<PAGE> 1
AIM GROWTH FUND
[AIM LOGO APPEARS HERE] ANNUAL REPORT DECEMBER 31, 1996
<PAGE> 2
[PHOTO APPEARS HERE]
----------------------------------------
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 differing fees and expenses.
o During the year ended 12/31/96, the Fund paid distributions on both Class A
and Class B shares of $0.681 per share.
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 Past performance cannot guarantee comparable future results.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The unmanaged Standard & Poor's Composite Index of 500 Stocks (S&P 500) is
widely regarded by investors as representative of the stock market in
general. The Standard & Poor's Midcap 400 Index (S&P 400) is an unmanaged
index of the common stocks of approximately 400 midsize capitalization
companies.
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:
Financial markets produced another noteworthy year in 1996.
Stocks surged again to enthusiastic levels, but the advance
[PHOTO OF was marked by dramatic volatility and confined mainly to the
Charles T. performance of a select few large-company stocks. Still,
Bauer, most investors in stock funds were rewarded with
Chairman of double-digit returns for the year. Bonds had a difficult
the Board of time until encouraging economic reports triggered a fall
the fund, rally that helped restore prices and bring yields back down
APPEARS HERE] to near 1995 levels.
As we begin 1997, the parallels to last year are striking.
The economy is growing at a moderate rate, corporate
earnings remain healthy, and inflation is modest. Such an
environment is ideal for financial investments.
Still, many suggest, as we do, that 1997 will be marked by
continued uncertainty and short-term volatility. And as the
market's performance continues to exceed historical averages, some advise that
a correction is overdue.
We believe the best way to achieve your investment goals in uncertain
markets is to follow a few basic strategies. First, you should keep a long-term
outlook. If you leave your money invested over the long term, you can help
avoid the results of the volatility that generally accompanies financial
markets over the short term. Those who try to "time the market"--move money in
and out of the market based on some gauge of future market performance--tend to
be less successful than investors using disciplined, long-term investment
strategies. That's because no one, not even expert market watchers, can
consistently predict what the market will do next.
Another strategy, diversification, may help you cushion the effects of a
volatile market and enhance your return potential. A mutual fund is already
diversified because it invests in many securities. You can diversify even
further by placing some of your assets in several different types of domestic
and international funds that may include stocks, bonds, and money market
securities.
Finally, no matter what your investment goals or time horizon, it makes good
sense to review your portfolio regularly with your financial consultant. In
rapidly changing markets, you need an investment professional on your side who
can explain what is happening and how your portfolio may be affected.
Your financial consultant can help you create and follow a regular
investment plan--investing a certain amount of money at regular intervals--that
can help you stay on track regardless of day-to-day market activity.
In 1997, and in the years ahead, we at AIM plan to meet the challenge of
changing financial markets through the consistent application of disciplined
investment strategies that have served our shareholders well for more than 20
years. We are pleased that AIM funds, overall, have turned in attractive, and
often impressive performance when measured against benchmark indexes and peer
group performance.
We appreciate the trust you have placed in us and we look forward to our
continued close association. If you have any questions or comments about this
report, we invite you to call Client Services at 800-959-4246 during normal
business hours. For automated account information 24 hours a day, call the AIM
Investor Line at 800-246-5463.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
----------------------------------------
In rapidly changing markets,
you need
an investment professional
on your side
who can explain
what is happening and
how your portfolio may be affected.
----------------------------------------
<PAGE> 4
The Managers' Overview
STOCK INVESTORS ARE TREATED TO A STRONG 1996
A roundtable discussion with the Fund management team for AIM Growth Fund for
the fiscal year ended December 31, 1996.
- --------------------------------------------------------------------------------
Q. STOCKS DEFIED PREDICTIONS BY PRODUCING ANOTHER STRONG YEAR. HOW DID AIM
GROWTH FUND PERFORM DURING THE REPORTING PERIOD?
A. The bull market logged another year in its record longevity, but its
strength was more thinly distributed than in 1995 and large-company stocks
definitely held the field.
Stocks of midsize companies turned in a decent performance, but they
lagged large-company stocks for the year, as evidenced by the 19.20% total
return posted for the Standard and Poor's Midcap 400 Index compared to the
22.95% return for the Standard & Poor's Composite Index of 500 Stocks.
The Fund delivered a strong total return of 18.61% for Class A shares and
17.60% for Class B shares in the year ended December 31, 1996, reflecting
the trend in mid-cap company stocks. Also in evidence was the impact of
sharp declines in the technology sector, which suffered significant
volatility in the summer of 1996.
Q. WHAT WERE THE FORCES BEHIND THE ADVANCE IN EQUITY MARKETS?
A. Stocks delivered another record-breaking performance thanks to robust
corporate profits and the favorable environment of healthy economic growth
without rising inflation. However, the charging advance was interrupted
several times during the year when economic reports suggested that
surprisingly strong growth might rock the boat and send interest rates
higher.
Higher interest rates increase borrowing and operating costs, and that
can have a strong impact on corporate profits. In 1995, many companies had
posted stunning profits that seemed hard to match a year later. That was
particularly true for many technology companies, and many technology stocks
fell sharply in the summer of 1996.
While later reports indicated the economy had slowed to a moderate pace,
some analysts anticipated that higher interest rates remained a possibility.
Q. HOW DID INVESTORS REACT IN THAT ENVIRONMENT?
A. Uncertainty creates volatile markets. While stocks rose to record levels
during the year, circuit breakers on the New York Stock Exchange, which
temporarily suspend computer program trading to check volatility, were
triggered a record 96 times.
Given such dramatic fluctuation, investors gravitated to stocks in larger
companies with more predictable earnings. As a result, large-company stocks
generally outperformed stocks of small and midsize companies during 1996.
Q. HOW DID THESE FACTORS AFFECT THE FUND?
A. The Fund was affected by the performance of mid-cap stocks as well as
stocks in the technology sector. Due to its larger concentration in
technology stocks, the Fund was vulnerable when that sector suffered a
broad-based decline in the summer.
Q. WHAT STRATEGIES DID THE FUND USE TO STRENGTHEN ITS PERFORMANCE?
A. The Fund stressed a more broadly diversified portfolio. The technology
weighting was pared to approximately 23% by the end of the reporting period,
and the Fund repositioned its emphasis from semiconductor producers to
computer software and networking companies. The Fund emphasized market
leaders--its top three holdings as of December 31, 1996, were Microsoft
Corp., Intel Corp., and 3Com Corp.
The Fund also increased its holdings in other sectors including specialty
retailers and medical services providers.
Q. WHAT'S THE OUTLOOK FOR THE TECHNOLOGY SECTOR?
A. We noted a number of positive factors that bode well for selected
technology areas where the Fund is invested. Technology giants Microsoft and
Intel continue as market leaders thanks to their ability to generate strong
profit growth. Microsoft's
PORTFOLIO COMPOSITION
As of December 31, 1996
<TABLE>
<CAPTION>
================================================================================
TOP 10 EQUITY HOLDINGS TOP 10 INDUSTRIES
================================================================================
<S> <C>
1. Microsoft Corp. 1. Computer Software/Services
2. Intel Corp. 2. Retail (Stores)
3. 3Com Corp. 3. Telecommunications
4. Cisco Systems, Inc. 4. Medical (Drugs)
5. Student Loan Marketing Association 5. Medical (Patient Services)
6. Safeway, Inc. 6. Computer Networking
7. Telefonaktiebolaget LM Ericsson-ADR 7. Finance (Consumer Credit)
8. Pep Boys - Mannie, Moe & Jack 8. Medical Instruments/Products
9. Compaq Computer Corp. 9. Semiconductors
10. Toys `R' Us, Inc. 10. Computer MINIs/PCs
</TABLE>
Please keep in mind that the Fund's portfolio is subject to change and there is
no assurance the Fund will continue to hold any particular security.
================================================================================
See important Fund & index disclosures inside front cover.
2
<PAGE> 5
Windows NT and Intel's Pentium Pro chip have the potential to launch
another major upgrade cycle in spring 1997 that will benefit PC makers and
software developers alike.
PC makers Compaq Computer Corp. and Dell Computer Corp. benefit from the
decline in prices of semiconductors and other components. Computer
networking companies like 3Com Corp. were consistently strong during the
period as companies continued to upgrade data communication capacity.
Q. HOW WAS THE FUND POSITIONED AT THE END OF THE FISCAL YEAR?
A. The Fund held a large number of stocks--379 as of December 31, 1996,
spread across 62 industry categories. The largest position weighting in the
Fund was 2.21%. The Fund's largest concentrations were 23% in technology,
followed by 16% in retail and consumer cyclicals, and 15% in medical
products and services.
Q. THE FUND HAD A SIGNIFICANT WEIGHTING IN STOCKS OF RETAIL AND CONSUMER
NON-CYCLICAL COMPANIES, PARTICULARLY RETAIL STORES. WHAT ATTRACTED YOU
THERE?
A. Earnings in the retail sector have been surprisingly strong, and they
continue to grow at an attractive pace. Consumer demand for goods has kept
store inventories low and fully priced, which benefits high-profile and
specialty niche players like The Gap Inc., Tech Data Corp., and Petsmart,
Inc. The Fund also emphasized holdings in stronger, name-brand stores:
Safeway, Inc., Staples, Inc., Consolidated Stores Corp., and Dayton Hudson
Corp.
Q. WHAT ARE THE MAIN THEMES IN THE HEALTH-CARE INDUSTRY?
A. Consolidation efforts continue in the health-care industry, and intense
competition has begun to drive out many of the smaller, less-experienced
players, particularly in the physician practice management area. The Fund
focused on three major areas in the health-care segment where there appears
to be attractive potential for earnings growth: preventive maintenance,
assisted living, and hospital systems administration.
Among the Fund's strongest performers were such market leaders as patient
services providers HealthSouth Corp. and Columbia/HCA Healthcare Corp.,
medical instruments and products maker St. Jude Medical, Inc., and drugmaker
Cardinal Health, Inc.
Q. WHAT IS YOUR OUTLOOK FOR THE MARKET IN 1997?
A. Conditions appear favorable for stocks in general over the near term,
thanks to a positive economic climate. The economy is growing at a
reasonable rate without rising inflation, and that reduces the likelihood
that interest rates may increase over the near term.
Nonetheless, we recommend that investors remain cautious and patient. The
bull market for stocks marked its sixth year in October 1996, making it the
longest in history. The market's performance for the year also was marked by
stunning volatility, and analysts disagree on how long its remarkable
advance can continue.
The pace of growth in corporate earnings will be the key to market
performance in 1997. Through most of the 1990s, corporate earnings growth
has been above historic averages. As economic growth continues at a slower
pace, it is likely that corporate earnings will slow to a more moderate
rate, which may translate into more conservative performance for stocks.
================================================================================
GROWTH OF A $10,000 INVESTMENT
12/31/86 - 12/31/96
- --------------------------------------------------------------------------------
AIM Growth Fund, Class A S&P 500 STOCK INDEX
- --------------------------------------------------------------------------------
(In thousands)
12/31/86 $9,451 $10,000
12/87 9,793 10,518
12/88 10,785 12,253
12/89 13,899 16,124
12/90 13,198 15,622
12/91 18,088 20,360
12/92 18,122 21,909
12/93 18,781 24,108
12/94 17,843 24,435
12/95 23,964 33,585
12/96 28,423 41,066
================================================================================
Past performance cannot guarantee comparable future results.
================================================================================
AVERAGE ANNUAL TOTAL RETURN
As of 12/31/96, including sales charges
CLASS A SHARES
1 Year 12.08%*
5 Years 8.23
10 Years 11.01
*18.61% excluding sales charge
CLASS B SHARES
1 Year 12.60%**
Inception (9/1/93) 11.30
**17.60% excluding CDSC
================================================================================
Source: Towers Data Systems HYPO --Registered Trademark--. Your Fund's total
return includes sales charges, expenses, and management fees. The performance
of the Fund's Class B shares will differ from that of Class A shares due to
differing fees and expenses. For Fund performance calculations and descriptions
of the index cited on this page, please refer to the inside front cover.
See important Fund & index disclosures inside front cover.
3
<PAGE> 6
SCHEDULE OF INVESTMENTS
December 31, 1996
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-77.00%
ADVERTISING/BROADCASTING-0.72%
American Radio Systems Corp.(a) 8,000 $ 218,000
- --------------------------------------------------------------
Catalina Marketing Corp.(a) 2,000 110,250
- --------------------------------------------------------------
Chancellor Corp.-Class A(a) 10,000 237,500
- --------------------------------------------------------------
Clear Channel Communications, Inc.(a) 30,400 1,098,200
- --------------------------------------------------------------
Interpublic Group of Cos., Inc. 25,000 1,187,500
- --------------------------------------------------------------
Jacor Communications, Inc.(a) 20,000 547,500
- --------------------------------------------------------------
Paxson Communications Corp.(a) 10,000 78,750
- --------------------------------------------------------------
True North Communications, Inc. 7,500 164,063
- --------------------------------------------------------------
3,641,763
- --------------------------------------------------------------
AEROSPACE/DEFENSE-0.40%
Gulfstream Aerospace Corp.(a) 40,000 970,000
- --------------------------------------------------------------
United Technologies Corp. 16,000 1,056,000
- --------------------------------------------------------------
2,026,000
- --------------------------------------------------------------
AUTOMOBILE/TRUCK PARTS & TIRES-0.14%
Mark IV Industries, Inc. 31,500 712,687
- --------------------------------------------------------------
AUTOMOBILE (MANUFACTURERS)-0.19%
Chrysler Corp. 30,000 990,000
- --------------------------------------------------------------
BANKING-0.16%
Bank of Boston Corp. 12,500 803,125
- --------------------------------------------------------------
BANKING (MONEY CENTER)-0.21%
Citicorp 10,500 1,081,500
- --------------------------------------------------------------
BEVERAGES (SOFT DRINKS)-0.18%
PepsiCo, Inc. 32,000 936,000
- --------------------------------------------------------------
BIOTECHNOLOGY-0.56%
AMGEN, Inc.(a) 30,300 1,647,561
- --------------------------------------------------------------
Guidant Corp. 21,000 1,197,000
- --------------------------------------------------------------
2,844,561
- --------------------------------------------------------------
BUSINESS SERVICES-1.47%
AccuStaff, Inc.(a) 54,792 1,157,481
- --------------------------------------------------------------
APAC Teleservices, Inc.(a) 8,000 307,000
- --------------------------------------------------------------
Cognizant Corp. 80,000 2,640,000
- --------------------------------------------------------------
Corrections Corp. of America(a) 2,200 67,375
- --------------------------------------------------------------
CUC International, Inc.(a) 45,750 1,086,562
- --------------------------------------------------------------
Diebold, Inc. 12,200 767,075
- --------------------------------------------------------------
Equifax, Inc. 26,000 796,250
- --------------------------------------------------------------
Olsten Corp. 24,750 374,344
- --------------------------------------------------------------
Paychex, Inc. 5,000 257,187
- --------------------------------------------------------------
7,453,274
- --------------------------------------------------------------
CHEMICALS-0.10%
Monsanto Co. 13,300 517,038
- --------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.30%
Airgas, Inc.(a) 34,400 756,800
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
CHEMICALS (SPECIALTY)-(CONTINUED)
IMC Global, Inc. 20,000 $ 782,500
- --------------------------------------------------------------
1,539,300
- --------------------------------------------------------------
COMPUTER MAINFRAMES-0.53%
International Business Machines
Corp. 18,000 2,718,000
- --------------------------------------------------------------
COMPUTER MINI/PCS-3.07%
Apple Computer, Inc.(a) 40,000 835,000
- --------------------------------------------------------------
COMPAQ Computer Corp.(a) 53,000 3,935,250
- --------------------------------------------------------------
Dell Computer Corp.(a) 60,000 3,187,500
- --------------------------------------------------------------
Gateway 2000, Inc.(a) 44,000 2,356,750
- --------------------------------------------------------------
Hewlett-Packard Co. 10,100 507,525
- --------------------------------------------------------------
Rational Software Corp.(a) 31,900 1,262,043
- --------------------------------------------------------------
Sun Microsystems, Inc.(a) 138,000 3,544,875
- --------------------------------------------------------------
15,628,943
- --------------------------------------------------------------
COMPUTER NETWORKING-4.05%
Ascend Communications, Inc.(a) 54,400 3,379,600
- --------------------------------------------------------------
Cabletron Systems, Inc.(a) 80,000 2,660,000
- --------------------------------------------------------------
Cascade Communications Corp.(a) 61,800 3,406,725
- --------------------------------------------------------------
Cisco Systems, Inc.(a) 70,000 4,453,750
- --------------------------------------------------------------
FORE Systems, Inc.(a) 30,100 989,538
- --------------------------------------------------------------
Shiva Corp.(a) 4,200 146,475
- --------------------------------------------------------------
Sync Research, Inc.(a) 4,500 61,875
- --------------------------------------------------------------
3Com Corp.(a) 75,000 5,503,125
- --------------------------------------------------------------
20,601,088
- --------------------------------------------------------------
COMPUTER PERIPHERALS-1.70%
Adaptec, Inc.(a) 32,000 1,280,000
- --------------------------------------------------------------
American Power Conversion Corp.(a) 12,500 340,625
- --------------------------------------------------------------
EMC Corp.(a) 58,600 1,941,125
- --------------------------------------------------------------
Microchip Technology, Inc.(a) 25,600 1,302,400
- --------------------------------------------------------------
Storage Technology Corp.(a) 39,600 1,885,950
- --------------------------------------------------------------
U.S. Robotics Corp.(a) 26,200 1,886,400
- --------------------------------------------------------------
8,636,500
- --------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES-8.23%
Affiliated Computer Services, Inc.(a)
10,200 303,450
- --------------------------------------------------------------
BISYS Group, Inc. (The)(a) 10,000 370,625
- --------------------------------------------------------------
BMC Software, Inc.(a) 90,000 3,723,750
- --------------------------------------------------------------
Cadence Design Systems, Inc.(a) 50,000 1,987,500
- --------------------------------------------------------------
Ceridian Corp.(a) 35,000 1,417,500
- --------------------------------------------------------------
Computer Associates International, Inc. 68,150 3,390,462
- --------------------------------------------------------------
CompuWare Corp.(a) 52,000 2,606,500
- --------------------------------------------------------------
CSG Systems International, Inc.(a) 11,200 172,200
- --------------------------------------------------------------
DST Systems, Inc.(a) 19,500 611,813
- --------------------------------------------------------------
Electronic Arts, Inc.(a) 17,900 535,881
- --------------------------------------------------------------
Electronic Data Systems Corp. 20,000 865,000
- --------------------------------------------------------------
First Data Corp. 16,500 602,250
- --------------------------------------------------------------
Fiserv, Inc.(a) 32,000 1,176,000
- --------------------------------------------------------------
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTER SOFTWARE/SERVICES-(CONTINUED)
HBO & Co. 19,900 $ 1,181,563
- --------------------------------------------------------------
HPR, Inc.(a) 10,000 137,500
- --------------------------------------------------------------
Intuit, Inc.(a) 17,700 557,550
- --------------------------------------------------------------
McAfee Associates, Inc.(a) 31,200 1,372,800
- --------------------------------------------------------------
Medic Computer Systems, Inc.(a) 8,200 330,562
- --------------------------------------------------------------
Microsoft Corp.(a) 78,800 6,510,850
- --------------------------------------------------------------
National Data Corp. 20,000 870,000
- --------------------------------------------------------------
Network General Corp.(a) 43,400 1,312,850
- --------------------------------------------------------------
Oracle Corp.(a) 57,250 2,390,188
- --------------------------------------------------------------
Parametric Technology Co.(a) 66,000 3,390,750
- --------------------------------------------------------------
Physician Computer Network, Inc.(a) 30,000 255,000
- --------------------------------------------------------------
Pure Atria Corp.(a) 2,300 56,925
- --------------------------------------------------------------
Sterling Commerce, Inc.(a) 38,814 1,368,193
- --------------------------------------------------------------
Sterling Software, Inc.(a) 11,500 363,688
- --------------------------------------------------------------
SunGard Data Systems Inc.(a) 10,400 410,800
- --------------------------------------------------------------
Synopsys, Inc.(a) 27,700 1,281,125
- --------------------------------------------------------------
Systemsoft Corp.(a) 4,200 62,475
- --------------------------------------------------------------
Transition Systems, Inc.(a) 400 5,650
- --------------------------------------------------------------
Wallace Computer Services, Inc. 55,000 1,897,500
- --------------------------------------------------------------
Wind River Systems(a) 7,000 331,625
- --------------------------------------------------------------
41,850,525
- --------------------------------------------------------------
CONGLOMERATES-1.56%
Allied-Signal Inc. 14,600 978,200
- --------------------------------------------------------------
Corning, Inc. 19,000 878,750
- --------------------------------------------------------------
Du Pont (E.I.) de Nemours & Co. 11,000 1,038,125
- --------------------------------------------------------------
Loews Corp. 22,100 2,082,925
- --------------------------------------------------------------
Tyco International Ltd. 35,000 1,850,625
- --------------------------------------------------------------
U.S. Industries, Inc.(a) 31,500 1,082,812
- --------------------------------------------------------------
7,911,437
- --------------------------------------------------------------
CONSUMER NON-DURABLES-0.04%
Central Garden and Pet Co.(a) 10,000 210,625
- --------------------------------------------------------------
CONTAINERS-0.13%
Sealed Air Corp.(a) 16,000 666,000
- --------------------------------------------------------------
COSMETICS & TOILETRIES-0.50%
Rexall Sundown, Inc.(a) 11,000 299,062
- --------------------------------------------------------------
Warner-Lambert Co. 30,000 2,250,000
- --------------------------------------------------------------
2,549,062
- --------------------------------------------------------------
ELECTRONIC COMPONENTS/MISCELLANEOUS-0.72%
Berg Electronics Corp.(a) 9,800 287,875
- --------------------------------------------------------------
BMC Industries, Inc. 9,700 305,550
- --------------------------------------------------------------
Checkpoint Systems, Inc.(a) 38,000 940,500
- --------------------------------------------------------------
Raychem Corp. 7,700 616,963
- --------------------------------------------------------------
SCI Systems, Inc.(a) 7,000 312,375
- --------------------------------------------------------------
Symbol Technologies, Inc.(a) 10,600 469,050
- --------------------------------------------------------------
Thermo Instrument Systems, Inc.(a) 22,000 728,750
- --------------------------------------------------------------
3,661,063
- --------------------------------------------------------------
FINANCE (ASSET MANAGEMENT)-0.60%
Bear Stearns Cos., Inc. 14,500 404,188
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FINANCE (ASSET MANAGEMENT)-(CONTINUED)
Franklin Resources, Inc. 12,700 $ 868,362
- --------------------------------------------------------------
Imperial Credit Industries, Inc.(a) 30,000 630,000
- --------------------------------------------------------------
Schwab (Charles) Corp. 24,700 790,400
- --------------------------------------------------------------
T. Rowe Price Associates 7,900 343,650
- --------------------------------------------------------------
3,036,600
- --------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-4.17%
Aames Financial Corp. 20,000 717,500
- --------------------------------------------------------------
Beneficial Corp. 8,000 507,000
- --------------------------------------------------------------
Capital One Financial Corp. 30,800 1,108,800
- --------------------------------------------------------------
Concord EFS, Inc.(a) 12,800 361,600
- --------------------------------------------------------------
Credit Acceptance Corp.(a) 24,000 564,000
- --------------------------------------------------------------
Federal Home Loan Mortgage Corp. 10,000 1,101,250
- --------------------------------------------------------------
Federal National Mortgage Association 35,000 1,303,750
- --------------------------------------------------------------
Finova Group, Inc. 9,500 610,375
- --------------------------------------------------------------
First USA, Inc. 16,000 554,000
- --------------------------------------------------------------
Green Tree Financial Corp. 70,900 2,738,512
- --------------------------------------------------------------
Household International, Inc. 20,000 1,845,000
- --------------------------------------------------------------
MBNA Corp. 30,000 1,245,000
- --------------------------------------------------------------
Money Store, Inc. (The) 25,700 709,963
- --------------------------------------------------------------
Olympic Financial Ltd.(a) 49,900 717,312
- --------------------------------------------------------------
PMI Group, Inc. (The) 20,100 1,113,038
- --------------------------------------------------------------
PMT Services, Inc.(a) 20,500 358,750
- --------------------------------------------------------------
Student Loan Marketing Association 46,000 4,283,750
- --------------------------------------------------------------
SunAmerica, Inc. 31,200 1,384,500
- --------------------------------------------------------------
21,224,100
- --------------------------------------------------------------
FINANCE (SAVINGS & LOAN)-0.40%
Ahmanson (H.F.) & Co. 35,000 1,137,500
- --------------------------------------------------------------
Washington Mutual, Inc. 21,200 918,225
- --------------------------------------------------------------
2,055,725
- --------------------------------------------------------------
FOOD/PROCESSING-0.62%
ConAgra, Inc. 18,800 935,300
- --------------------------------------------------------------
Dean Foods Co. 35,000 1,128,750
- --------------------------------------------------------------
Lancaster Colony Corp. 11,400 524,400
- --------------------------------------------------------------
Richfood Holdings, Inc. 24,000 582,000
- --------------------------------------------------------------
3,170,450
- --------------------------------------------------------------
FUNERAL SERVICES-0.40%
Service Corp. International 62,900 1,761,200
- --------------------------------------------------------------
Stewart Enterprises, Inc.-Class A 7,650 260,100
- --------------------------------------------------------------
2,021,300
- --------------------------------------------------------------
FURNITURE-0.13%
Leggett & Platt, Inc. 19,000 657,875
- --------------------------------------------------------------
GAMING-0.81%
Circus Circus Enterprises(a) 25,000 859,375
- --------------------------------------------------------------
GTECH Holdings Corp.(a) 15,800 505,600
- --------------------------------------------------------------
International Game Technology 150,000 2,737,500
- --------------------------------------------------------------
4,102,475
- --------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HOME BUILDING-0.03%
Oakwood Homes Corp. 6,000 $ 137,250
- --------------------------------------------------------------
HOTELS/MOTELS-1.16%
Choice Hotels International, Inc.(a) 31,900 562,238
- --------------------------------------------------------------
Doubletree Corp.(a) 3,100 139,500
- --------------------------------------------------------------
HFS, Inc.(a) 39,000 2,330,250
- --------------------------------------------------------------
Hilton Hotels Corp. 24,000 627,000
- --------------------------------------------------------------
Host Marriott Corp.(a) 62,500 1,000,000
- --------------------------------------------------------------
Marriot International, Inc. 8,600 475,150
- --------------------------------------------------------------
Promus Hotel Corp.(a) 13,000 385,125
- --------------------------------------------------------------
Sun International Hotels Ltd.(a) 10,300 375,950
- --------------------------------------------------------------
5,895,213
- --------------------------------------------------------------
INSURANCE (LIFE & HEALTH)-0.76%
Compdent Corp.(a) 10,600 373,650
- --------------------------------------------------------------
Conseco Inc. 47,500 3,028,125
- --------------------------------------------------------------
Provident Companies, Inc. 1,700 82,237
- --------------------------------------------------------------
United Companies Financial Corp. 15,000 399,375
- --------------------------------------------------------------
3,883,387
- --------------------------------------------------------------
INSURANCE (MULTI-LINE PROPERTY)-2.37%
Allstate Corp. 27,900 1,614,713
- --------------------------------------------------------------
American International Group, Inc. 11,500 1,244,875
- --------------------------------------------------------------
CapMAC Holdings, Inc. 18,100 599,562
- --------------------------------------------------------------
CIGNA Corp. 9,700 1,325,263
- --------------------------------------------------------------
Everest Re Holdings, Inc. 36,300 1,043,625
- --------------------------------------------------------------
ITT Hartford Group, Inc. 16,000 1,080,000
- --------------------------------------------------------------
MGIC Investment Corp. 34,600 2,629,600
- --------------------------------------------------------------
Old Republic International Corp. 13,000 347,750
- --------------------------------------------------------------
Progressive Corp. 1,300 87,587
- --------------------------------------------------------------
Travelers Group, Inc. 45,666 2,072,095
- --------------------------------------------------------------
12,045,070
- --------------------------------------------------------------
LEISURE & RECREATION-0.80%
Callaway Golf Co. 22,100 635,375
- --------------------------------------------------------------
Carnival Corp.-Class A 29,200 963,600
- --------------------------------------------------------------
Coleman Co., Inc.(a) 17,000 233,750
- --------------------------------------------------------------
Harley-Davidson, Inc. 41,400 1,945,800
- --------------------------------------------------------------
Mattel, Inc. 5,187 143,939
- --------------------------------------------------------------
Speedway Motorsports, Inc.(a) 7,200 151,200
- --------------------------------------------------------------
4,073,664
- --------------------------------------------------------------
MACHINERY (HEAVY)-0.21%
Caterpillar Inc. 14,000 1,053,500
- --------------------------------------------------------------
MACHINERY (MISCELLANEOUS)-0.63%
Pentair, Inc. 10,000 322,500
- --------------------------------------------------------------
Thermo Electron Corp.(a) 69,750 2,877,188
- --------------------------------------------------------------
3,199,688
- --------------------------------------------------------------
MEDICAL (DRUGS)-3.82%
Abbott Laboratories 19,000 964,250
- --------------------------------------------------------------
American Home Products Corp. 18,000 1,055,250
- --------------------------------------------------------------
AmeriSource Health Corp.(a) 12,000 579,000
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MEDICAL (DRUGS)-(CONTINUED)
Bristol-Myers Squibb Co. 18,000 $ 1,957,500
- --------------------------------------------------------------
Cardinal Health, Inc. 52,950 3,084,337
- --------------------------------------------------------------
Curative Technologies, Inc.(a) 500 13,844
- --------------------------------------------------------------
Dura Pharmaceuticals, Inc.(a) 15,000 716,250
- --------------------------------------------------------------
Express Scripts, Inc.-Class A(a) 15,200 545,300
- --------------------------------------------------------------
ICN Pharmaceuticals, Inc. 21,500 421,937
- --------------------------------------------------------------
Johnson & Johnson 35,300 1,756,175
- --------------------------------------------------------------
Jones Medical Industries, Inc. 15,900 582,338
- --------------------------------------------------------------
Lilly (Eli) & Co. 11,100 810,300
- --------------------------------------------------------------
Merck & Co., Inc. 19,000 1,505,750
- --------------------------------------------------------------
Parexel International Corp.(a) 4,400 227,150
- --------------------------------------------------------------
Pharmacia & Upjohn, Inc. 23,000 911,375
- --------------------------------------------------------------
Rhone-Poulenc Rorer, Inc. 28,500 2,226,562
- --------------------------------------------------------------
Schering-Plough Corp. 14,300 925,925
- --------------------------------------------------------------
Watson Pharmaceuticals, Inc.(a) 26,000 1,168,375
- --------------------------------------------------------------
19,451,618
- --------------------------------------------------------------
MEDICA (INSTRUMENTS/PRODUCTS)-3.98%
Advanced Technology Laboratories,
Inc.(a) 10,000 310,000
- --------------------------------------------------------------
Baxter International Inc. 24,900 1,020,900
- --------------------------------------------------------------
Becton, Dickinson & Co. 31,000 1,344,625
- --------------------------------------------------------------
Boston Scientific Corp.(a) 34,540 2,072,400
- --------------------------------------------------------------
Dentsply International, Inc. 10,800 513,000
- --------------------------------------------------------------
Gulf South Medical Supply, Inc.(a) 25,300 648,313
- --------------------------------------------------------------
IDEXX Laboratories, Inc.(a) 17,900 644,400
- --------------------------------------------------------------
Invacare Corp. 18,700 514,250
- --------------------------------------------------------------
Medtronic, Inc. 22,000 1,496,000
- --------------------------------------------------------------
Nellcor Puritan Bennett, Inc.(a) 9,200 201,250
- --------------------------------------------------------------
Omnicare, Inc. 54,100 1,737,962
- --------------------------------------------------------------
Physician Sales & Service, Inc.(a) 14,000 201,250
- --------------------------------------------------------------
Quintiles Transnational Corp.(a) 21,400 1,417,750
- --------------------------------------------------------------
St. Jude Medical, Inc.(a) 71,000 3,026,375
- --------------------------------------------------------------
Steris Corp.(a) 20,000 870,000
- --------------------------------------------------------------
Stryker Corp. 40,000 1,195,000
- --------------------------------------------------------------
Sybron International Corp.(a) 55,900 1,844,700
- --------------------------------------------------------------
U.S. Surgical Corp. 30,300 1,193,063
- --------------------------------------------------------------
20,251,238
- --------------------------------------------------------------
MEDICAL (PATIENT SERVICES)-4.75%
American Medical Response, Inc.(a) 10,200 331,500
- --------------------------------------------------------------
American Oncology Resources, Inc.(a) 4,900 50,225
- --------------------------------------------------------------
ClinTrials Research Inc.(a) 14,850 337,837
- --------------------------------------------------------------
Columbia/HCA Healthcare Corp. 58,880 2,399,360
- --------------------------------------------------------------
FPA Medical Management, Inc.(a) 15,000 335,625
- --------------------------------------------------------------
Genesis Health Ventures, Inc.(a) 21,750 676,969
- --------------------------------------------------------------
Health Care & Retirement Corp.(a) 46,350 1,326,768
- --------------------------------------------------------------
Health Management Associates,
Inc.-Class A(a) 65,925 1,483,313
- --------------------------------------------------------------
HEALTHSOUTH Corp.(a) 93,200 3,599,850
- --------------------------------------------------------------
Lincare Holdings, Inc.(a) 20,000 820,000
- --------------------------------------------------------------
MedPartners, Inc.(a) 97,780 2,053,380
- --------------------------------------------------------------
Multicare Companies, Inc.(a) 17,200 348,300
- --------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MEDICAL (PATIENT SERVICES)-(CONTINUED)
OccuSystems, Inc.(a) 8,600 $ 232,200
- --------------------------------------------------------------
OrNda HealthCorp (a) 40,200 1,175,850
- --------------------------------------------------------------
Orthodontic Centers of America,
Inc.(a) 15,800 252,800
- --------------------------------------------------------------
Oxford Health Plans, Inc.(a) 25,600 1,499,200
- --------------------------------------------------------------
PhyCor, Inc.(a) 14,700 417,112
- --------------------------------------------------------------
Quorum Health Group, Inc.(a) 45,000 1,338,750
- --------------------------------------------------------------
Tenet Healthcare Corp.(a) 91,600 2,003,750
- --------------------------------------------------------------
Total Renal Care Holdings, Inc.(a) 11,000 398,750
- --------------------------------------------------------------
United Healthcare Corp. 13,200 594,000
- --------------------------------------------------------------
Universal Health Services,
Inc.-Class B (a) 31,000 887,375
- --------------------------------------------------------------
Vencor, Inc.(a) 50,000 1,581,250
- --------------------------------------------------------------
24,144,164
- --------------------------------------------------------------
NATURAL GAS PIPELINE-0.18%
Columbia Gas System, Inc. 14,700 935,288
- --------------------------------------------------------------
OFFICE AUTOMATION-0.21%
Xerox Corp. 20,000 1,052,500
- --------------------------------------------------------------
OFFICE PRODUCTS-0.62%
Avery Dennison Corp. 24,200 856,075
- --------------------------------------------------------------
Ingram Micro, Inc.-Class A(a) 38,400 883,200
- --------------------------------------------------------------
Reynolds & Reynolds Co.-Class A 54,600 1,419,600
- --------------------------------------------------------------
3,158,875
- --------------------------------------------------------------
OIL & GAS (DRILLING)-0.26%
Reading & Bates Corp.(a) 50,000 1,325,000
- --------------------------------------------------------------
OIL & GAS (EXPLORATION &
PRODUCTION)-0.26%
Burlington Resources, Inc. 15,400 775,775
- --------------------------------------------------------------
Transocean Offshore Inc. 8,500 532,312
- --------------------------------------------------------------
1,308,087
- --------------------------------------------------------------
OIL & GAS (SERVICES)-0.61%
Energy Ventures, Inc.(a) 5,400 274,725
- --------------------------------------------------------------
Global Marine, Inc.(a) 35,000 721,875
- --------------------------------------------------------------
Halliburton Co. 21,000 1,265,250
- --------------------------------------------------------------
Louisiana Land & Exploration Co. 14,500 777,563
- --------------------------------------------------------------
NorAm Energy Corp. 4,300 66,112
- --------------------------------------------------------------
3,105,525
- --------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES-2.31%
Baker Hughes, Inc. 45,000 1,552,500
- --------------------------------------------------------------
BJ Services Co.(a) 10,000 510,000
- --------------------------------------------------------------
Cooper Cameron Corp.(a) 12,000 918,000
- --------------------------------------------------------------
Diamond Offshore Drilling, Inc.(a) 21,100 1,202,700
- --------------------------------------------------------------
Dresser Industries, Inc. 17,000 527,000
- --------------------------------------------------------------
ENSCO International, Inc.(a) 15,000 727,500
- --------------------------------------------------------------
Marine Drilling Co., Inc.(a) 50,000 984,375
- --------------------------------------------------------------
Nabors Industries, Inc.(a) 10,000 192,500
- --------------------------------------------------------------
Rowan Companies, Inc.(a) 80,000 1,810,000
- --------------------------------------------------------------
Schlumberger Ltd. 6,000 599,250
- --------------------------------------------------------------
Smith International, Inc.(a) 16,500 740,438
- --------------------------------------------------------------
Tidewater, Inc. 24,000 1,086,000
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
OIL EQUIPMENT & SUPPLIES-(CONTINUED)
Varco International, Inc.(a) 38,100 $ 881,062
- --------------------------------------------------------------
11,731,325
- --------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.19%
Kimberly-Clark Corp. 10,000 952,500
- --------------------------------------------------------------
POLLUTION CONTROL-0.35%
U.S. Filter Corp.(a) 14,300 454,025
- --------------------------------------------------------------
USA Waste Services, Inc.(a) 19,000 605,625
- --------------------------------------------------------------
United Waste Systems, Inc.(a) 21,000 721,875
- --------------------------------------------------------------
1,781,525
- --------------------------------------------------------------
PUBLISHING-0.27%
Gartner Group, Inc.(a) 5,400 210,262
- --------------------------------------------------------------
New York Times Co.-Class A 24,000 912,000
- --------------------------------------------------------------
Times Mirror Co.-Class A 5,300 263,675
- --------------------------------------------------------------
1,385,937
- --------------------------------------------------------------
RESTAURANTS-1.04%
Applebee's International, Inc. 58,900 1,619,750
- --------------------------------------------------------------
Brinker International, Inc.(a) 40,000 640,000
- --------------------------------------------------------------
Cracker Barrel Old Country Store,
Inc. 33,100 839,913
- --------------------------------------------------------------
Lone Star Steakhouse & Saloon, Inc.(a) 30,000 802,500
- --------------------------------------------------------------
Outback Steakhouse, Inc.(a) 20,000 535,000
- --------------------------------------------------------------
Planet Hollywood International,
Inc.-Class A (a) 15,500 306,125
- --------------------------------------------------------------
Rainforest Cafe, Inc.(a) 7,500 176,250
- --------------------------------------------------------------
Starbucks Corp.(a) 12,100 346,362
- --------------------------------------------------------------
5,265,900
- --------------------------------------------------------------
RETAIL (FOOD & DRUGS)-1.67%
American Stores Co. 44,600 1,823,025
- --------------------------------------------------------------
Eckerd Corp. (The)(a) 7,383 236,256
- --------------------------------------------------------------
Kroger Co.(a) 12,400 576,600
- --------------------------------------------------------------
Revco D.S., Inc.(a) 22,700 839,900
- --------------------------------------------------------------
Rite Aid Corp. 18,200 723,450
- --------------------------------------------------------------
Safeway, Inc.(a) 100,000 4,275,000
- --------------------------------------------------------------
8,474,231
- --------------------------------------------------------------
RETAIL (STORES)-7.54%
Bed Bath & Beyond, Inc.(a) 28,200 683,850
- --------------------------------------------------------------
Boise Cascade Office Products
Corp.(a) 6,000 126,000
- --------------------------------------------------------------
CDW Computer Centers, Inc.(a) 13,150 779,959
- --------------------------------------------------------------
CompUSA, Inc.(a) 30,500 629,063
- --------------------------------------------------------------
Consolidated Stores Corp.(a) 87,375 2,806,921
- --------------------------------------------------------------
Corporate Express, Inc.(a) 21,400 629,963
- --------------------------------------------------------------
Dayton Hudson Corp. 75,700 2,971,225
- --------------------------------------------------------------
Dollar General Corp. 19,575 626,400
- --------------------------------------------------------------
Dollar Tree Stores, Inc.(a) 12,500 478,125
- --------------------------------------------------------------
Finish Line, Inc. (The)-Class A(a) 20,000 422,500
- --------------------------------------------------------------
Gap, Inc. (The) 43,000 1,295,375
- --------------------------------------------------------------
Global DirectMail Corp.(a) 12,800 558,400
- --------------------------------------------------------------
Gymboree Corp.(a) 27,600 631,350
- --------------------------------------------------------------
Home Depot, Inc. 21,000 1,052,625
- --------------------------------------------------------------
Jones Apparel Group, Inc.(a) 15,000 560,625
- --------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
RETAIL (STORES)-(CONTINUED)
<S> <C> <C>
Kohl's Corp.(a) 15,800 $ 620,150
- --------------------------------------------------------------
Lowe's Companies, Inc. 70,000 2,485,000
- --------------------------------------------------------------
Men's Wearhouse, Inc. (The)(a) 30,400 744,800
- --------------------------------------------------------------
Meyer (Fred), Inc.(a) 14,300 507,650
- --------------------------------------------------------------
Micro Warehouse, Inc.(a) 23,900 280,825
- --------------------------------------------------------------
Neiman Marcus Group, Inc. (The)(a) 6,500 165,750
- --------------------------------------------------------------
Oakley, Inc.(a) 38,800 421,950
- --------------------------------------------------------------
Pep Boys-Manny, Moe & Jack 130,100 4,000,575
- --------------------------------------------------------------
Petco Animal Supplies, Inc.(a) 18,000 373,500
- --------------------------------------------------------------
PETsMART, Inc.(a) 40,900 894,688
- --------------------------------------------------------------
Ross Stores, Inc. 8,400 420,000
- --------------------------------------------------------------
Saks Holdings, Inc.(a) 5,500 148,500
- --------------------------------------------------------------
Sports Authority, Inc. (The)(a) 38,400 835,200
- --------------------------------------------------------------
Staples, Inc.(a) 161,450 2,916,191
- --------------------------------------------------------------
Sunglass Hut International, Inc.(a) 16,400 118,900
- --------------------------------------------------------------
Sysco Corp. 35,000 1,141,875
- --------------------------------------------------------------
Tech Data Corp.(a) 33,400 914,325
- --------------------------------------------------------------
Tiffany & Co. 14,500 531,062
- --------------------------------------------------------------
TJX Companies, Inc. 16,900 800,638
- --------------------------------------------------------------
Toys "R" Us, Inc.(a) 130,000 3,900,000
- --------------------------------------------------------------
Viking Office Products, Inc.(a) 57,900 1,545,206
- --------------------------------------------------------------
Williams-Sonoma, Inc.(a) 9,000 327,375
- --------------------------------------------------------------
38,346,541
- --------------------------------------------------------------
SCIENTIFIC INSTRUMENTS-0.02%
Input/Output, Inc.(a) 6,600 122,100
- --------------------------------------------------------------
SEMICONDUCTORS-3.11%
Advanced Micro Devices, Inc.(a) 26,400 679,800
- --------------------------------------------------------------
Altera Corp.(a) 34,700 2,522,256
- --------------------------------------------------------------
Applied Materials, Inc.(a) 65,000 2,335,938
- --------------------------------------------------------------
Intel Corp. 44,600 5,839,812
- --------------------------------------------------------------
KLA Instruments Corp.(a) 21,000 745,500
- --------------------------------------------------------------
Micron Technology, Inc. 30,000 873,750
- --------------------------------------------------------------
National Semiconductor Corp.(a) 37,500 914,063
- --------------------------------------------------------------
Novellus Systems, Inc.(a) 2,400 130,050
- --------------------------------------------------------------
Solectron Corp.(a) 6,100 325,588
- --------------------------------------------------------------
Tencor Instruments(a) 5,800 152,975
- --------------------------------------------------------------
Texas Instruments, Inc. 17,000 1,083,750
- --------------------------------------------------------------
Vitesse Semiconductor Corp.(a) 5,000 227,500
- --------------------------------------------------------------
15,830,982
- --------------------------------------------------------------
SHOES & RELATED APPAREL-0.79%
Nike, Inc.-Class B 38,000 2,270,500
- --------------------------------------------------------------
Nine West Group, Inc.(a) 30,800 1,428,350
- --------------------------------------------------------------
Wolverine World Wide, Inc. 11,250 326,250
- --------------------------------------------------------------
4,025,100
- --------------------------------------------------------------
TELECOMMUNICATIONS-4.02%
ACC Corp. 9,000 272,250
- --------------------------------------------------------------
ADC Telecommunications, Inc. 105,600 3,286,800
- --------------------------------------------------------------
Andrew Corp.(a) 49,400 2,621,287
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TELECOMMUNICATIONS-(CONTINUED)
Aspect Telecommunications Corp.(a) 10,000 $ 635,000
- ---------------------------------------------------------------
Billing Information Concepts(a) 12,000 345,000
- ---------------------------------------------------------------
Frontier Corp. 17,900 404,988
- ---------------------------------------------------------------
Lucent Technologies, Inc. 29,300 1,355,125
- ---------------------------------------------------------------
MFS Communications Co., Inc.(a) 33,000 1,798,500
- ---------------------------------------------------------------
PairGain Technologies, Inc.(a) 100,000 3,043,750
- ---------------------------------------------------------------
Premisys Communications, Inc.(a) 21,200 715,500
- ---------------------------------------------------------------
QUALCOMM, Inc.(a) 11,000 438,625
- ---------------------------------------------------------------
Tellabs, Inc.(a) 65,200 2,453,150
- ---------------------------------------------------------------
360 Communications Co.(a) 45,700 1,056,812
- ---------------------------------------------------------------
U.S. Long Distance Corp.(a) 8,400 67,200
- ---------------------------------------------------------------
WorldCom, Inc.(a) 75,800 1,975,538
- ---------------------------------------------------------------
20,469,525
- ---------------------------------------------------------------
TELEPHONE-0.31%
Cincinnati Bell, Inc. 26,000 1,602,250
- ---------------------------------------------------------------
TEXTILES-1.13%
Designer Holdings Ltd.(a) 5,000 80,625
- ---------------------------------------------------------------
Fruit of The Loom, Inc.-Class A(a) 30,000 1,136,250
- ---------------------------------------------------------------
Liz Claiborne, Inc. 45,000 1,738,125
- ---------------------------------------------------------------
Nautica Enterprises, Inc.(a) 20,000 505,000
- ---------------------------------------------------------------
Russell Corp. 19,300 574,175
- ---------------------------------------------------------------
Tommy Hilfiger Corp.(a) 22,800 1,094,400
- ---------------------------------------------------------------
Unifi, Inc. 19,700 632,863
- ---------------------------------------------------------------
5,761,438
- ---------------------------------------------------------------
TOBACCO-1.40%
Philip Morris Companies, Inc. 27,000 3,040,875
- ---------------------------------------------------------------
RJR Nabisco Holdings Corp. 58,000 1,972,000
- ---------------------------------------------------------------
UST, Inc. 65,000 2,104,375
- ---------------------------------------------------------------
7,117,250
- ---------------------------------------------------------------
TRANSPORTATION (MISCELLANEOUS)-0.05%
Rural/Metro Corp.(a) 7,500 270,000
- ---------------------------------------------------------------
TRUCKING-0.06%
US Freightways Corp. 11,100 304,556
- ---------------------------------------------------------------
Total Domestic Common Stocks 391,708,243
- ---------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-4.78%
CANADA-0.67%
Agrium, Inc. (Chemicals) 20,000 275,000
- ---------------------------------------------------------------
Newbridge Networks Corp. (Computer
Networking)(a) 44,200 1,248,650
- ---------------------------------------------------------------
Northern Telecom Ltd.
(Telecommunications) 17,000 1,051,875
- ---------------------------------------------------------------
Potash Corp. of Saskatchewan Inc.
(Chemicals) 10,000 850,000
- ---------------------------------------------------------------
3,425,525
- ---------------------------------------------------------------
FINLAND-0.68%
Nokia Oy A.B.-Class A
(Telecommunications) 3,050 177,033
- ---------------------------------------------------------------
Nokia Oy A.B.-Class A-ADR
(Telecommunications) 56,950 3,281,744
- ---------------------------------------------------------------
3,458,777
- ---------------------------------------------------------------
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FRANCE-0.05%
SGS-Thomson Microelectronics
N.V.-New York Shares
(Semiconductors)(a) 3,400 $ 238,000
- --------------------------------------------------------------
IRELAND-0.40%
CBT Group PLC-ADR (Computer
Software & Services)(a) 1,600 86,800
- --------------------------------------------------------------
Elan Corp. PLC-ADR
(Medical-Drugs)(a) 59,400 1,975,050
- --------------------------------------------------------------
2,061,850
- --------------------------------------------------------------
ISRAEL-0.38%
ECI Telecommunications Ltd. Designs
(Computer Networking) 32,900 699,125
- --------------------------------------------------------------
Teva Pharmaceutical Industries
Ltd.-ADR (Medical-Drugs) 24,500 1,231,125
- --------------------------------------------------------------
1,930,250
- --------------------------------------------------------------
JAPAN-0.25%
Honda Motor Co., Ltd. (Automobile-
Manufacturers) 45,000 1,286,158
- --------------------------------------------------------------
NETHERLANDS-0.61%
Baan Co., N.V.(Computer Software &
Services)(a) 16,400 569,900
- --------------------------------------------------------------
Gucci Group N.V.-ADR (Textiles) 22,000 1,405,250
- --------------------------------------------------------------
Royal Dutch Petroleum Co. (Oil &
Gas-Services) 6,500 1,109,875
- --------------------------------------------------------------
3,085,025
- --------------------------------------------------------------
SWEDEN-0.94%
Astra A.B.-Class A Shares
(Medical-Drugs) 12,000 592,971
- --------------------------------------------------------------
Telefonaktiebolaget LM Ericsson-ADR
(Telecommunications) 139,040 4,197,270
- --------------------------------------------------------------
4,790,241
- --------------------------------------------------------------
UNITED KINGDOM-0.80%
Danka Business Systems PLC-ADR
(Office Automation) 60,800 2,150,800
- --------------------------------------------------------------
SmithKline Beecham PLC-ADR
(Medical-Drugs) 28,000 1,904,000
- --------------------------------------------------------------
4,054,800
- --------------------------------------------------------------
Total Foreign Stocks & Other
Equity Interests 24,330,626
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
DOMESTIC CONVERTIBLE CORPORATE
BONDS-0.40%
FINANCE (CONSUMER CREDIT)-0.04%
Cityscape Financial Corp.,
Conv. Sub. Deb., 6.00%, 05/01/06
(Acquired 08/06/96-08/29/96; Cost
$273,697)(b) $ 205,000 $ 208,587
- --------------------------------------------------------------
RESTAURANTS-0.36%
Boston Chicken, Inc.,
Conv. Liquid Yield Option
Notes, 8.00%, 06/01/15(c) 5,690,000 1,809,648
- --------------------------------------------------------------
Total Domestic Convertible
Corporate Bonds 2,018,235
- --------------------------------------------------------------
U.S. TREASURY SECURITIES-14.98%
U.S. TREASURY BILLS(d)-14.98%
5.57%, 01/02/97(e) 29,515,000 29,510,942
- --------------------------------------------------------------
5.58%, 01/02/97(e) 33,000,000 32,995,490
- --------------------------------------------------------------
4.72%, 02/06/97 3,100,000 3,085,926
- --------------------------------------------------------------
4.84%, 02/06/97 1,765,000 1,756,987
- --------------------------------------------------------------
4.98%, 03/27/97(e) 8,820,000 8,719,981
- --------------------------------------------------------------
4.96%, 03/27/97(e) 110,000 108,753
- --------------------------------------------------------------
Total U.S. Treasury Securities 76,178,079
- --------------------------------------------------------------
REPURCHASE AGREEMENT(f)-2.97%
SBC Capital Markets, Inc.,
6.25%, 01/02/97(g) 15,114,433 15,114,433
- --------------------------------------------------------------
TOTAL INVESTMENTS-100.13% 509,349,616
- --------------------------------------------------------------
LIABILITIES LESS OTHER ASSETS-(0.13%) (660,077)
- --------------------------------------------------------------
NET ASSETS-100.00% $508,689,539
==============================================================
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Trustees. The market
value of this security at December 31, 1996 was $208,587 which represented
0.04% of the Fund's net assets.
(c) Zero coupon bond. The interest rate represents the rate of original issue
discount.
(d) 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.
(e) A portion of the principal balance was pledged as collateral to cover margin
requirements for open futures contracts. See Note 7.
(f) 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.
(g) Joint repurchase agreement entered into 12/31/96 with a maturing value of
$400,138,889. Collateralized by $44,915,000 U.S. Treasury obligations, 0%
due 02/15/09 to 11/15/13 and $473,268,844 U.S. Government obligations, 5.035
to 7.679% due 03/03/97 to 03/01/33.
Investment Abbreviations:
ADR - American Depository Receipt
Conv. - Convertible
Deb. - Debentures
Sub. - Subordinated
See Notes to Financial Statements.
9
<PAGE> 12
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$421,625,299) $509,349,616
- ---------------------------------------------------------
Foreign currencies, at market value (cost $46) 48
- ---------------------------------------------------------
Receivables for:
Investments sold 1,062,946
- ---------------------------------------------------------
Fund shares sold 2,589,385
- ---------------------------------------------------------
Dividends and interest 242,279
- ---------------------------------------------------------
Investment for deferred compensation plan 59,847
- ---------------------------------------------------------
Other assets 19,160
- ---------------------------------------------------------
Total assets 513,323,281
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 1,294,708
- ---------------------------------------------------------
Fund shares reacquired 852,765
- ---------------------------------------------------------
Variation margin 1,511,100
- ---------------------------------------------------------
Deferred compensation plan 59,847
- ---------------------------------------------------------
Accrued advisory fees 292,551
- ---------------------------------------------------------
Accrued administrative service fees 6,524
- ---------------------------------------------------------
Accrued distribution fees 438,846
- ---------------------------------------------------------
Accrued trustees' fees 2,000
- ---------------------------------------------------------
Accrued transfer agent fees 85,083
- ---------------------------------------------------------
Accrued operating expenses 90,318
- ---------------------------------------------------------
Total liabilities 4,633,742
- ---------------------------------------------------------
Net assets applicable to shares outstanding $508,689,539
=========================================================
NET ASSETS:
Class A $227,882,039
=========================================================
Class B $280,807,500
=========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 15,416,223
=========================================================
Class B 19,603,569
=========================================================
Class A:
Net asset value and redemption price per
share $ 14.78
=========================================================
Offering price per share:
(Net asset value of $14.78 divided
by 94.50%) $ 15.64
=========================================================
Class B:
Net asset value and offering price per
share $ 14.32
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended December 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $22,195 foreign
withholding tax) $ 2,226,881
- ---------------------------------------------------------
Interest 4,640,218
- ---------------------------------------------------------
Total investment income 6,867,099
- ---------------------------------------------------------
EXPENSES:
Advisory fees 2,874,943
- ---------------------------------------------------------
Custodian fees 106,199
- ---------------------------------------------------------
Transfer agent fees-Class A 286,486
- ---------------------------------------------------------
Transfer agent fees-Class B 538,049
- ---------------------------------------------------------
Administrative service fees 72,903
- ---------------------------------------------------------
Trustees' fees 7,946
- ---------------------------------------------------------
Distribution fees-Class A 511,145
- ---------------------------------------------------------
Distribution fees-Class B 2,133,271
- ---------------------------------------------------------
Other 218,314
- ---------------------------------------------------------
Total expenses 6,749,256
- ---------------------------------------------------------
Less: Expenses paid indirectly (6,910)
- ---------------------------------------------------------
Net expenses 6,742,346
- ---------------------------------------------------------
Net investment income 124,753
- ---------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES
AND FUTURES CONTRACTS:
Net realized gain (loss) from:
Investment securities 16,117,722
- ---------------------------------------------------------
Foreign currency transactions (6,446)
- ---------------------------------------------------------
Futures contracts 9,704,155
- ---------------------------------------------------------
25,815,431
- ---------------------------------------------------------
Unrealized appreciation of:
Investment securities 40,419,895
- ---------------------------------------------------------
Futures contracts 585,412
- ---------------------------------------------------------
Foreign currencies 56
- ---------------------------------------------------------
41,005,363
- ---------------------------------------------------------
Net gain from investment securities,
foreign currencies and futures
contracts 66,820,794
- ---------------------------------------------------------
Net increase in net assets resulting from
operations $66,945,547
=========================================================
</TABLE>
See Notes to Financial Statements.
10
<PAGE> 13
STATEMENT OF CHANGES IN NET ASSETS
For the years ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ 124,753 $ (245,146)
- --------------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies and futures contracts 25,815,431 23,173,371
- --------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities,
foreign currencies and futures contracts 41,005,363 36,741,565
- --------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 66,945,547 59,669,790
- --------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A (9,939,277) (9,550,061)
- --------------------------------------------------------------------------------------------
Class B (12,535,665) (7,736,264)
- --------------------------------------------------------------------------------------------
Share transactions-net:
Class A 35,293,722 13,074,357
- --------------------------------------------------------------------------------------------
Class B 122,675,148 89,072,917
- --------------------------------------------------------------------------------------------
Net increase in net assets 202,439,475 144,530,739
- --------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 306,250,064 161,719,325
- --------------------------------------------------------------------------------------------
End of period $508,689,539 $306,250,064
============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $412,932,159 $254,963,289
- --------------------------------------------------------------------------------------------
Undistributed net investment income (loss) 66,315 (58,438)
- --------------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies and futures contracts 6,948,040 3,607,551
- --------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies and futures contracts 88,743,025 47,737,662
- --------------------------------------------------------------------------------------------
$508,689,539 $306,250,064
============================================================================================
</TABLE>
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
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 (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular day,
the security is valued at the mean between the closing bid and asked prices
on that day. Each security traded in the over-the-counter market (but not
including securities reported on the NASDAQ National Market System) is valued
at the mean between the last bid and asked prices based upon quotes furnished
by market makers for such securities. If a mean is not available, as is the
case in some foreign markets, the closing bid will be used absent a last
sales price. Each security reported on the NASDAQ National Market System is
valued at the last sales price on the valuation date or absent a last sales
price, at the mean of the closing bid and asked prices. Debt obligations
(including convertible bonds)
11
<PAGE> 14
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 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 Fund's portfolio being hedged.
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.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the year ended December 31, 1996, AIM
was reimbursed $72,903 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 year ended December 31,
1996, AFS was paid $502,473 for such services.
The Fund received reductions in transfer agency fees payable to AFS of $6,391
from dividends received on balances in cash management bank accounts. In
addition, pricing service expenses in the amount of $519 were paid through
directed brokerage commissions paid by the Fund. The above arrangements resulted
in a reduction in the Fund's total expenses of $6,910 during the year ended
December 31, 1996.
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
12
<PAGE> 15
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 year ended December 31, 1996, the Class A shares and the
Class B shares paid AIM Distributors $511,145 and $2,133,271, respectively, as
compensation under the Plans.
AIM Distributors received commissions of $219,373 from sales of the Class A
shares of the Fund during the year ended December 31, 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 year ended December 31, 1996,
AIM Distributors received $105,215 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 year ended December 31, 1996, the Fund paid legal fees of $3,719
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.
NOTE 4-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $325,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. Interest on
borrowings under the line of credit is payable on maturity or prepayment date.
Prior to an amendment of the line of credit on July 19, 1996, the Fund was
limited to borrowing $3,400,000. During the year ended December 31, 1996, the
Fund did not borrow under the line of credit agreement. The funds which are
parties to the line of credit are charged a commitment fee of 0.08% on the
unused balance of the committed line. The commitment fee is allocated among such
funds based on their respective average net assets for the period.
NOTE 5-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended December 31, 1996 was
$433,485,417 and $319,852,010, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of December 31, 1996 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $95,659,038
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (8,547,044)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $87,111,994
=========================================================
Cost of investments for tax purposes is
$422,245,355.
</TABLE>
NOTE 6-SHARE INFORMATION
Changes in shares outstanding during years ended December 31, 1996 and 1995 were
as follows:
<TABLE>
<CAPTION>
1996 1995
--------------------------- ---------------------------
SHARES VALUE SHARES VALUE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold:
Class A 10,862,824 $ 152,766,558 11,797,896 $ 152,090,445
- --------------------------------------------------------------------------------
Class B 12,013,218 167,088,540 7,675,619 97,224,008
- --------------------------------------------------------------------------------
Issued as
reinvestment of
dividends:
Class A 657,046 9,474,936 714,727 9,127,169
- --------------------------------------------------------------------------------
Class B 845,350 11,809,495 577,277 7,221,770
- --------------------------------------------------------------------------------
Reacquired:
Class A (8,993,672) (126,947,772) (11,562,734) (148,143,257)
- --------------------------------------------------------------------------------
Class B (4,060,745) (56,222,887) (1,213,971) (15,372,861)
- --------------------------------------------------------------------------------
11,324,021 $ 157,968,870 7,988,814 $ 102,147,274
================================================================================
</TABLE>
NOTE 7-OPEN FUTURES CONTRACTS
On December 31, 1996, $3,105,000 principal amount of U.S. Treasury bills were
pledged as collateral to cover margin requirements for open futures contracts.
Open futures contracts at December 31, 1996 were as follows:
<TABLE>
<CAPTION>
NO. OF UNREALIZED
CONTRACT CONTRACTS MONTH COMMITMENT APPRECIATION
<S> <C> <C> <C> <C>
207
S&P 500 Index contracts Mar 97 Buy $1,018,602
==================================================================
</TABLE>
13
<PAGE> 16
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a Class A share outstanding during
each of the years in the ten-year period ended December 31, 1996 and for a Class
B share outstanding during each of the years in the three-year period ended
December 31, 1996 and the period September 1, 1993 (date sales commenced)
through December 31, 1993.
<TABLE>
<CAPTION>
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 0.07 0.02 -- -- 0.06 0.11 0.21
- --------------------------------------------- -------- -------- -------- -------- -------- -------- --------
Net gains (losses) on securities (both
realized and unrealized) 2.34 3.50 (0.57) 0.41 (0.04) 4.33 (0.91)
- --------------------------------------------- -------- -------- -------- -------- -------- -------- --------
Total from investment operations 2.41 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 (0.68) (0.79) (0.43) (1.37) (2.41) (1.93) (0.67)
- --------------------------------------------- -------- -------- -------- -------- -------- -------- --------
Total distributions (0.68) (0.79) (0.43) (1.37) (2.47) (2.06) (0.87)
- --------------------------------------------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 14.78 $ 13.05 $ 10.32 $ 11.32 $ 12.28 $ 14.73 $ 12.35
============================================= ======== ======== ======== ======== ======== ======== ========
Total return(b) 18.61% 34.31% (4.99)% 3.64% 0.19% 37.05% (5.04)%
============================================= ======== ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $227,882 $168,217 $123,271 $146,723 $168,395 $185,461 $153,245
============================================= ======== ======== ======== ======== ======== ======== ========
Ratio of expenses to average net assets 1.18%(c)(d) 1.28% 1.22% 1.17% 1.17% 1.21% 1.16%
============================================= ======== ======== ======== ======== ======== ======== ========
Ratio of net investment income to average net
assets 0.46%(c) 0.20% 0.02% 0.02% 0.42% 0.73% 1.41%
============================================= ======== ======== ======== ======== ======== ======== ========
Portfolio turnover rate 97% 87% 201% 192% 133% 73% 61%
============================================= ======== ======== ======== ======== ======== ======== ========
Average broker commission rate(e) $ 0.0621 N/A N/A N/A N/A N/A N/A
============================================= ======== ======== ======== ======== ======== ======== ========
<CAPTION>
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%
============================================= ======== ======== ========
Average broker commission rate(e) N/A N/A N/A
============================================= ======== ======== ========
</TABLE>
(a) The Fund changed investment advisors on June 30, 1992.
(b) Total returns do not deduct sales charges.
(c) Ratios are based on average net assets of $204,456,793.
(d) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly,
the ratio of expenses to average net assets would have been the same.
(e) Disclosure requirement beginning with the Fund's fiscal year ended December
31, 1996.
<TABLE>
<CAPTION>
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) (0.05) (0.08)(a) (0.06) (0.01)
- ------------------------------------------------------------ -------- -------- ------- -------
Net gains (losses) on securities (both realized and
unrealized) 2.28 3.43(a) (0.61) (0.14)
- ------------------------------------------------------------ -------- -------- ------- -------
Total from investment operations 2.23 3.35 (0.67) (0.15)
- ------------------------------------------------------------ -------- -------- ------- -------
Less distributions:
Distributions from capital gains (0.68) (0.79) (0.43) (1.37)
- ------------------------------------------------------------ -------- -------- ------- -------
Total distributions (0.68) (0.79) (0.43) (1.37)
- ------------------------------------------------------------ -------- -------- ------- -------
Net asset value, end of period $ 14.32 $ 12.77 $ 10.21 $ 11.31
============================================================ ======== ======== ======= =======
Total return(b) 17.60% 33.00% (5.88)% (0.92)%
============================================================ ======== ======== ======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $280,807 $138,034 $38,448 $11,053
============================================================ ======== ======== ======= =======
Ratio of expenses to average net assets 2.03%(c)(d) 2.13% 2.18% 1.91%(e)
============================================================ ======== ======== ======= =======
Ratio of net investment income (loss) to average net assets (0.39)%(c) (0.65)% (0.94)% (0.72)%(e)
============================================================ ======== ======== ======= =======
Portfolio turnover rate 97% 87% 201% 192%
============================================================ ======== ======== ======= =======
Average broker commission rate(f) $ 0.0621 N/A N/A N/A
============================================================ ======== ======== ======= =======
</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 based on average net assets of $213,327,146.
(d) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly,
the ratio of expenses to average net assets would have been the same.
(e) Annualized.
(f) Disclosure requirement beginning with the Fund's fiscal year ended December
31, 1996.
NOTE 9-SUBSEQUENT EVENT
On November 4, 1996, A I M Management Group Inc. ("AIM Management") and INVESCO
plc announced the execution of an agreement and plan of merger pursuant to which
AIM Management will be merged with and into a direct wholly-owned subsidiary of
INVESCO plc. AIM Management is the parent company of the Fund's advisor. The
merger is expected to take place during the first quarter of 1997.
14
<PAGE> 17
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders of
AIM Growth Fund:
We have audited the accompanying statement of assets and
liabilities of AIM Growth Fund (a portfolio of AIM Funds
Group), including the schedule of investments, as of
December 31, 1996, and the related statement of operations
for the year then ended, the statement of changes in net
assets for each of the years in the two-year period then
ended and the financial highlights for each of the years in
the four-year period then ended. These financial statements
and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an
opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of December 31, 1996, by correspondence
with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM Growth
Fund as of December 31, 1996, the results of its operations
for the year then ended, the changes in its net assets for
each of the years in the two-year period then ended and the
financial highlights for each of the years in the four-year
period then ended, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
February 7, 1997
15
<PAGE> 18
[This page intentionally left blank.]
16
<PAGE> 19
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 Carol F. Relihan Houston, TX 77046
Director Senior Vice President and Secretary
Cortland Trust Inc. TRANSFER AGENT
Gary T. Crum
Carl Frischling Senior Vice President A I M Fund Services, Inc.
Partner P.O. Box 4739
Kramer, Levin, Naftalis & Frankel Scott G. Lucas Houston, TX 77210-4739
Senior Vice President
Robert H. Graham CUSTODIAN
President and Chief Operating Officer Dana R. Sutton
A I M Management Group Inc. Vice President and Assistant Treasurer State Street Bank & Trust Company
225 Franklin Street
John F. Kroeger Robert G. Alley Boston, MA 02110
Formerly Consultant Vice President
Wendell & Stockel Associates, Inc. COUNSEL TO THE FUND
Stuart W. Coco
Lewis F. Pennock Vice President Ballard Spahr
Attorney Andrews & Ingersoll
Melville B. Cox 1735 Market Street
Ian W. Robinson Vice President Philadelphia, PA 19103
Consultant; Formerly Executive
Vice President and Karen Dunn Kelley COUNSEL TO THE TRUSTEES
Chief Financial Officer Vice President
Bell Atlantic Management Kramer, Levin, Naftalis & Frankel
Services, Inc. Jonathan C. Schoolar 919 Third Avenue
Vice President 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 AUDITORS
Ofelia M. Mayo KPMG Peat Marwick LLP
Assistant Secretary 700 Louisiana
NationsBank Bldg.
Kathleen J. Pflueger Houston, TX 77002
Assistant Secretary
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
Mary J. Benson
Assistant Treasurer
</TABLE>
REQUIRED FEDERAL INCOME TAX INFORMATION
AIM Growth Fund paid ordinary dividends in the amount of $0.041 per share,
respectively, to shareholders of both Class A and Class B shares during its
tax year ended December 31, 1996. Of this amount 13.34% is eligible for the
dividends received deduction for corporations. The Fund also distributed
long-term capital gains of $0.64 per share for Class A and Class B shares during
its tax year ended December 31, 1996.
<PAGE> 20
<TABLE>
<S> <C>
THE AIM FAMILY OF FUNDS--Registered Trademark--
AGGRESSIVE GROWTH
AIM Aggressive Growth Fund*
AIM Capital Development Fund
AIM Constellation Fund
AIM Global Aggressive Growth Fund
[PHOTO OF GROWTH
11 Greenway Plaza AIM Blue Chip Fund
APPEARS HERE] AIM Global Growth Fund
AIM Growth Fund
AIM International Equity Fund
AIM Value Fund
AIM Weingarten Fund
GROWTH AND INCOME
AIM Balanced Fund
AIM Charter Fund
INCOME AND GROWTH
AIM Global Utilities Fund
HIGH CURRENT INCOME
AIM High Yield Fund
CURRENT INCOME
AIM Global Income Fund
AIM Income Fund
CURRENT TAX-FREE INCOME
AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of CT
AIM Tax-Free Intermediate Shares
CURRENT INCOME AND HIGH DEGREE OF SAFETY
AIM Intermediate Government Fund
HIGH DEGREE OF SAFETY AND CURRENT INCOME
AIM Limited Maturity Treasury Shares
STABILITY, LIQUIDITY, AND CURRENT INCOME
AIM Money Market Fund
STABILITY, LIQUIDITY, AND CURRENT TAX-FREE INCOME
AIM Tax-Exempt Cash Fund
A I M Management Group Inc. has provided leadership in the
mutual fund industry since 1976 and manages approximately
$70 billion in assets for more than 3.5 million shareholders,
including individual investors, corporate clients, and *AIM Aggressive Growth Fund was closed to new investors
financial institutions as of February 11, 1997. The AIM on July 18, 1995. For more complete information about
Family of Funds--Registered Trademark-- is distributed any AIM Fund(s), including sales charges and expenses,
nationwide, and AIM today ranks among the nation's top 15 ask your financial consultant or securities dealer for
mutual fund companies in assets under management, according a free prospectus(es). Please read the prospectus(es)
to Lipper Analytical Services, Inc. carefully before you invest or send money.
</TABLE>
---------------
BULK RATE
U.S. POSTAGE
PAID
HOUSTON, TX
[AIM Logo appears here] Permit No. 1919
A I M Distributors, Inc. ---------------
11 Greenway Plaza, Suite 1919
Houston, TX 77046
