<PAGE> 1
(cover photo)
AIM GROWTH FUND
[AIM LOGO APPEARS HERE] ANNUAL REPORT DECEMBER 31, 1997
<PAGE> 2
(cover photo)
---------------------------------------
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 and Class C
share performance reflect the applicable contingent deferred sales charge
(CDSC) for the period involved. The CDSC on Class B shares declines from 5%
beginning at the time of purchase to 0% at the beginning of the seventh
year. The CDSC on Class C shares is 1% for the first year after purchase.
The performance of the Fund's Class B and Class C shares will differ from
that of Class A shares due to differing fees and expenses.
o Because Class C shares have been offered for less than one year (since
8/4/97), all total return figures for Class C shares reflect cumulative
total return that has not been annualized.
o The Fund's investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
o The Fund's portfolio composition is subject to change and there is no
assurance the Fund will continue to hold any particular security.
o Past performance cannot guarantee comparable future results.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The 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.
o The Dow Jones Industrial Average (DJIA) is a price-weighted average of 30
actively traded primarily industrial stocks.
o An investment cannot be made in any index listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect
sales charges.
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:
1997 proved an eventful year in securities markets. The Dow
[PHOTO OF Jones Industrial Average reached its all-time high--and also
Charles T. had its largest one-day point drop ever, though not its
Bauer, largest percentage drop. Volatility was unabated, and we
Chairman of experienced the first 10% stock market correction in the
the Board of U.S. since 1991.
THE FUND Never dull and occasionally unsettling, 1997 was also a
APPEARS HERE] very good year for many investments. For an unprecedented
third year in a row, domestic equities rose more than 20%.
Late in the year, in the uncertainty brought on by events in
Asia, bond markets, especially the U.S. Treasury market,
fulfilled their usual role as relative safe havens, and a
bull market in bonds took hold. Overseas, though Asian
markets plummeted, Europe thrived.
Market expectations performed an about-face during the
year. Worry about the inflationary potential of vigorous
economic growth became concern about the potential negative impact of Asia's
financial crisis. At fiscal year end, there was no consensus about how serious
or widespread this impact would be.
An interview with your Fund's managers appears on the following pages. They
discuss their investment strategies, how your Fund performed in this context,
and their outlook for the future.
In uncertain times like these, your financial consultant remains your best
source for information on market trends and for advice on how to invest
strategically rather than emotionally. We encourage you to visit your financial
consultant regularly to make sure your chosen investments still suit your goals,
risk tolerance, and time horizon.
INVESTOR EDUCATION EVENTS
In addition to professional guidance, every investor needs fundamental
information about the saving and investing choices offered by the marketplace.
AIM has always championed investor education, convinced a more knowledgeable
shareholder is a better customer. A great deal of investment information will be
available during two upcoming events, and we hope our shareholders will
participate in and learn from them to the greatest extent possible.
First, from March 29 through April 4, the Securities and Exchange
Commission (SEC) will sponsor Saving and Investing Education Week. As the SEC
points out, financial markets are more stable when investors are confident in
them, and knowledge is a major confidence builder. The week's theme is "Get the
facts. It's your money. It's your future." The aim is to inform citizens about
the saving and investment possibilities available and to build understanding
about how one's financial needs and goals change throughout one's life. The
week's awareness and education events will culminate with a national investors
town meeting at satellite-linked locations across the nation. You can find out
more from the SEC's Web site at www.sec.gov.
The second event concerns citizens' financial planning for retirement, a
subject of growing urgency as the population ages and the solvency of the Social
Security system is increasingly debatable. In July, the first National Summit on
Retirement Savings will be held at the White House. Under the auspices of the
Department of Labor, working through public-private partnership, the summit's
goal is to advance the public's knowledge of retirement savings through
development of a broad-based education program and to develop recommendations
for public/private action to promote private retirement savings among American
workers.
Look for further information on both of these investor education events in
the national and local press.
We are pleased to send you this report on your Fund. Please contact our
Client Services department at 800-959-4246 if you have questions or comments.
Automated information about your account is available 24 hours a day on the AIM
Investor Line, 800-246-5463. Account information and much more can be found on
our Web site, www.aimfunds.com.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
--------------------------------
In uncertain times like these,
your financial consultant
remains your best source
for information on market trends
and for advice on
how to invest strategically
rather than emotionally.
--------------------------------
<PAGE> 4
The Managers' Overview
DESPITE VOLATILITY, FUND LOGS
RESPECTABLE RETURNS
A roundtable discussion with the Fund management team for AIM Growth Fund for
the fiscal year ended December 31, 1997.
- --------------------------------------------------------------------------------
Q. 1997 WAS A TURBULENT YEAR IN THE STOCK MARKET. HOW DID AIM GROWTH FUND
PERFORM?
A. Despite dramatic fluctuations in the stock market and a narrow market
environment favoring large-company stocks, your Fund posted respectable
returns for the year ended December 31, 1997. Average annual total return
was 19.54% and 18.50% for Class A and Class B shares, respectively. Class C
shares produced a cumulative total return of -3.86% from their inception on
August 4, 1997, through December 31, 1997.
During the year, the Fund's net assets grew from $508.7 million to
$623.5 million.
Q. WHAT WERE THE MAJOR TRENDS IN THE STOCK MARKET DURING THE FISCAL YEAR?
A. Although the Dow Jones Industrial Average (DJIA) soared to record heights in
1997, the market experienced two major declines, the first from mid-March to
mid-April when the industrial average lost nearly 10% of its value. The
initial selloff stemmed from concerns that inflation, the product of rapid
economic growth, might accelerate and erode corporate profits. However,
inflation remained subdued and the market resumed its upward climb at the
end of April.
The second and more dramatic of the two selloffs occurred from early
August to late October and saw the DJIA lose 13.2% of its value, marking the
first correction of the seven-year bull market. A correction is generally
defined as a drop of 10% or more in the stock market. This particular
correction was precipitated by the currency devaluations in Southeast Asia
and culminated on October 27, when the DJIA plunged 554 points or 7.2% in a
single day.
Q. HOW DID INVESTORS REACT TO THE UNSTABLE MARKET CONDITIONS?
A. For most of the year, investors tended to favor the more liquid stocks of
larger companies with more predictable earnings. This trend was interrupted
in the third quarter of 1997 when the more reasonably priced stocks of
smaller companies with greater earnings potential emerged as the market
leaders. However, when the problems in Asia jolted markets worldwide,
investors again shifted their focus to large-company stocks.
Q. HOW DID MARKET TRENDS AFFECT FUND PERFORMANCE?
A. The Fund's diversification tended to put it at a disadvantage in the narrow
market environment. At the end of the year, large-company stocks formed 54%
of the portfolio while mid- and small-sized company stocks composed about
40% and 6%, respectively. While large-, mid-, and small-cap stocks all
posted solid gains for the year, large-cap stocks were by far the strongest
performers.
The Fund's top sector holdings as of December 31, 1997, included:
technology, 27%; financial, 13%; and health care, 10%. During the six months
since our last report, we reduced our health-care holdings while increasing
our holdings in financial stocks. The Fund's technology exposure remained
about the same.
Q. IT WAS A DIFFICULT YEAR FOR TECHNOLOGY STOCKS. ARE YOU STILL OPTIMISTIC
ABOUT THIS SECTOR?
A. The relative weakness of the technology sector affected the Fund's total
return. Nevertheless, technology continues to be the fastest-growing segment
of the economy. The largest portion of corporate and global capital
expenditures is being channeled into technology. The technology sector also
stands to benefit from the reprogramming of older computers to recognize the
year 2000 and the conversion of Europe to a single currency.
The technology sector took a beating in 1997 because of the Asian
financial crisis. However, the currency devaluations in Southeast Asia may
ultimately work in favor of some technology companies as it could reduce the
cost of components.
<TABLE>
<CAPTION>
PORTFOLIO COMPOSITION
As of December 31, 1997 based on total net assets
=============================================================================================
TOP 10 EQUITY HOLDINGS % TOP 10 INDUSTRIES %
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Conseco, Inc. 1.49% 1. Oil & Gas (Drilling & Equipment) 7.83%
2. Travelers Group, Inc. 1.48 2. Computers (Software & Services) 7.51
3. Microsoft Corp. 1.45 3. Electronics (Semiconductors) 3.84
4. Tyco International Ltd. 1.21 4. Communications Equipment 3.67
5. AES Corp. 1.16 5. Computers (Hardware) 2.85
6. CVS Corp. 0.99 6. Financial (Diversified) 2.78
7. Worldcom, Inc. 0.99 7. Health Care
(Drugs-Major Pharmaceuticals) 2.65
8. Clear Channel Communications, Inc. 0.98
8. Telecommunications (Long Distance) 2.45
9. Service Corp. International 0.97
9. Electrical Equipment 2.38
10. Chase Manhattan Corp. 0.97
10. Consumer Finance 2.33
=============================================================================================
</TABLE>
See important fund and index disclosures inside front cover.
2
<PAGE> 5
Moreover, we only invest in the stocks of technology companies that
show earnings growth potential. Since our last report, we reduced our
holdings in the stocks of semiconductor companies when their earnings fell
short of expectations.
Technology stocks we found attractive included Microsoft Corp., Dell
Computer Corp., and BMC Software, Inc. The last company is a leading
provider of systems management software products for mainframe and
client/server-based information systems.
Q. WHAT WAS BEHIND THE STRONG PERFORMANCE OF FINANCIAL-COMPANY STOCKS?
A. The financial sector was the top-performing Dow Jones U.S. industry group in
1997. The sector benefited from declining interest rates, low inflation, and
a continuing wave of mergers and acquisitions. For example, Travelers Group,
Inc., one of the top holdings in the portfolio, acquired Salomon Brothers, a
leading investment banking firm, in September. Travelers reported
significant earnings growth in 1997.
The Fund also benefited from owning the stocks of Allstate Corp.,
Franklin Resources, Inc., and Household International Inc.
If the low-interest-rate, low-inflation environment persists, it should
be a boon to financial companies. However, firms that were heavily involved
in making loans in Southeast Asia could be adversely affected by the
currency devaluations in that region.
Q. WHERE WAS YOUR EMPHASIS IN THE HEALTH-CARE SECTOR?
A. Our main focus was on the stocks of pharmaceutical companies and
medical-product suppliers. These companies have been bringing a steady
stream of new products to the market to meet the needs of a health-conscious
population. In 1997, SmithKline Beecham PLC, one of the stocks in the
portfolio, reported strong sales of new pharmaceutical products, including
an antidepressant and new vaccines.
Other health-care stocks in the portfolio included pharmaceutical
makers Bristol-Myers Squibb Co. and Merck & Co., Inc., and HEALTHSOUTH
Corp., a leading provider of rehabilitative health-care services.
Q. WHAT IS YOUR OUTLOOK FOR THE FUTURE?
A. We continue to be optimistic about the stock market. In the U.S., the
economic fundamentals are sound: inflation is low, corporate profits are
strong, and the economy is growing at a healthy pace. However, after a
record three straight years of 20% or more returns, we believe that it is
unlikely that stocks will post similar gains in 1998. Moreover, the problems
in Asia could slow economic growth, reducing corporate profits and stock
returns.
While large-cap stocks continue to be the market leaders, we remain
optimistic about the more reasonably priced stocks of mid- and small-sized
companies because of their greater earnings potential.
1997 was one of the more volatile years in recent decades in the
financial markets, and that trend could persist over the coming months. In
such an environment, investors would be well advised to focus on their
long-term financial goals rather than on transitory fluctuations in the
markets.
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 12/31/97, including sales charges
CLASS A SHARES
1 Year 12.97%*
5 Years 12.13
10 Years 12.61
*19.54% excluding sales charge
CLASS B SHARES
1 Year 13.50**
Inception (9/1/93) 13.16
**18.50% excluding CDSC
CLASS C SHARES
Inception (8/4/97)-4.71***
***Total return provided is cumulative total return that has not been
annualized.
================================================================================
GROWTH OF A $10,000 INVESTMENT
12/31/87-12/31/97
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AIM Growth Fund, S&P 500
Class A Shares Stock Index
- --------------------------------------------------------------------------------
<S> <C> <C>
12/87 $9,451 $10,000
12/88 10,410 11,650
12/89 13,416 15,330
12/90 12,740 14,852
12/91 17,460 19,358
12/92 17,492 20,831
12/93 18,128 22,921
12/94 17,223 23,232
12/95 23,131 31,931
12/96 27,435 39,243
12/97 32,683 52,317
================================================================================
</TABLE>
Past performance cannot guarantee comparable future results.
Source: Towers Data Systems HYPO--Registered Trademark--; Lipper Analytical
Services, Inc. Your Fund's total return includes sales charges, expenses, and
management fees. The performance of the Fund's Class B and Class C shares will
differ from that of Class A shares due to differing fees and expenses. For Fund
performance calculations and descriptions of indexes cited on this page, please
refer to the inside front cover.
See important fund and index disclosures inside front cover.
3
<PAGE> 6
SCHEDULE OF INVESTMENTS
December 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-83.14%
AEROSPACE/DEFENSE-0.16%
BE Aerospace, Inc.(a) 15,000 $ 401,250
- --------------------------------------------------------------
Precision Castparts Corp. 10,000 603,125
- --------------------------------------------------------------
1,004,375
- --------------------------------------------------------------
AIR FREIGHT-0.13%
CNF Transportation Inc. 21,800 836,575
- --------------------------------------------------------------
AIRLINES-0.06%
Southwest Airlines Co. 15,450 380,456
- --------------------------------------------------------------
AUTO PARTS & EQUIPMENT-0.13%
Mark IV Industries, Inc. 37,590 822,281
- --------------------------------------------------------------
BANKS (MAJOR REGIONAL)-0.21%
BankBoston Corp. 14,100 1,324,518
- --------------------------------------------------------------
BANKS (MONEY CENTER)-1.56%
BankAmerica Corp. 30,000 2,190,000
- --------------------------------------------------------------
Chase Manhattan Corp. 55,200 6,044,400
- --------------------------------------------------------------
Citicorp 12,000 1,517,250
- --------------------------------------------------------------
9,751,650
- --------------------------------------------------------------
BANKS (REGIONAL)-0.21%
AmSouth Bancorporation 15,000 814,687
- --------------------------------------------------------------
TCF Financial Corp. 14,000 475,125
- --------------------------------------------------------------
1,289,812
- --------------------------------------------------------------
BIOTECHNOLOGY-0.03%
Curative Health Services, Inc.(a) 5,500 167,062
- --------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE)-1.17%
Clear Channel Communications,
Inc.(a) 76,700 6,092,856
- --------------------------------------------------------------
Jacor Communications, Inc.(a) 22,500 1,195,312
- --------------------------------------------------------------
7,288,168
- --------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.09%
Crompton & Knowles Corp. 22,000 583,000
- --------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-2.76%
ADC Telecommunications, Inc.(a) 119,700 4,997,475
- --------------------------------------------------------------
Brightpoint, Inc.(a) 21,600 299,700
- --------------------------------------------------------------
DSC Communications Corp.(a) 55,000 1,320,000
- --------------------------------------------------------------
Lucent Technologies, Inc. 40,200 3,210,975
- --------------------------------------------------------------
PairGain Technologies, Inc.(a) 113,700 2,202,937
- --------------------------------------------------------------
REMEC, Inc.(a) 5,000 112,500
- --------------------------------------------------------------
Scientific-Atlanta, Inc. 36,700 614,725
- --------------------------------------------------------------
Tellabs, Inc.(a) 83,800 4,430,925
- --------------------------------------------------------------
17,189,237
- --------------------------------------------------------------
COMPUTERS (HARDWARE)-2.85%
Citrix Systems, Inc.(a) 41,100 3,123,600
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (HARDWARE)-(CONTINUED)
Comdisco, Inc. 27,600 $ 922,875
- --------------------------------------------------------------
Compaq Computer Corp. 54,050 3,050,446
- --------------------------------------------------------------
Concord EFS, Inc.(a) 47,700 1,186,537
- --------------------------------------------------------------
Dell Computer Corp.(a) 69,000 5,796,000
- --------------------------------------------------------------
IDX Systems Corp.(a) 10,000 370,000
- --------------------------------------------------------------
International Business Machines
Corp. 32,000 3,346,000
- --------------------------------------------------------------
17,795,458
- --------------------------------------------------------------
COMPUTERS (NETWORKING)-0.25%
Bay Networks, Inc.(a) 60,000 1,533,750
- --------------------------------------------------------------
COMPUTERS (PERIPHERALS)-1.02%
Adaptec, Inc.(a) 41,900 1,555,537
- --------------------------------------------------------------
EMC Corp.(a) 100,000 2,743,750
- --------------------------------------------------------------
Iomega Corp.(a) 65,000 808,437
- --------------------------------------------------------------
SMART Modular Technologies, Inc.(a) 20,000 460,000
- --------------------------------------------------------------
Storage Technology Corp.(a) 13,000 805,187
- --------------------------------------------------------------
6,372,911
- --------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-7.43%
America Online, Inc.(a) 34,100 3,041,293
- --------------------------------------------------------------
Applied Voice Technology, Inc.(a) 5,000 141,250
- --------------------------------------------------------------
Autodesk, Inc. 10,500 388,500
- --------------------------------------------------------------
Avant! Corp.(a) 16,000 268,000
- --------------------------------------------------------------
BMC Software, Inc.(a) 54,000 3,543,750
- --------------------------------------------------------------
Broderbund Software, Inc.(a) 95,000 2,434,375
- --------------------------------------------------------------
Cadence Design Systems, Inc.(a) 100,000 2,450,000
- --------------------------------------------------------------
Computer Associates International,
Inc. 69,000 3,648,375
- --------------------------------------------------------------
Compuware Corp.(a) 104,000 3,328,000
- --------------------------------------------------------------
Electronic Arts, Inc.(a) 96,700 3,656,468
- --------------------------------------------------------------
Electronics for Imaging, Inc.(a) 6,400 106,400
- --------------------------------------------------------------
HBO & Co. 113,200 5,433,600
- --------------------------------------------------------------
Microsoft Corp.(a) 69,900 9,034,575
- --------------------------------------------------------------
Network Associates, Inc.(a) 3,800 200,925
- --------------------------------------------------------------
Parametric Technology Co.(a) 36,300 1,719,712
- --------------------------------------------------------------
Security Dynamics Technologies,
Inc.(a) 21,400 765,050
- --------------------------------------------------------------
Sterling Commerce, Inc.(a) 100,000 3,843,750
- --------------------------------------------------------------
Sybase, Inc.(a) 11,300 150,431
- --------------------------------------------------------------
Symantec Corp.(a) 23,000 504,562
- --------------------------------------------------------------
Synopsys, Inc.(a) 33,800 1,208,350
- --------------------------------------------------------------
Wind River Systems(a) 11,900 472,281
- --------------------------------------------------------------
46,339,647
- --------------------------------------------------------------
CONSUMER FINANCE-2.33%
Aames Financial Corp. 18,150 234,816
- --------------------------------------------------------------
Capital One Financial Corp. 18,000 975,375
- --------------------------------------------------------------
FIRSTPLUS Financial Group, Inc.(a) 38,000 1,458,250
- --------------------------------------------------------------
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
CONSUMER FINANCE-(CONTINUED)
Green Tree Financial Corp. 53,000 $ 1,387,938
- --------------------------------------------------------------
Household International, Inc. 26,100 3,329,381
- --------------------------------------------------------------
IMC Mortgage Co.(a) 41,000 486,875
- --------------------------------------------------------------
MBNA Corp. 89,250 2,437,641
- --------------------------------------------------------------
Money Store, Inc. (The) 34,200 718,200
- --------------------------------------------------------------
Providian Financial Corp. 11,400 515,138
- --------------------------------------------------------------
SLM Holding Corp. 21,500 2,991,188
- --------------------------------------------------------------
14,534,802
- --------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-1.01%
AmeriSource Health Corp.-Class A(a) 28,000 1,631,000
- --------------------------------------------------------------
Cardinal Health, Inc. 31,050 2,332,631
- --------------------------------------------------------------
McKesson Corp. 10,000 1,081,875
- --------------------------------------------------------------
Sysco Corp. 28,000 1,275,750
- --------------------------------------------------------------
6,321,256
- --------------------------------------------------------------
ELECTRICAL EQUIPMENT-2.38%
AVX Corp. 21,700 400,093
- --------------------------------------------------------------
American Power Conversion Corp.(a) 50,000 1,181,250
- --------------------------------------------------------------
Avid Technology, Inc.(a) 10,000 267,500
- --------------------------------------------------------------
Berg Electronics Corp.(a) 22,400 509,600
- --------------------------------------------------------------
Black Box Corp.(a) 10,700 378,512
- --------------------------------------------------------------
General Electric Co. 61,200 4,490,550
- --------------------------------------------------------------
SCI Systems, Inc.(a) 55,500 2,417,718
- --------------------------------------------------------------
Sanmina Corp.(a) 43,600 2,953,900
- --------------------------------------------------------------
Sawtek Inc.(a) 8,000 211,000
- --------------------------------------------------------------
Solectron Corp.(a) 49,000 2,036,562
- --------------------------------------------------------------
14,846,685
- --------------------------------------------------------------
ELECTRONICS (COMPONENT DISTRIBUTORS)-0.35%
Arrow Electronics, Inc.(a) 26,600 862,837
- --------------------------------------------------------------
Avnet, Inc. 15,700 1,036,200
- --------------------------------------------------------------
Kent Electronics(a) 10,400 261,300
- --------------------------------------------------------------
2,160,337
- --------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION)-0.61%
Methode Electronics, Inc.-Class A 22,400 364,000
- --------------------------------------------------------------
Perkin-Elmer Corp. 18,800 1,335,975
- --------------------------------------------------------------
Tektronix, Inc. 14,250 565,546
- --------------------------------------------------------------
Waters Corp.(a) 41,000 1,542,625
- --------------------------------------------------------------
3,808,146
- --------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-3.81%
Altera Corp.(a) 140,400 4,650,750
- --------------------------------------------------------------
ANADIGICS, Inc.(a) 15,000 451,875
- --------------------------------------------------------------
Analog Devices, Inc.(a) 40,000 1,107,500
- --------------------------------------------------------------
Atmel Corp.(a) 46,800 868,725
- --------------------------------------------------------------
Burr-Brown Corp.(a) 15,300 491,512
- --------------------------------------------------------------
Dallas Semiconductor Corp. 16,200 660,150
- --------------------------------------------------------------
Intel Corp. 36,000 2,529,000
- --------------------------------------------------------------
Linear Technology Corp. 44,400 2,558,550
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRONICS (SEMICONDUCTORS)-(CONTINUED)
Maxim Integrated Products, Inc.(a) 70,000 $ 2,415,000
- --------------------------------------------------------------
Microchip Technology, Inc.(a) 52,000 1,560,000
- --------------------------------------------------------------
National Semiconductor Corp.(a) 60,000 1,556,250
- --------------------------------------------------------------
PMC-Sierra, Inc.(a) 105,800 3,279,800
- --------------------------------------------------------------
Unitrode Corp.(a) 8,000 172,000
- --------------------------------------------------------------
Vitesse Semiconductor Corp.(a) 8,400 317,100
- --------------------------------------------------------------
Xilinx, Inc.(a) 32,200 1,129,013
- --------------------------------------------------------------
23,747,225
- --------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR)-1.18%
Applied Materials, Inc.(a) 90,000 2,711,250
- --------------------------------------------------------------
BMC Industries, Inc. 5,300 85,463
- --------------------------------------------------------------
KLA-Tencor Corp.(a) 42,000 1,622,250
- --------------------------------------------------------------
Lam Research Corp.(a) 30,000 877,500
- --------------------------------------------------------------
Novellus Systems, Inc.(a) 25,200 814,275
- --------------------------------------------------------------
Teradyne, Inc.(a) 38,000 1,216,000
- --------------------------------------------------------------
7,326,738
- --------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-2.75%
American Express Co. 40,100 3,578,925
- --------------------------------------------------------------
Fannie Mae 40,000 2,282,500
- --------------------------------------------------------------
Freddie Mac 82,700 3,468,231
- --------------------------------------------------------------
MBIA, Inc. 12,000 801,750
- --------------------------------------------------------------
MGIC Investment Corp. 78,400 5,213,600
- --------------------------------------------------------------
Morgan Stanley, Dean Witter,
Discover & Co. 30,500 1,803,313
- --------------------------------------------------------------
17,148,319
- --------------------------------------------------------------
FOODS-0.18%
Sara Lee Corp. 20,000 1,126,250
- --------------------------------------------------------------
FOOTWEAR-0.08%
Wolverine World Wide, Inc. 21,275 481,347
- --------------------------------------------------------------
GAMING, LOTTERY & PARI-MUTUEL COMPANIES-0.14%
International Game Technology 13,500 340,875
- --------------------------------------------------------------
MGM Grand, Inc.(a) 14,600 526,513
- --------------------------------------------------------------
867,388
- --------------------------------------------------------------
HEALTHCARE (DIVERSIFIED)-1.44%
Abbott Laboratories 27,200 1,783,300
- --------------------------------------------------------------
Bristol-Myers Squibb Co. 31,700 2,999,613
- --------------------------------------------------------------
Johnson & Johnson 24,000 1,581,000
- --------------------------------------------------------------
Warner-Lambert Co. 20,900 2,591,600
- --------------------------------------------------------------
8,955,513
- --------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-1.52%
Alpharma, Inc. 10,200 221,850
- --------------------------------------------------------------
Dura Pharmaceuticals, Inc.(a) 17,900 821,163
- --------------------------------------------------------------
Forest Laboratories, Inc.(a) 25,100 1,237,744
- --------------------------------------------------------------
ICN Pharmaceuticals, Inc. 51,700 2,523,606
- --------------------------------------------------------------
Jones Medical Industries, Inc. 21,000 803,250
- --------------------------------------------------------------
Mylan Laboratories, Inc. 21,000 439,688
- --------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (DRUGS-GENERIC & OTHER)-(CONTINUED)
Watson Pharmaceuticals, Inc.(a) 105,000 $ 3,405,938
- --------------------------------------------------------------
9,453,239
- --------------------------------------------------------------
HEATH CARE (DRUGS-MAJOR PHARMACEUTICALS)-2.10%
Lilly (Eli) & Co. 48,300 3,362,888
- --------------------------------------------------------------
Merck & Co., Inc. 35,000 3,718,750
- --------------------------------------------------------------
Pfizer Inc. 80,400 5,994,825
- --------------------------------------------------------------
13,076,463
- --------------------------------------------------------------
HEALTH CARE (LONG-TERM CARE)-1.35%
Beverly Enterprises, Inc.(a) 47,000 611,000
- --------------------------------------------------------------
Health Care and Retirement Corp.(a) 72,450 2,916,113
- --------------------------------------------------------------
HEALTHSOUTH Corp.(a) 176,700 4,903,425
- --------------------------------------------------------------
8,430,538
- --------------------------------------------------------------
HEALTH CARE (MANAGED CARE)-0.96%
Concentra Managed Care, Inc.(a) 34,700 1,171,125
- --------------------------------------------------------------
Express Scripts, Inc.-Class A(a) 17,300 1,038,000
- --------------------------------------------------------------
HealthCare COMPARE Corp.(a) 55,900 2,857,888
- --------------------------------------------------------------
PhyCor, Inc.(a) 33,600 907,200
- --------------------------------------------------------------
5,974,213
- --------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-2.27%
Arterial Vascular Engineering,
Inc.(a) 7,900 513,500
- --------------------------------------------------------------
Becton, Dickinson & Co. 47,000 2,350,000
- --------------------------------------------------------------
Biomet, Inc. 20,600 527,875
- --------------------------------------------------------------
DENTSPLY International, Inc. 17,800 542,900
- --------------------------------------------------------------
DePuy, Inc. 9,600 276,000
- --------------------------------------------------------------
Guidant Corp. 35,800 2,228,550
- --------------------------------------------------------------
Henry Schein, Inc.(a) 7,717 270,095
- --------------------------------------------------------------
Medtronic, Inc. 18,900 988,706
- --------------------------------------------------------------
Physician Sales & Service, Inc.(a) 15,900 341,850
- --------------------------------------------------------------
Quintiles Transnational Corp.(a) 20,400 780,300
- --------------------------------------------------------------
Sofamor Danek Group, Inc.(a) 5,000 325,313
- --------------------------------------------------------------
Stryker Corp. 40,400 1,504,900
- --------------------------------------------------------------
Sybron International Corp.(a) 74,500 3,496,844
- --------------------------------------------------------------
14,146,833
- --------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES)-0.67%
Covance, Inc.(a) 42,650 847,669
- --------------------------------------------------------------
FPA Medical Management, Inc.(a) 31,900 594,138
- --------------------------------------------------------------
Omnicare, Inc. 71,400 2,213,400
- --------------------------------------------------------------
Orthodontic Centers of America,
Inc.(a) 17,800 295,925
- --------------------------------------------------------------
PharMerica, Inc.(a) 21,390 221,918
- --------------------------------------------------------------
Transition Systems, Inc.(a) 400 8,850
- --------------------------------------------------------------
4,181,900
- --------------------------------------------------------------
HOMEBUILDING-0.15%
Clayton Homes, Inc. 40,000 720,000
- --------------------------------------------------------------
Oakwood Homes Corp. 5,600 185,850
- --------------------------------------------------------------
905,850
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HOUSEHOLD FURNITURE & SUPPLIES-0.26%
Furniture Brands International,
Inc.(a) 28,000 $ 574,000
- --------------------------------------------------------------
Maytag Corp. 28,200 1,052,213
- --------------------------------------------------------------
1,626,213
- --------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES)-0.38%
Dial Corp. (The) 45,000 936,563
- --------------------------------------------------------------
Procter & Gamble Co. 18,000 1,436,625
- --------------------------------------------------------------
2,373,188
- --------------------------------------------------------------
HOUSEWARES-0.05%
Central Garden and Pet Co.(a) 11,300 296,625
- --------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-1.88%
Conseco, Inc. 204,400 9,287,425
- --------------------------------------------------------------
Equitable Companies, Inc. 36,000 1,791,000
- --------------------------------------------------------------
Torchmark Corp. 15,300 643,556
- --------------------------------------------------------------
11,721,981
- --------------------------------------------------------------
INSURANCE (MULTI-LINE)-2.00%
Ace, Ltd. 18,000 1,737,000
- --------------------------------------------------------------
American International Group, Inc. 12,000 1,305,000
- --------------------------------------------------------------
Century Business Services, Inc.(a) 11,000 189,750
- --------------------------------------------------------------
Travelers Group, Inc. 171,050 9,215,319
- --------------------------------------------------------------
12,447,069
- --------------------------------------------------------------
INSURANCE (PROPERTY-CASUALTY)-1.28%
Allstate Corp. 31,600 2,871,650
- --------------------------------------------------------------
CapMAC Holdings, Inc. 20,500 712,375
- --------------------------------------------------------------
Everest Reinsurance Holdings, Inc. 56,100 2,314,125
- --------------------------------------------------------------
EXEL Ltd. 16,000 1,014,000
- --------------------------------------------------------------
Fremont General Corp. 18,000 985,500
- --------------------------------------------------------------
HCC Insurance Holdings, Inc. 5,300 112,625
- --------------------------------------------------------------
8,010,275
- --------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE-0.46%
Merrill Lynch & Co., Inc. 39,000 2,844,563
- --------------------------------------------------------------
INVESTMENT MANAGEMENT-0.93%
Affiliated Managers Group, Inc.(a) 54,300 1,574,700
- --------------------------------------------------------------
Franklin Resources, Inc. 21,650 1,882,197
- --------------------------------------------------------------
T. Rowe Price Associates, Inc. 36,900 2,320,088
- --------------------------------------------------------------
5,776,985
- --------------------------------------------------------------
LEISURE TIME (PRODUCTS)-0.11%
Callaway Golf Co. 10,200 291,338
- --------------------------------------------------------------
North Face, Inc. (The)(a) 10,000 220,000
- --------------------------------------------------------------
Speedway Motorsports, Inc.(a) 8,100 200,981
- --------------------------------------------------------------
712,319
- --------------------------------------------------------------
LODGING (HOTELS)-0.53%
Choice Hotels International,
Inc.(a) 20,800 332,800
- --------------------------------------------------------------
Host Marriott Corp.(a) 10,000 196,250
- --------------------------------------------------------------
ITT Corp. 22,000 1,823,250
- --------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
LODGING (HOTELS)-(CONTINUED)
Promus Hotel Corp.(a) 22,500 $ 945,000
- --------------------------------------------------------------
3,297,300
- --------------------------------------------------------------
MACHINERY (DIVERSIFIED)-0.37%
Dover Corp. 37,800 1,365,525
- --------------------------------------------------------------
Ingersoll-Rand Co. 22,500 911,250
- --------------------------------------------------------------
2,276,775
- --------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-0.23%
Crane Co. 7,000 303,625
- --------------------------------------------------------------
U.S. Industries, Inc. 36,900 1,111,613
- --------------------------------------------------------------
1,415,238
- --------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-0.81%
Cognex Corp.(a) 116,600 3,177,350
- --------------------------------------------------------------
Diebold, Inc. 36,400 1,842,750
- --------------------------------------------------------------
5,020,100
- --------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES-0.04%
HON INDUSTRIES, Inc. 3,800 224,200
- --------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-7.71%
Baker Hughes, Inc. 21,000 916,125
- --------------------------------------------------------------
BJ Services Co.(a) 33,400 2,402,713
- --------------------------------------------------------------
Camco International, Inc. 19,000 1,210,062
- --------------------------------------------------------------
Cooper Cameron Corp.(a) 50,000 3,050,000
- --------------------------------------------------------------
Diamond Offshore Drilling, Inc. 58,400 2,810,500
- --------------------------------------------------------------
ENSCO International, Inc. 28,400 951,400
- --------------------------------------------------------------
EVI, Inc.(a) 93,300 4,828,275
- --------------------------------------------------------------
Falcon Drilling Company, Inc.(a) 30,000 1,051,875
- --------------------------------------------------------------
Global Industries Ltd.(a) 191,000 3,247,000
- --------------------------------------------------------------
Input/Output, Inc.(a) 29,800 884,688
- --------------------------------------------------------------
Marine Drilling Companies, Inc.(a) 35,000 726,250
- --------------------------------------------------------------
Nabors Industries, Inc.(a) 180,000 5,658,750
- --------------------------------------------------------------
National-Oilwell, Inc.(a) 90,000 3,076,875
- --------------------------------------------------------------
Newpark Resources, Inc.(a) 18,000 315,000
- --------------------------------------------------------------
Noble Drilling Corp.(a) 100,000 3,062,500
- --------------------------------------------------------------
Pride International, Inc.(a) 32,900 830,725
- --------------------------------------------------------------
Rowan Companies, Inc.(a) 20,000 610,000
- --------------------------------------------------------------
Santa Fe International Corp. 74,000 3,010,875
- --------------------------------------------------------------
Schlumberger Ltd. 35,100 2,825,550
- --------------------------------------------------------------
Smith International, Inc.(a) 21,500 1,319,562
- --------------------------------------------------------------
Varco International, Inc.(a) 66,600 1,427,738
- --------------------------------------------------------------
Veritas DGC, Inc.(a) 12,600 497,700
- --------------------------------------------------------------
Western Atlas Inc.(a) 45,000 3,330,000
- --------------------------------------------------------------
48,044,163
- --------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-0.25%
Apache Corp. 15,000 525,938
- --------------------------------------------------------------
Burlington Resources, Inc. 17,500 784,218
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
OIL & GAS (EXPLORATION &
PRODUCTION)-(CONTINUED)
Pioneer Natural Resources Co. 8,000 $ 231,500
- --------------------------------------------------------------
1,541,656
- --------------------------------------------------------------
PERSONAL CARE-0.72%
Avon Products, Inc. 29,100 1,786,012
- --------------------------------------------------------------
Gillette Co. 20,500 2,058,969
- --------------------------------------------------------------
Perrigo Co.(a) 50,000 668,750
- --------------------------------------------------------------
4,513,731
- --------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT)-1.16%
AES Corp.(a) 154,600 7,208,225
- --------------------------------------------------------------
PUBLISHING (NEWSPAPERS)-0.12%
Gannett Co., Inc. 12,000 741,750
- --------------------------------------------------------------
RESTAURANTS-0.23%
Cracker Barrel Old Country Store,
Inc. 25,000 834,375
- --------------------------------------------------------------
Starbucks Corp.(a) 15,600 598,650
- --------------------------------------------------------------
1,433,025
- --------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-0.26%
Fastenal Co. 7,300 279,225
- --------------------------------------------------------------
Home Depot, Inc. 22,600 1,330,575
- --------------------------------------------------------------
1,609,800
- --------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS)-1.56%
CHS Electronics, Inc.(a) 75,000 1,284,375
- --------------------------------------------------------------
CompUSA, Inc.(a) 104,300 3,233,300
- --------------------------------------------------------------
Ingram Micro, Inc.-Class A(a) 71,900 2,094,088
- --------------------------------------------------------------
Tech Data Corp.(a) 80,300 3,121,662
- --------------------------------------------------------------
9,733,425
- --------------------------------------------------------------
RETAIL (DEPARTMENT STORES)-0.56%
Federated Department Stores,
Inc.(a) 22,000 947,375
- --------------------------------------------------------------
Kohl's Corp.(a) 10,900 742,563
- --------------------------------------------------------------
Nordstrom, Inc. 15,200 917,700
- --------------------------------------------------------------
Proffitt's, Inc.(a) 30,000 853,125
- --------------------------------------------------------------
3,460,763
- --------------------------------------------------------------
RETAIL (DISCOUNTERS)-1.09%
Consolidated Stores Corp.(a) 86,593 3,804,680
- --------------------------------------------------------------
Dollar General Corp. 18,085 655,581
- --------------------------------------------------------------
Dollar Tree Stores, Inc.(a) 22,950 949,556
- --------------------------------------------------------------
Ross Stores, Inc. 37,700 1,371,338
- --------------------------------------------------------------
6,781,155
- --------------------------------------------------------------
RETAIL (DRUG STORES)-1.39%
CVS Corp. 96,249 6,165,951
- --------------------------------------------------------------
Rite Aid Corp. 42,600 2,500,088
- --------------------------------------------------------------
8,666,039
- --------------------------------------------------------------
RETAIL (FOOD CHAINS)-1.65%
Kroger Co.(a) 114,900 4,244,119
- --------------------------------------------------------------
Quality Food Centers, Inc.(a) 21,600 1,447,200
- --------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (FOOD CHAINS)-(CONTINUED)
Safeway, Inc.(a) 73,000 $ 4,617,250
- --------------------------------------------------------------
10,308,569
- --------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE)-1.33%
Costco Companies, Inc.(a) 76,000 3,391,500
- --------------------------------------------------------------
Dayton Hudson Corp. 48,700 3,287,250
- --------------------------------------------------------------
Fred Meyer, Inc.(a) 43,800 1,593,225
- --------------------------------------------------------------
8,271,975
- --------------------------------------------------------------
RETAIL (HOME SHOPPING)-0.29%
CDW Computer Centers, Inc.(a) 23,050 1,201,481
- --------------------------------------------------------------
Micro Warehouse, Inc.(a) 42,500 592,344
- --------------------------------------------------------------
1,793,825
- --------------------------------------------------------------
RETAIL (SPECIALTY)-2.01%
Bed Bath & Beyond, Inc.(a) 45,900 1,767,150
- --------------------------------------------------------------
Hollywood Entertainment Corp.(a) 31,100 330,438
- --------------------------------------------------------------
Michaels Stores, Inc.(a) 25,000 731,250
- --------------------------------------------------------------
Office Depot, Inc.(a) 114,600 2,743,238
- --------------------------------------------------------------
Payless ShoeSource, Inc.(a) 10,400 698,100
- --------------------------------------------------------------
Petco Animal Supplies, Inc.(a) 20,400 489,600
- --------------------------------------------------------------
Tiffany & Co. 22,700 818,618
- --------------------------------------------------------------
Viking Office Products, Inc.(a) 64,800 1,413,450
- --------------------------------------------------------------
Williams-Sonoma, Inc.(a) 85,000 3,559,375
- --------------------------------------------------------------
12,551,219
- --------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-0.50%
Gap, Inc. 24,000 850,500
- --------------------------------------------------------------
TJX Companies, Inc. 65,400 2,248,125
- --------------------------------------------------------------
3,098,625
- --------------------------------------------------------------
SAVINGS & LOAN COMPANIES-0.70%
Ahmanson (H.F.) & Co. 39,600 2,650,725
- --------------------------------------------------------------
Dime Bancorp, Inc. 15,000 453,750
- --------------------------------------------------------------
Washington Mutual, Inc. 19,500 1,244,344
- --------------------------------------------------------------
4,348,819
- --------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING)-0.14%
Omnicom Group, Inc. 20,000 847,500
- --------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-2.11%
Cendant Corp.(a) 120,395 4,138,589
- --------------------------------------------------------------
Cerner Corp.(a) 41,000 866,125
- --------------------------------------------------------------
Equity Corp. International(a) 11,200 259,000
- --------------------------------------------------------------
Service Corp. International 164,500 6,076,219
- --------------------------------------------------------------
Stewart Enterprises, Inc.-Class A 28,650 1,335,806
- --------------------------------------------------------------
Trammell Crow Co.(a) 20,000 515,000
- --------------------------------------------------------------
13,190,739
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SERVICES (COMPUTER SYSTEMS)-0.44%
Cambridge Technology Partners,
Inc.(a) 10,100 $ 420,413
- --------------------------------------------------------------
Gartner Group, Inc.(a) 23,000 856,750
- --------------------------------------------------------------
Shared Medical Systems Corp. 10,900 719,400
- --------------------------------------------------------------
SunGard Data Systems Inc.(a) 23,600 731,600
- --------------------------------------------------------------
2,728,163
- --------------------------------------------------------------
SERVICES (DATA PROCESSING)-2.12%
Affiliated Computer Services,
Inc.(a) 22,600 594,662
- --------------------------------------------------------------
BISYS Group, Inc.(a) 11,200 372,400
- --------------------------------------------------------------
CSG Systems International, Inc.(a) 90,000 3,600,000
- --------------------------------------------------------------
DST Systems, Inc.(a) 22,100 943,394
- --------------------------------------------------------------
Equifax, Inc. 72,400 2,565,675
- --------------------------------------------------------------
Fiserv, Inc.(a) 37,900 1,861,838
- --------------------------------------------------------------
National Data Corp. 32,000 1,156,000
- --------------------------------------------------------------
PMT Services, Inc.(a) 25,500 353,812
- --------------------------------------------------------------
Paychex, Inc. 34,600 1,751,625
- --------------------------------------------------------------
13,199,406
- --------------------------------------------------------------
SERVICES (EMPLOYMENT)-0.20%
AccuStaff, Inc.(a) 53,700 1,235,100
- --------------------------------------------------------------
SERVICES (FACILITIES & ENVIRONMENTAL)-0.13%
Corrections Corp. of America(a) 22,500 833,906
- --------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-2.45%
AT&T Corp. 30,000 1,837,500
- --------------------------------------------------------------
Billing Information Concepts
Corp.(a) 18,600 892,800
- --------------------------------------------------------------
CIENA Corp.(a) 41,100 2,512,238
- --------------------------------------------------------------
LCI International, Inc.(a) 40,000 1,230,000
- --------------------------------------------------------------
MCI Communications Corp. 62,800 2,688,625
- --------------------------------------------------------------
WorldCom, Inc.(a) 203,200 6,146,800
- --------------------------------------------------------------
15,307,963
- --------------------------------------------------------------
TEXTILES (APPAREL)-0.48%
Jones Apparel Group, Inc.(a) 26,200 1,126,600
- --------------------------------------------------------------
Liz Claiborne, Inc. 29,300 1,225,106
- --------------------------------------------------------------
Nautica Enterprises, Inc.(a) 28,800 669,600
- --------------------------------------------------------------
3,021,306
- --------------------------------------------------------------
TEXTILES (SPECIALTY)-0.17%
Unifi, Inc. 25,800 1,049,738
- --------------------------------------------------------------
TRUCKS & PARTS-0.02%
Wabash National Corp. 5,000 142,188
- --------------------------------------------------------------
WASTE MANAGEMENT-0.73%
American Disposal Services, Inc.(a) 10,000 365,000
- --------------------------------------------------------------
Thermo Instrument Systems, Inc.(a) 26,125 899,680
- --------------------------------------------------------------
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
WASTE MANAGEMENT-(CONTINUED)
USA Waste Services, Inc.(a) 82,992 $ 3,257,436
- --------------------------------------------------------------
4,522,116
- --------------------------------------------------------------
Total Domestic Common Stocks 518,399,662
- --------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY INTERESTS-3.26%
BERMUDA-1.21%
Tyco International Ltd.
(Manufacturing-Diversified) 167,700 7,556,981
- --------------------------------------------------------------
CANADA-0.65%
Newcourt Credit Group, Inc.
(Financial-Diversified) 5,500 183,562
- --------------------------------------------------------------
Northern Telecom Ltd.-ADR
(Communications Equipment) 19,100 1,699,900
- --------------------------------------------------------------
Philip Services Corp. (Waste
Management)(a) 100,000 1,437,500
- --------------------------------------------------------------
Precision Drilling Corp. (Oil &
Gas-Drilling & Equipment)(a) 31,000 755,625
- --------------------------------------------------------------
4,076,587
- --------------------------------------------------------------
FINLAND-0.21%
Nokia Oyj A.B.-Class A-ADR
(Communications Equipment) 18,350 1,284,500
- --------------------------------------------------------------
IRELAND-0.02%
CBT Group PLC-ADR
(Computers-Software &
Services)(a) 1,800 147,825
- --------------------------------------------------------------
ISRAEL-0.15%
Tecnomatix Technologies Ltd.
(Computers-Software &
Services)(a) 10,000 337,500
- --------------------------------------------------------------
Teva Pharmaceutical Industries
Ltd.-ADR (Health
Care-Drugs-Generic & Other) 13,000 615,063
- --------------------------------------------------------------
952,563
- --------------------------------------------------------------
SWEDEN-0.44%
Telefonaktiebolaget LM Ericsson-ADR
(Communications Equipment) 72,700 2,712,619
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TAIWAN-0.03%
Taiwan Semiconductor Manufacturing
Co. Ltd.-ADR
(Electronics-Semiconductors)(a) 10,000 $ 181,875
- --------------------------------------------------------------
UNITED KINGDOM-0.55%
SmithKline Beecham PLC-ADR (Health
Care-Drugs-Major Pharmaceuticals) 67,000 3,446,312
- --------------------------------------------------------------
Total Foreign Stocks & Other
Equity Interests 20,359,262
- --------------------------------------------------------------
CONVERTIBLE PREFERRED STOCK-0.15%
LODGING (HOTELS)-0.15%
Host Marriott Corp., $3.375 Conv.
Pfd. 14,950 918,498
- --------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
DOMESTIC CONVERTIBLE CORPORATE NOTES-0.11%
COMPUTERS (PERIPHERALS)-0.11%
EMC Corp., 3.25%, Conv. Sub. Notes $ 500,000 674,875
- --------------------------------------------------------------
U.S. TREASURY SECURITIES-7.16%
U.S. TREASURY BILLS(b)-7.16%
4.566%, 01/02/98(c) 44,700,000 44,693,909
- --------------------------------------------------------------
Total Investments, excluding
repurchase agreement 585,046,206
- --------------------------------------------------------------
REPURCHASE AGREEMENT(d)-10.64%
Dean Witter Reynolds, Inc., 6.75%,
01/02/98(e) 66,326,931 66,326,931
- --------------------------------------------------------------
TOTAL INVESTMENTS-104.46% 651,373,137
- --------------------------------------------------------------
LIABILITIES LESS OTHER
ASSETS-(4.46%) (27,830,220)
- --------------------------------------------------------------
NET ASSETS-100.00% $623,542,917
==============================================================
</TABLE>
(a) Non-income producing security.
(b) U.S. Treasury bills are traded on a discount basis. In such cases the
interest rate shown represents the rate of discount paid or received at the
time of purchase by the Fund.
(c) A portion of the principal balance was pledged as collateral to cover
margin requirements for open futures contracts. See Note 8.
(d) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value as being 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(e) Joint repurchase agreement entered into 12/31/97 with a maturing value of
$200,075,000. Collateralized by $204,420,000 U.S. Government obligations,
0% to 8.80% due 01/09/98 to 11/15/29 with an aggregate market value at
12/31/97 of $204,000,245.
Investment Abbreviations:
ADR-American Depositary Receipt
Conv.-Convertible
Pfd.-Preferred
Sub.-Subordinated
See Notes to Financial Statements.
9
<PAGE> 12
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase
agreement, at market value (cost
$466,409,789) $585,046,206
- ---------------------------------------------------------
Repurchase agreement 66,326,931
- ---------------------------------------------------------
Receivables for:
Investments sold 429,715
- ---------------------------------------------------------
Fund shares sold 722,005
- ---------------------------------------------------------
Dividends and interest 254,824
- ---------------------------------------------------------
Investment for deferred compensation plan 63,989
- ---------------------------------------------------------
Other assets 19,859
- ---------------------------------------------------------
Total assets 652,863,529
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 25,404,932
- ---------------------------------------------------------
Fund shares reacquired 2,649,663
- ---------------------------------------------------------
Variation margin 9,650
- ---------------------------------------------------------
Deferred compensation plan 63,989
- ---------------------------------------------------------
Accrued advisory fees 347,621
- ---------------------------------------------------------
Accrued administrative service fees 5,749
- ---------------------------------------------------------
Accrued distribution fees 596,362
- ---------------------------------------------------------
Accrued trustees' fees 2,890
- ---------------------------------------------------------
Accrued transfer agent fees 127,426
- ---------------------------------------------------------
Accrued operating expenses 112,330
- ---------------------------------------------------------
Total liabilities 29,320,612
- ---------------------------------------------------------
Net assets applicable to shares outstanding $623,542,917
=========================================================
NET ASSETS:
Class A $266,167,858
=========================================================
Class B $356,185,858
=========================================================
Class C $ 1,189,201
=========================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER
SHARE:
Class A 16,990,731
=========================================================
Class B 23,779,883
=========================================================
Class C 79,397
=========================================================
Class A:
Net asset value and redemption price per
share $ 15.67
=========================================================
Offering price per share:
(Net asset value of $15.67 divided by
94.50%) $ 16.58
=========================================================
Class B:
Net asset value and offering price per
share $ 14.98
=========================================================
Class C:
Net asset value and offering price per
share $ 14.98
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $31,497 foreign
withholding tax) $ 2,818,914
- ---------------------------------------------------------
Interest 4,030,884
- ---------------------------------------------------------
Total investment income 6,849,798
- ---------------------------------------------------------
EXPENSES:
Advisory fees 3,901,342
- ---------------------------------------------------------
Administrative service fees 74,201
- ---------------------------------------------------------
Custodian fees 145,850
- ---------------------------------------------------------
Transfer agent fees-Class A 369,991
- ---------------------------------------------------------
Transfer agent fees-Class B 731,596
- ---------------------------------------------------------
Transfer agent fees-Class C 750
- ---------------------------------------------------------
Trustees' fees 11,880
- ---------------------------------------------------------
Distribution fees-Class A 633,698
- ---------------------------------------------------------
Distribution fees-Class B 3,284,783
- ---------------------------------------------------------
Distribution fees-Class C 2,571
- ---------------------------------------------------------
Other 274,011
- ---------------------------------------------------------
Total expenses 9,430,673
- ---------------------------------------------------------
Less: Expenses paid indirectly (17,975)
- ---------------------------------------------------------
Net expenses 9,412,698
- ---------------------------------------------------------
Net investment income (loss) (2,562,900)
- ---------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES
AND FUTURES CONTRACTS:
Net realized gain (loss) from:
Investment securities 59,302,302
- ---------------------------------------------------------
Foreign currencies (53,295)
- ---------------------------------------------------------
Futures contracts 9,324,974
- ---------------------------------------------------------
68,573,981
- ---------------------------------------------------------
Net unrealized appreciation (depreciation)
of:
Investment securities 30,912,100
- ---------------------------------------------------------
Foreign currencies 21
- ---------------------------------------------------------
Futures contracts (1,308,102)
- ---------------------------------------------------------
29,604,019
- ---------------------------------------------------------
Net gain from investment securities,
foreign currencies and futures
contracts 98,178,000
- ---------------------------------------------------------
Net increase in net assets resulting from
operations $95,615,100
=========================================================
</TABLE>
See Notes to Financial Statements.
10
<PAGE> 13
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (2,562,900) $ 124,753
- -------------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies and futures contracts 68,573,981 25,815,431
- -------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities,
foreign currencies and futures contracts 29,604,019 41,005,363
- -------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 95,615,100 66,945,547
- -------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (115,803) --
- -------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A (28,869,623) (9,939,277)
- -------------------------------------------------------------------------------------------
Class B (40,478,955) (12,535,665)
- -------------------------------------------------------------------------------------------
Class C (105,058) --
- -------------------------------------------------------------------------------------------
Share transactions-net:
Class A 23,238,247 35,293,722
- -------------------------------------------------------------------------------------------
Class B 64,250,779 122,675,148
- -------------------------------------------------------------------------------------------
Class C 1,318,691 --
- -------------------------------------------------------------------------------------------
Net increase in net assets 114,853,378 202,439,475
- -------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 508,689,539 306,250,064
- -------------------------------------------------------------------------------------------
End of period $623,542,917 $508,689,539
===========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $499,110,813 $412,932,159
- -------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (34,200) 66,315
- -------------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies and futures contracts 6,119,260 6,948,040
- -------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies and futures contracts 118,347,044 88,743,025
- -------------------------------------------------------------------------------------------
$623,542,917 $508,689,539
===========================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
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 three different classes of shares: the Class A shares, the
Class B shares and the Class C shares. The new Class C shares commenced sales on
August 4, 1997. Class A shares are sold with a front-end sales charge. Class B
shares and Class C shares are sold with a contingent deferred sales charge.
Matters affecting each portfolio or class 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 investment 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 preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of significant accounting policies followed by the Fund
in the preparation of its financial statements.
A. Security Valuations -- A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular day,
the security is valued at the mean between the closing bid and asked prices
on that day. Each security traded in the over-the-counter market (but not
including securities reported on the NASDAQ National Market System) is valued
at the mean between the last bid and asked prices based upon quotes furnished
by market makers for such
11
<PAGE> 14
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) 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. Foreign Currency Translations -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollar
amounts at date of valuation. Purchases and sales of portfolio securities and
income items denominated in foreign currencies are translated into U.S.
dollar amounts on the respective dates of such transactions.
C. Foreign Currency Contracts -- A foreign currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract for the purchase or
sales of a security denominated in a foreign currency in order to "lock in"
the U.S. dollar price of that security. The Fund could be exposed to risk if
counterparties to the contracts are unable to meet the terms of their
contracts.
D. Securities Transactions, Investment Income and Distributions -- Securities
transactions are 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. On December 31, 1997,
paid-in capital was decreased by $2,629,063, undistributed net investment
income was increased by $2,578,188 and undistributed net realized gains
increased by $50,875 in order to comply with the requirements of the American
Institute of Certified Public Accountants Statement of Position 93-2. Net
assets of the Fund were unaffected by the reclassifications discussed above.
E. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
F. Expenses -- Distribution and transfer agency expenses directly attributable
to a class of shares are charged to that class' operations. All other
expenses which are attributable to more than one class are allocated among
the classes.
G. 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, 1997, AIM
was reimbursed $74,201 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,
1997, AFS was paid $608,362 for such services.
The Trust has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Trust has adopted
distribution plans pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Class A shares and Class C shares (the "Class A and C Plan") and the
Fund's Class B shares (the "Class B Plan") (collectively, the "Plans"). The
Fund, pursuant to the Class A and C Plan, pays AIM Distributors compensation at
an annual rate of 0.25% of the average daily net assets of the Class A shares
and 1.00% of the average daily net assets of the Class C shares. The Fund
pursuant to the Class B Plan,
12
<PAGE> 15
pays AIM Distributors compensation at an annual rate of 1.00% of the average
daily net assets attributable to the Class B shares. Of these amounts, the Fund
may pay a service fee of 0.25% of the average daily net assets of the Class A,
Class B or Class C shares to selected dealers and financial institutions who
furnish continuing personal shareholder services to their customers who purchase
and own shares of the Fund. Any amounts not paid as a service fee by the Class B
or Class C shares under the Plans would constitute an asset-based sales charge.
The Plans also impose a cap on the total sales charges, including asset-based
sales charges that may be paid by the respective classes. AIM Distributors may,
from time to time, assign, transfer, or pledge to one or more designees, its
rights to all or a designated portion of (a) compensation received by AIM
Distributors from the Fund pursuant to the Class B Plan (but not AIM
Distributors' duties and obligations pursuant to the Class B Plan) and (b) any
contingent deferred sales charges received by AIM Distributors related to the
Class B shares. During the year ended December 31, 1997, for the Class A shares
and Class B shares and the period August 4, 1997 through December 31, 1997 for
the Class C shares, the Class A, Class B, and Class C shares paid AIM
Distributors $633,698, $3,284,783 and $2,571 respectively, as compensation under
the Plans.
AIM Distributors received commissions of $143,669 from sales of the Class A
shares of the Fund during the year ended December 31, 1997. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year ended December 31, 1997,
AIM Distributors received $109,547 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, 1997, the Fund paid legal fees of $5,583
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-INDIRECT EXPENSES
AIM has directed certain portfolio trades to brokers who paid a portion of the
Fund's expenses related to pricing services used by the Fund which reduced Fund
expenses by $2,139 during the year ended December 31, 1997. Also during the year
ended December 31, 1997, the Fund received reductions in transfer agency fees
from AFS (an affiliate of AIM) and reductions in custodian fees of $6,509 and
$9,327, respectively, under expense offset arrangements. The effect of the above
arrangements resulted in reductions of the Fund's total expenses of $17,975
during the year ended December 31, 1997.
NOTE 4-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 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $500,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. Interest on
borrowings under the line of credit is payable on maturity or prepayment date.
Prior to an amendment of the line of credit on July 15, 1997, the Fund was
limited to borrowing up to the lesser of (i) $325,000,000 or (ii) the limits set
by its prospectus for borrowings. During the year ended December 31, 1997, 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 0.05% 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 6-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, 1997 was
$592,414,766 and $560,170,230, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of December 31, 1997 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $131,466,776
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (14,012,338)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $117,454,438
=========================================================
Cost of investments for tax purposes is
$467,591,768.
</TABLE>
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the years ended December 31, 1997 and 1996
were as follows:
<TABLE>
<CAPTION>
1997 1996
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold:
Class A 14,466,946 $ 234,213,923 10,862,824 $ 152,766,558
- --------------------------------------------------------------------------------
Class B 7,100,475 113,053,525 12,013,218 167,088,540
- --------------------------------------------------------------------------------
Class C* 104,003 1,760,456 -- --
- --------------------------------------------------------------------------------
Issued as
reinvestment of
dividends:
Class A 1,802,991 27,333,257 657,046 9,474,936
- --------------------------------------------------------------------------------
Class B 2,600,309 37,704,454 845,350 11,809,495
- --------------------------------------------------------------------------------
Class C* 6,820 98,891 -- --
- --------------------------------------------------------------------------------
Reacquired:
Class A (14,695,429) (238,308,933) (8,993,672) (126,947,772)
- --------------------------------------------------------------------------------
Class B (5,524,470) (86,507,200) (4,060,745) (56,222,887)
- --------------------------------------------------------------------------------
Class C* (31,426) (540,656) -- --
- --------------------------------------------------------------------------------
5,830,219 $ 88,807,717 11,324,021 $ 157,968,870
================================================================================
</TABLE>
* Class C shares commenced sales on August 4, 1997.
NOTE 8-OPEN FUTURES CONTRACTS
On December 31, 1997, $2,156,000 principal amount of U.S. Treasury obligations
were pledged as collateral to cover margin requirements for open futures
contracts.
Open futures contracts at December 31, 1997 were as follows:
<TABLE>
<CAPTION>
UNREALIZED
NO. OF APPRECIATION
CONTRACT CONTRACTS MONTH COMMITMENT (DEPRECIATION)
<S> <C> <C> <C> <C>
193
S&P 500 Index contracts Mar. 98 Buy $(289,500)
=======================================================================
</TABLE>
13
<PAGE> 16
NOTE 9-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A outstanding
during each of the years in the five-year period ended December 31, 1997, for a
share of Class B outstanding during each of the years in the four-year period
ended December 31, 1997 and the period September 1, 1993 (date sales commenced)
through December 31, 1993, and for a share of Class C outstanding for the period
August 4, 1997 (date sales commenced) through December 31, 1997.
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 14.78 $ 13.05 $ 10.32 $ 11.32 $ 12.28
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.01(a) 0.07 0.02(a) -- --
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) 2.82 2.34 3.50 (0.57) 0.41
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total from investment operations 2.83 2.41 3.52 (0.57) 0.41
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.01) -- -- -- --
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Distributions from net realized gains (1.93) (0.68) (0.79) (0.43) (1.37)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Total distributions (1.94) (0.68) (0.79) (0.43) (1.37)
- ------------------------------------------------------------ -------- -------- -------- -------- --------
Net asset value, end of period $ 15.67 $ 14.78 $ 13.05 $ 10.32 $ 11.32
============================================================ ======== ======== ======== ======== ========
Total return(b) 19.54% 18.61% 34.31% (4.99)% 3.64%
============================================================ ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $266,168 $227,882 $168,217 $123,271 $146,723
============================================================ ======== ======== ======== ======== ========
Ratio of expenses to average net assets 1.13%(c)(d) 1.18% 1.28% 1.22% 1.17%
============================================================ ======== ======== ======== ======== ========
Ratio of net investment income to average net assets 0.04%(c) 0.46% 0.20% 0.02% 0.02%
============================================================ ======== ======== ======== ======== ========
Portfolio turnover rate 110% 97% 87% 201% 192%
============================================================ ======== ======== ======== ======== ========
Average broker commission rate paid(e) $ 0.0568 $ 0.0621 N/A N/A N/A
============================================================ ======== ======== ======== ======== ========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct sales charges.
(c) Ratios are based on average net assets of $253,479,200.
(d) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly,
the ratio of expenses to average net assets would have been the same.
(e) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
<TABLE>
<CAPTION>
CLASS B CLASS C
------------------------------------------------------ -------
1997 1996 1995 1994 1993 1997
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 14.32 $ 12.77 $ 10.21 $ 11.31 $ 12.83 $ 17.65
- ----------------------------------------------------- ------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income (loss) (0.13)(a) (0.05) (0.08)(a) (0.06) (0.01) (0.04)(a)
- ----------------------------------------------------- ------- ------- ------- ------- ------- -------
Net gains (losses) on securities (both realized and
unrealized) 2.72 2.28 3.43 (0.61) (0.14) (0.70)
- ----------------------------------------------------- ------- ------- ------- ------- ------- -------
Total from investment operations 2.59 2.23 3.35 (0.67) (0.15) (0.74)
- ----------------------------------------------------- ------- ------- ------- ------- ------- -------
Less distributions:
Distributions from net realized gains (1.93) (0.68) (0.79) (0.43) (1.37) (1.93)
- ----------------------------------------------------- ------- ------- ------- ------- ------- -------
Total distributions (1.93) (0.68) (0.79) (0.43) (1.37) (1.93)
- ----------------------------------------------------- ------- ------- ------- ------- ------- -------
Net asset value, end of period $ 14.98 $ 14.32 $ 12.77 $ 10.21 $ 11.31 $ 14.98
===================================================== ======= ======= ======= ======= ======= =======
Total return(b) 18.50% 17.60% 33.00% (5.88)% (0.92)% (3.86)%
===================================================== ======= ======= ======= ======= ======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $356,186 $280,807 $138,034 $38,448 $11,053 $ 1,189
===================================================== ======= ======= ======= ======= ======= =======
Ratio of expenses to average net assets 1.99%(c)(d) 2.03% 2.13% 2.18% 1.91%(e) 1.95%(f)(g)
===================================================== ======= ======= ======= ======= ======= =======
Ratio of net investment income (loss) to average net
assets (0.82)%(c) (0.39)% (0.65)% (0.94)% (0.72)%(e) (0.77)%(f)
===================================================== ======= ======= ======= ======= ======= =======
Portfolio turnover rate 110% 97% 87% 201% 192% 110%
===================================================== ======= ======= ======= ======= ======= =======
Average broker commission rate paid(h) $0.0568 $0.0621 N/A N/A N/A $0.0568
===================================================== ======= ======= ======= ======= ======= =======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and are not annualized for
periods less than one year.
(c) Ratios are based on average net assets of $328,478,309.
(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) Ratios are annualized and based on average net assets of $625,699.
(g) Ratio includes expenses paid indirectly. Excluding expenses paid
indirectly, the ratio of expenses to average net assets would have been
1.94%.
(h)The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
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, 1997, 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 or periods in the five-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 and financial highlights. Our procedures
included confirmation of securities owned as of December
31, 1997, by correspondence with the custodian and
brokers. An audit also includes assessing the accounting
principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM Growth
Fund as of December 31, 1997, 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 or periods in the five-year period then ended, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
February 6, 1998
15
<PAGE> 18
Trustees & Officers
<TABLE>
<S> <C> <C>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman Chairman Suite 100
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Director
ACE Limited; John J. Arthur A I M Advisors, Inc.
Formerly Director, President, and Chief Senior Vice President and Treasurer 11 Greenway Plaza
Executive Officer Suite 100
COMSAT Corporation Carol F. Relihan Houston, TX 77046
Senior Vice President
Owen Daly II and Secretary TRANSFER AGENT
Director
Cortland Trust Inc. Gary T. Crum A I M Fund Services, Inc.
Senior Vice President P.O. Box 4739
Jack Fields Houston, TX 77210-4739
Chief Executive Officer Dana R. Sutton
Texana Global, Inc.; Vice President and Assistant Treasurer CUSTODIAN
Formerly Member of the
U.S. House of Representatives Robert G. Alley State Street Bank & Trust Company
Vice President 225 Franklin Street
Carl Frischling Boston, MA 02110
Partner Stuart W. Coco
Kramer, Levin, Naftalis & Frankel Vice President COUNSEL TO THE FUND
Robert H. Graham Melville B. Cox Ballard Spahr
President and Chief Executive Officer Vice President Andrews & Ingersoll
A I M Management Group Inc. 1735 Market Street
Karen Dunn Kelly Philadelphia, PA 19103
John F. Kroeger Vice President
Formerly Consultant COUNSEL TO THE TRUSTEES
Wendell & Stockel Associates, Inc. Jonathan C. Schoolar
Vice President Kramer, Levin, Naftalis & Frankel
Lewis F. Pennock 919 Third Avenue
Attorney P. Michelle Grace New York, NY 10022
Assistant Secretary
Ian W. Robinson DISTRIBUTOR
Consultant; Formerly Executive Nancy L. Martin
Vice President and Assistant Secretary A I M Distributors, Inc.
Chief Financial Officer 11 Greenway Plaza
Bell Atlantic Management Ofelia M. Mayo Suite 100
Services, Inc. Assistant Secretary Houston, TX 77046
Louis S. Sklar Kathleen J. Pflueger AUDITORS
Executive Vice President Assistant Secretary KPMG Peat Marwick
Hines Interests 700 Louisiana
Limited Partnership Samuel D. Sirko Houston, TX 77002
Assistant Secretary
Stephen I. Winer
Assistant Secretary
Mary J. Benson
Assistant Treasurer
</TABLE>
REQUIRED FEDERAL INCOME TAX INFORMATION
AIM Growth Fund Class A, Class B, and Class C shares paid ordinary dividends in
the amount of $0.2168, $0.209, and $0.0209 per share, respectively, to
shareholders during its tax year ended December 31, 1997. Of these amounts,
33.14% is eligible for the dividends received deduction for corporations. The
Fund also distributed long-term capital gains of $1.716 per share during its
tax year ended December 31, 1997. Of long-term capital gains distributed,
49.46% is 20% rate gain.
REQUIRED STATE INCOME TAX INFORMATION
Of total ordinary dividends paid, 1.25% for Class A, 0% for Class C shares were
derived from U.S. Treasury obligations.
16
<PAGE> 19
HOW AIM MAKES INVESTING
EASY FOR YOU
o LOW INITIAL INVESTMENT. You can get your investment program started for as
little as $500. Subsequent investments can be made for only $50.
o AUTOMATIC REINVESTMENT OF DIVIDENDS AND/OR CAPITAL GAINS. Distributions may
be received in cash or reinvested in the Fund free of charge. Over time, the
power of compounding can significantly increase the value of your assets.
o AUTOMATIC INVESTMENT PLAN. You many build your investment by regularly
purchasing additional shares. Pre-authorized checks for $50 or more can be
drafted monthly from your personal checking account.
o EASY ACCESS TO YOUR MONEY. Your shares may be redeemed at net asset value
any day the New York Stock Exchange is open. The price of shares sold may be
more or less than their original cost, depending on market conditions.
o SYSTEMATIC WITHDRAWAL PLAN. You may elect to receive checks of at least $50
monthly or quarterly through a systematic withdrawal plan.
o EXCHANGE PRIVILEGE. As your goals change, you may exchange all or part of
your assets for those of other funds within the same share class of The AIM
Family of Funds --Registered Trademark--. The exchange privilege may be
modified or discontinued for any of the AIM funds.
o RETIREMENT PLANS. You may purchase shares of the fund for your Individual
Retirement Account (IRA) or any other type of retirement plan, and earn
tax-deferred dollars for your retirement.
o TOLL-FREE ACCESS. Current shareholders can call our AIM Investor Line at
800-246-5463 for 24-hour-a-day account information. Or, of course, you may
contact your financial consultant for assistance.
o WWW.AIMFUNDS.COM. As a current shareholder, you can check account balances
24 hours a day over the Internet. State-of-the-art encryption lets you send
us questions that include confidential information without the fear of
eavesdropping, tampering, or forgery.
--------------------------------
Current shareholders
can call our
AIM Investor Line at
800-246-5463
for 24-hour-a-day
account information.
--------------------------------
<PAGE> 20
<TABLE>
<S> <C>
THE AIM FAMILY OF FUNDS--Registered Trademark--
AGGRESSIVE GROWTH
AIM Aggressive Growth Fund*
AIM Asian Growth Fund
AIM Capital Development Fund
AIM Constellation Fund
AIM European Development Fund
AIM Global Aggressive Growth Fund
GROWTH OF CAPITAL
AIM Advisor International Value Fund
[PHOTO OF AIM Blue Chip Fund
11 GREENWAY PLAZA AIM Global Growth Fund
APPEARS HERE] AIM Growth Fund
AIM International Equity Fund
AIM Value Fund
AIM Weingarten Fund
GROWTH AND INCOME OR INCOME WITH CAPITAL GROWTH
AIM Advisor Flex Fund
AIM Advisor Large Cap Value Fund
AIM Advisor MultiFlex Fund
AIM Advisor Real Estate Fund
AIM Balanced Fund
AIM Charter Fund
AIM Global Utilities Fund
HIGH CURRENT INCOME OR CURRENT INCOME
AIM High Yield Fund
AIM Global Income Fund
AIM Income Fund
CURRENT TAX-FREE INCOME
AIM High Income Municipal Fund
AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of Connecticut
AIM Tax-Free Intermediate Fund
CURRENT INCOME AND HIGH DEGREE OF SAFETY
AIM Intermediate Government Fund
AIM Limited Maturity Treasury Fund
AIM Money Market Fund
AIM Tax-Exempt Cash Fund
A I M Management Group Inc. has provided leadership in the *AIM Aggressive Growth Fund was closed to new investors on
mutual fund industry since 1976 and managed approximately June 5, 1997. For more complete information about any AIM
$83 billion in assets for more than 3.7 million shareholders, Fund(s), including sales charges and expenses, ask your
including individual investors, corporate clients, and financial financial consultant or securities dealer for a free
institutions as of December 31, 1997. The AIM Family of prospectus(es). Please read the prospectus(es) carefully
Funds--Registered Trademark-- is distributed nationwide, and before you invest or send money.
AIM today ranks among the nation's top 15 mutual fund
companies in assets under management, according to Lipper INVEST WITH DISCIPLINE-SM-
Analytical Services, Inc.
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