-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WRDZM9PswuhxO8VjPm2pfrjISTCUvm8jafg4RtmxUj6hrWkEtdcJkresu6c+Y10c xfR51azoQIRIxZLZ60gd7w== 0000950129-98-002866.txt : 19980703 0000950129-98-002866.hdr.sgml : 19980703 ACCESSION NUMBER: 0000950129-98-002866 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980430 FILED AS OF DATE: 19980702 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AIM EQUITY FUNDS INC CENTRAL INDEX KEY: 0000105377 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 132576643 STATE OF INCORPORATION: MD FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-01424 FILM NUMBER: 98659800 BUSINESS ADDRESS: STREET 1: ELEVEN GREENWAY PLZ STREET 2: STE 1919 CITY: HOUSTON STATE: TX ZIP: 77046 BUSINESS PHONE: 7136261919 MAIL ADDRESS: STREET 1: AIM EQUITY FUNDS INC STREET 2: 11 GREENWAY PLZ STE 1919 CITY: HOUSTON STATE: TX ZIP: 77046 FORMER COMPANY: FORMER CONFORMED NAME: WEINGARTEN EQUITY FUND INC DATE OF NAME CHANGE: 19880929 FORMER COMPANY: FORMER CONFORMED NAME: COMPUFUND INC DATE OF NAME CHANGE: 19880616 N-30D 1 AIM AGGRESSIVE GROWTH FUND - SEMI-ANNUAL REPORT 1 AIM AGGRESSIVE GROWTH FUND [AIM LOGO APPEARS HERE] SEMIANNUAL REPORT APRIL 30, 1998 2 ---------------------------------------- AIM AGGRESSIVE GROWTH FUND For shareholders who seek long-term growth of capital by investing in a portfolio consisting primarily of small-company stocks which management believes will have earnings growth in excess of the general economy. ---------------------------------------- ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT: o AIM Aggressive 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. When sales charges are included, Fund performance reflects the maximum 5.50% sales charge. o AIM Aggressive Growth Fund's average annual total returns, including sales charges, for periods ended 3/31/98, the most recent calendar quarter-end, were as follows: one year, 36.78% (44.75% excluding sales charges); five years, 23.51%; 10 years, 20.78%; inception (5/1/84), 16.67%. o The Fund's investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. o The Fund's portfolio composition is subject to change and there is no assurance the Fund will continue to hold any particular security. o Past performance cannot guarantee comparable future results. ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT: o The unmanaged Lipper Small Cap Funds Index represents an average of the performance of the 30 largest small-capitalization growth funds. o The unmanaged Russell 2000 Index is generally representative of the performance of the stocks of small-capitalization companies. o The Dow Jones Industrial Average is a price-weighted average of 30 actively traded primarily industrial stocks. o An investment cannot be made in the indexes 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 AFFLIATE; 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. 3 The Chairman's Letter Dear Fellow Shareholder: When we last reported to you, for the fiscal year ended October 31, 1997, equity markets worldwide had just been shaken by the currency crisis in Southeast Asia. By the April 30, 1998, end of this six-month reporting period, most [PHOTO OF markets had recovered nicely, with domestic equities reaching Charles T. new highs and European markets outdoing even the U.S.'s heady Bauer, pace. Only Asian markets remained in the doldrums. Bonds have Chairman of turned in a solid performance with generous real returns, the Board of though not as spectacular as some had predicted when the THE FUND Asian crisis first broke. APPEARS HERE] Good economic news has been arriving almost daily early in 1998. Inflation and joblessness in the U.S. have been at their lowest levels in decades, consumer confidence at its highest. The economic fundamentals in the U.S. appear sound, and we at AIM remain cautiously optimistic that the current economic expansion, and the buoyant financial markets that accompany it, will continue for the foreseeable future. Nevertheless, by the close of this reporting period, many market participants were uneasy. Some worried that economic growth was so robust and labor markets so tight that the Federal Reserve Board would raise interest rates to keep inflation at bay. Historically, it has been events such as a rise in interest rates-or more ominous occurrences such as wars-that have ended bull markets as experienced in this decade. Other participants fretted about signs of speculative fever, particularly in U.S. stock markets, where equity prices continued to rise despite evidence that earnings growth, especially for larger companies, had slowed considerably. All were aware that the Asian story was not yet completed, and no one was certain how serious its ultimate impact would be. Of course, this bull market will end one day, and markets became less ebullient shortly after this reporting period closed. In the face of uncertainty, the best course for investors is to remain realistic and ready. The market advances of the past three years have been unprecedented and may have fostered unrealistic expectations among investors. We have never experienced two years in a row of market returns above 30%, let alone three. Investors would do well to remember that the long-term average return for equities is closer to 10% per year. A well-diversified portfolio is still one of the most effective tools for coping with shifts in a market's direction because different asset classes and different national markets tend to move independently of one another. Of course, your financial consultant remains your best source of information about how to allocate your investments based on your particular goals and situation. AIM FURTHER DIVERSIFIES ITS OFFERINGS Shortly after the close of this reporting period, AIM broadened its offerings to shareholders through the addition of the GT Global group of mutual funds. During the next few months, you will be receiving more details about this transaction and the products it adds to The AIM Family of Funds--Registered Trademark--. In addition to making a more varied group of investments available to our shareholders, this transaction helps strengthen AIM's position as a major participant in the money-management industry worldwide. Such strength will enable us to continue expanding both the scope of our fund offerings and our menu of services for our shareholders. YOUR FUND MANAGERS COMMENT On the pages that follow, the managers of your AIM Fund discuss how the Fund performed during the six months covered by this report and give their near-term market outlook. We hope you will find their discussion informative. We are pleased to send you this report on your Fund. If you have any questions or comments, please contact our Client Services department at 800-959-4246 or visit our Web site at www.aimfunds.com. You can access information about your account on our Web site and also on our automated AIM Investor Line, 800-246-5463. Thank you for your continued participation in The AIM Family of Funds--Registered Trademark--. Sincerely, /s/ CHARLES T. BAUER Charles T. Bauer Chairman 4 The Manager's Overview FUND BENEFITS FROM SMALL-CAP STOCK RALLY A roundtable discussion with the Fund management team for AIM Aggressive Growth Fund for the six months ended April 30, 1998. - -------------------------------------------------------------------------------- ------------------------------------------ Indeed, virtually all classes of stocks posted respectable gains for the six months ended April 30, 1998. ------------------------------------------ Q. AFTER SHAKING OFF THE EFFECTS OF THE ASIAN CURRENCY CRISIS, SMALL-CAP STOCKS REBOUNDED IMPRESSIVELY. HOW DID AIM AGGRESSIVE GROWTH FUND PERFORM? A. A strong rally in small-cap stocks during the second half of the reporting period helped your Fund to register a respectable 8.35% cumulative total return for the six months ended April 30, 1998. By comparison, total return for the Russell 2000 Index and the Lipper Small Cap Funds Index was 11.88% and 10.21%, respectively. The Fund's performance was hurt by its large stake in technology stocks, which were adversely affected by the Asian currency crisis late in 1997. However, technology stocks rallied early in 1998, and that helped propel the Fund to a 16.09% total return for the three months ended April 30. That bested the 12.44% total return for the Russell 2000 Index and the 13.35% total return for the Lipper Small Cap Funds Index. For the year ended April 30, your Fund posted a total return of 48.79% compared to 42.40% for the Russell 2000 Index and 42.38% for the Lipper Small Cap Funds Index. FUND EXTENDS PERFORMANCE RECORD ================================================================================ AVERAGE ANNUAL TOTAL RETURNS As of 4/30/98, at net asset value 10 Years 21.39% 5 Years 25.96 1 Year 48.79 ================================================================================ Q. WHAT WERE THE MAJOR TRENDS IN THE STOCK MARKET DURING THE REPORTING PERIOD? A. For the first three months of the reporting period, the stock market was still feeling the effects of the Asian currency crisis. Markets were slow to recover from a significant drop in October, just before the reporting period began, as investors were concerned about the impact of the Asian currency devaluations on corporate profits worldwide. However, in the U.S. and most other developed countries, the economic fundamentals remained sound. While the economy grew at a brisk pace, inflation and interest rates-two forces that could potentially undermine corporate profits-continued to be low. In this environment, the Dow Jones Industrial Average (DJIA) resumed its upward climb in late January and passed the 9000 point mark in April to set a record. Q. HOW DID SMALL-CAP STOCKS FARE IN THIS ENVIRONMENT? A. When markets skyrocketed in the second half of the reporting period, large-cap stocks-particularly, the stocks of the very largest companies, the so-called "mega caps"-led the charge. In the uncertain environment created by the Asian currency crisis, investors gravitated to the stocks of large, well-known companies. Toward the end of the reporting period, however, the market rally began to broaden to include the stocks of smaller companies. Indeed, virtually all classes of stocks posted respectable gains for the six months ended April 30, 1998. Q. WHAT MADE SMALL-CAP STOCKS ATTRACTIVE TO INVESTORS? A. Small-cap stocks were more reasonably priced than large-cap issues. Moreover, while earnings growth projections for large companies were declining from double to single digits, the corresponding figures for smaller companies remained in the double-digit range. The cut in the capital gains tax and the relative lack of exposure of smaller companies to troubled Asian markets also contributed to the attractiveness of small-cap stocks. Q. HOW WAS THE FUND POSITIONED AT THE END OF THE REPORTING PERIOD? A. Your Fund's top holdings were in the following sectors: technology, 30%, retail, 12%, and health care, 12%. Since our last report six months ago, we have reduced our holdings in energy stocks, which were hurt by falling oil prices, and increased our retail holdings. The Fund's holdings in the technology and health-care sectors remained approximately the same. See important fund and index disclosures inside front cover. 2 5 PORTFOLIO COMPOSITION As of 4/30/98, based on total net assets
======================================================================================================================= Top 10 Equity Holdings Top 10 Industries - ----------------------------------------------------------------------------------------------------------------------- 1. Heftel Broadcasting Corp. 0.72% 1. Computer (Software & Services) 11.08% 2. National-Oilwell, Inc. 0.69 2. Oil & Gas (Drilling & Equipment) 5.63 3. Billing Information Concepts Corp. 0.65 3. Services (Data Processing) 4.18 4. Saville Systems Ireland PLC-ADR 0.64 4. Retail (Specialty) 4.17 5. Citrix Systems, Inc. 0.64 5. Electronics (Semiconductors) 3.80 6. Sanmina Corp. 0.64 6. Health Care (Specialized Services) 3.79 7. Helen of Troy Ltd. 0.64 7. Electrical Equipment 3.60 8. Universal Health Services, Inc.-Class B 0.63 8. Health Care (Medical Products & Supplies) 2.99 9. EVI, Inc. 0.62 9. Services (Commercial & Consumer) 2.64 10. Flextronics International Ltd. 0.61 10. Services (Computer Systems) 2.53 Please keep in mind that the Fund's portfolio is subject to change and there is no assurance the Fund will continue to hold any particular security. =======================================================================================================================
Q. HOW DID TECHNOLOGY STOCKS FARE? A. Technology stocks, which sustained losses toward the end of 1997 because of the Asian crisis, rebounded early in 1998, even though several large technology companies reported earnings disappointments. However, we only select the stocks of technology companies that meet our earnings criteria. Moreover, we remain optimistic about this sector, which should benefit from ongoing efforts to solve the so-called millennium problem-the critical need to reprogram older computers to recognize the Year 2000. Companies represented in the portfolio that are getting a tremendous boost from the need to upgrade software to solve the millennium problem include Veritas Software Corp., Legato Systems, Inc., Hyperion Software Corp., and Jack Henry & Associates, which produces software for the banking industry. The Fund also benefited from owning the stocks of Level One Communications, Inc., Micrel Inc., and PMC-Sierra Inc., which supply the telecommunications and data-communications areas. Q. WHAT WAS BEHIND THE SOLID PERFORMANCE OF RETAIL STOCKS? A. Declining unemployment, rising wages, and falling mortgage rates translated into increased consumer spending, and that was good news for the nation's retailers. At the same time, wholesale prices dropped-another positive development for the retail sector. As incomes rose and mortgage payments declined, more Americans spent money on decorating their homes. That was a plus for a number of companies represented in the portfolio, including Pier 1 Imports, Inc., Linens 'N Things, Inc., and Ethan Allen Interiors Inc. The Fund also benefited from owning the stocks of companies catering to youth fashion trends, including The Buckle Inc., Pacific Sunwear of California, and Abercrombie & Fitch Co., as well as firms meeting the needs of an increasingly health-conscious population, such as Whole Foods Markets, Inc. Q. WHAT MAKES THE STOCKS OF HEALTH-CARE COMPANIES ATTRACTIVE? A. As the population ages, we expect the health-care industry to remain vibrant. This sector, particularly pharmaceutical manufacturers, benefited from increasing demand for its services and products. For example, Medicis Pharmaceutical Corp., one of the stocks in the portfolio, has watched its sales grow dramatically as demand for its skin-care products increases. Other health-care stocks that performed well for the Fund included Concentra Managed Care Inc., Sybron International Corp., Omnicare Inc., and Universal Health Services, Inc., the nation's third-largest operator of for-profit hospitals. Q. What is your outlook for the immediate future? A. As 1998 nears its midpoint, conditions appear to be favorable for small-cap stocks. The economy is growing at a healthy pace, and inflation and interest rates remain low. And while the Federal Reserve Board left monetary policy unchanged at its May meeting, it has hinted that it could raise interest rates if economic growth remains strong. Such an increase in interest rates could have a negative impact on corporate profits. Indeed, while profits for the largest companies appear to be gravitating toward the single-digit level, profits remain robust for smaller companies. We believe that if this trend continues, it could make small-cap stocks increasingly more attractive and vault them into a position of market leadership. Such a development would be highly favorable for the Fund. See important fund and index disclosures inside front cover. 3 6 Long-Term Performance AIM Aggressive Growth Fund vs. Benchmark Indexes The chart compares your Fund to benchmark indexes. It is intended to give you a general idea of how your Fund performed compared to the stock market. It is important to understand differences between your Fund and an index. An index measures the performance of a hypothetical portfolio, in this case the Russell 2000 Index and the Lipper Small Cap Funds Index. Unlike your Fund, an index is not managed; therefore there are no sales charges, expenses, or fees. You cannot invest in an index. But if you could buy all the securities that make up an index, you would incur expenses that would affect the return on your investment. ================================================================================ Average Annual Total Returns For periods ended 4/30/98, including sales charges CLASS A SHARES Since Inception (5/1/84) 16.68% 10 Years 20.70 5 Years 24.55 1 Year 40.60 ================================================================================ THE AIM AGGRESSIVE GROWTH FUND GROWTH STORY GROWTH OF A $10,000 INVESTMENT May 1, 1984-April 30, 1998 - -------------------------------------------------------------------------------- AIM Aggressive Growth Fund Russell 2000 Lipper Small Cap Funds Index Index - -------------------------------------------------------------------------------- (In thousands) 5/1/84 $9,452 10,000 10,000 4/85 10,541 11,239 10,987 4/86 13,713 15,167 14,632 4/87 14,514 16,689 15,657 4/88 12,472 15,369 14,982 4/89 13,629 17,734 17,404 4/90 14,056 17,344 17,843 4/91 17,889 19,112 19,816 4/92 21,873 22,372 23,173 4/93 27,320 25,900 26,127 4/94 37,131 29,727 30,192 4/95 47,087 31,877 33,218 4/96 72,334 42,394 46,572 4/97 58,225 42,415 41,668 4/98 86,632 60,401 59,328 ================================================================================ Past performance is no guarantee of comparable future results. Data shown are as of the Fund's fiscal year-end. Your Fund's total return includes sales charges, expenses, and management fees. For Fund performance calculations and descriptions of indexes cited on this page, please refer to the inside front cover. Source: Towers Data Systems HYPO--Registered Trademark-- 5 7 For Consideration THE ROTH IRA: THE POWER TO KEEP MORE Contribute After-Tax Dollars Now ..So You Can Get Federally Tax-Free Savings Later SOME ROTH IRA CONVERSION GUIDELINES If you can check most of these boxes, converting your Traditional IRA to a Roth IRA may make sense for you. o You have assets outside your retirement savings with which you can easily afford to pay the taxes due when you convert. o You have 10 years or more before you retire. The longer you invest tax free, the more you benefit. o Your tax rate will probably be higher in retirement than it is now. If so, you'll pay less taxes now to convert than you would pay at retirement if you withdrew from a traditional IRA. o You plan to convert in 1998. On January 1, 1999, the ability to spread tax payments over four years disappears. o You want to keep making contributions after age 70 1/2 and may wish to pass your IRA assets on to your heirs after your death. A new and potentially more powerful type of IRA-the Roth IRA-became available on January 1, 1998. What makes it more powerful? The Roth IRA gives you the opportunity to keep more of what you earn. Are you eligible to open a Roth IRA? The answer is yes if you or your spouse has earned income for the tax year for which you want to make the contribution, and your adjusted gross income is below $110,000 if you are a single tax filer, $160,000 if you file jointly. TWO KEY ROTH IRA BENEFITS: TAX-FREE AND PENALTY-FREE WITHDRAWALS o Of earnings after five years. Earnings on your Roth IRA are federally tax-free if your Roth IRA account has been open for five years and you are at least 59 1/2 years old, or in the case of death or disability. You may also use up to $10,000 of your earnings to buy a first home (after five years). o Of contributions at any time. For instance, if you make annual contributions of $2,000 for the next three years, you may take out up to $6,000 and use that money for any purpose. HOW YOU MIGHT PUT BOTH BENEFITS TO WORK FOR YOU Here's an example of how you may take full advantage of a Roth IRA. You are 39 1/2 years old. You contribute $2,000 after-tax annually in your Roth IRA every year for 20 years, earning an average annual return of 10%. After 20 years, your account has grown to $126,005. Now at age 59 1/2 you can begin taking withdrawals and pay no federal income tax or penalty on any of your $126,005. Or you can keep your money invested and take it out whenever you need it. THE ROTH IRA: TO CONVERT OR NOT TO CONVERT Can you convert your Traditional IRA to a Roth IRA? The answer is yes if you meet these requirements: You must pay taxes on the amount you convert. If you convert in 1998, you can spread your tax payments over the next four years. This four-year allowance will not be available after December 31, 1998. You cannot convert to a Roth IRA if you are married and file your tax return separately, or if your annual gross income is over $100,000. The Roth IRA Analyzer & Calculator at AIM's Internet Web site- www.aimfunds.com- can help you determine your IRA eligibility status and whether it makes sense for you to convert an existing IRA into a Roth IRA. MAKE YOUR IRA CONVERSION DECISION A TRULY INFORMED ONE Talk to your financial consultant, who knows your specific needs and goals. You may also wish to talk with a tax adviser. The Roth IRA Analyzer & Calculator at AIM's Internet Web site -- www.aimfunds. com -- can help you determine your IRA eligibility status and whether it makes sense for you to convert an existing IRA into a Roth IRA. This discussion does not constitute tax advice. Your tax adviser can provide guidance concerning your particular situation. 6 8 SCHEDULE OF INVESTMENTS April 30, 1998 (Unaudited)
MARKET SHARES VALUE COMMON STOCKS-94.57% AEROSPACE/DEFENSE-0.72% AAR Corp. 337,500 $ 8,838,280 - --------------------------------------------------------------- BE Aerospace, Inc.(a) 200,000 6,237,500 - --------------------------------------------------------------- Orbital Sciences Corp.(a) 150,000 6,675,000 - --------------------------------------------------------------- Precision Castparts Corp. 100,000 6,212,500 - --------------------------------------------------------------- 27,963,280 - --------------------------------------------------------------- AIR FREIGHT-0.32% Airborne Freight Corp. 150,000 5,943,750 - --------------------------------------------------------------- Expeditors International of Washington, Inc. 150,000 6,375,000 - --------------------------------------------------------------- 12,318,750 - --------------------------------------------------------------- AIRLINES-0.14% Alaska Air Group, Inc.(a) 100,000 5,612,500 - --------------------------------------------------------------- AUTO PARTS & EQUIPMENT-0.57% Danaher Corp. 100,000 7,187,500 - --------------------------------------------------------------- Gentex Corp.(a) 250,000 8,437,500 - --------------------------------------------------------------- Keystone Automotive Industries, Inc.(a) 250,000 6,453,125 - --------------------------------------------------------------- 22,078,125 - --------------------------------------------------------------- BANKS (REGIONAL)-2.42% Bank United Corp.-Class A 200,000 10,350,000 - --------------------------------------------------------------- Centura Banks, Inc. 100,000 7,200,000 - --------------------------------------------------------------- Community First Bankshares, Inc. 230,000 11,586,250 - --------------------------------------------------------------- First Republic Bank(a) 300,000 10,312,500 - --------------------------------------------------------------- First Savings Bank of Washington Bancorp, Inc. 150,000 3,984,375 - --------------------------------------------------------------- Imperial Bancorp(a) 225,000 6,595,312 - --------------------------------------------------------------- Provident Bankshares Corp. 210,000 6,825,000 - --------------------------------------------------------------- Southwest Bancorp. of Texas, Inc.(a) 250,000 10,000,000 - --------------------------------------------------------------- Sterling Bancshares, Inc. 225,000 3,937,500 - --------------------------------------------------------------- TCF Financial Corp. 200,000 6,512,500 - --------------------------------------------------------------- Westamerica Bancorp. 225,000 7,425,000 - --------------------------------------------------------------- Zions Bancorp. 175,000 8,946,875 - --------------------------------------------------------------- 93,675,312 - --------------------------------------------------------------- BIOTECHNOLOGY-0.64% Curative Health Services, Inc.(a) 300,000 9,300,000 - --------------------------------------------------------------- IDEXX Laboratories, Inc.(a) 500,000 11,062,500 - ---------------------------------------------------------------
MARKET SHARES VALUE BIOTECHNOLOGY-(CONTINUED) Incyte Pharmaceuticals, Inc.(a) 100,000 $ 4,500,000 - --------------------------------------------------------------- 24,862,500 - --------------------------------------------------------------- BROADCASTING (TELEVISION, RADIO & CABLE)-1.18% Chancellor Media Corp.(a) 200,000 9,487,500 - --------------------------------------------------------------- Heftel Broadcasting Corp.(a) 633,400 27,790,425 - --------------------------------------------------------------- Jacor Communications, Inc.(a) 150,000 8,531,250 - --------------------------------------------------------------- 45,809,175 - --------------------------------------------------------------- BUILDING MATERIALS-0.16% TJ International, Inc. 200,000 6,225,000 - --------------------------------------------------------------- CHEMICALS-0.20% Agrium, Inc. (Canada) 500,000 7,843,750 - --------------------------------------------------------------- CHEMICALS (SPECIALTY)-0.12% OM Group, Inc. 100,000 4,431,250 - --------------------------------------------------------------- COMMUNICATIONS EQUIPMENT-2.30% Brightpoint, Inc.(a) 1,200,000 23,400,000 - --------------------------------------------------------------- Comverse Technology, Inc.(a) 400,000 18,950,000 - --------------------------------------------------------------- Corsair Communications, Inc.(a) 400,000 7,400,000 - --------------------------------------------------------------- Davox Corp.(a) 150,000 3,356,250 - --------------------------------------------------------------- Discreet Logic, Inc.(a) (Canada) 350,000 6,256,250 - --------------------------------------------------------------- Innova Corp.(a) 200,000 3,425,000 - --------------------------------------------------------------- P-COM, Inc.(a) 300,000 5,906,250 - --------------------------------------------------------------- Premisys Communications, Inc.(a) 125,000 3,648,438 - --------------------------------------------------------------- REMEC, Inc.(a) 350,000 8,706,250 - --------------------------------------------------------------- Tollgrade Communications, Inc.(a)(b) 350,000 7,918,750 - --------------------------------------------------------------- 88,967,188 - --------------------------------------------------------------- COMPUTERS (HARDWARE)-0.78% Brooktrout Technology, Inc.(a) 250,000 5,203,125 - --------------------------------------------------------------- IDX Systems Corp.(a) 300,000 13,068,750 - --------------------------------------------------------------- National Instruments Corp.(a) 200,000 7,100,000 - --------------------------------------------------------------- Visual Networks, Inc.(a) 150,000 4,968,750 - --------------------------------------------------------------- 30,340,625 - --------------------------------------------------------------- COMPUTERS (NETWORKING)-0.76% Broadcom Corp.(a) 74,100 3,556,800 - --------------------------------------------------------------- International Network Services(a) 200,000 6,725,000 - --------------------------------------------------------------- MMC Networks, Inc.(a) 200,000 4,475,000 - --------------------------------------------------------------- Premiere Technologies, Inc.(a) 300,000 9,562,500 - ---------------------------------------------------------------
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MARKET SHARES VALUE COMPUTERS (NETWORKING)-(CONTINUED) Xylan Corp.(a) 174,200 $ 4,959,256 - --------------------------------------------------------------- 29,278,556 - --------------------------------------------------------------- COMPUTERS (PERIPHERALS)-1.28% Creative Technology Limited(a) (Singapore) 250,000 5,125,000 - --------------------------------------------------------------- Diamond Multimedia Systems, Inc.(a) 400,000 4,650,000 - --------------------------------------------------------------- DSP Communications, Inc.(a) 250,000 4,171,875 - --------------------------------------------------------------- Network Appliance, Inc.(a) 300,000 10,818,750 - --------------------------------------------------------------- SanDisk Corp.(a) 350,000 7,306,250 - --------------------------------------------------------------- SMART Modular Technologies, Inc.(a) 360,000 8,887,500 - --------------------------------------------------------------- STB Systems, Inc.(a)(b) 600,000 8,587,500 - --------------------------------------------------------------- 49,546,875 - --------------------------------------------------------------- COMPUTERS (SOFTWARE & SERVICES)-11.08% Advanced Fibre Communications, Inc.(a) 300,000 12,712,500 - --------------------------------------------------------------- Applied Voice Technology, Inc.(a)(b) 309,000 13,634,625 - --------------------------------------------------------------- Aspect Development, Inc.(a) 100,000 6,331,250 - --------------------------------------------------------------- Aspen Technologies, Inc.(a) 61,500 3,005,812 - --------------------------------------------------------------- Avant! Corp.(a) 400,000 11,600,000 - --------------------------------------------------------------- Axent Technologies, Inc.(a) 250,000 6,562,500 - --------------------------------------------------------------- CBT Group PLC-ADR(a) (Ireland) 150,000 7,631,250 - --------------------------------------------------------------- Check Point Software Technologies Ltd.(a) (Israel) 250,000 7,343,750 - --------------------------------------------------------------- Citrix Systems, Inc.(a) 400,000 24,850,000 - --------------------------------------------------------------- Computer Management Sciences, Inc.(a) 175,000 4,506,250 - --------------------------------------------------------------- Concord EFS, Inc.(a) 575,000 18,112,500 - --------------------------------------------------------------- DA Consulting Group, Inc.(a) 80,400 1,417,050 - --------------------------------------------------------------- Documentum, Inc.(a) 155,300 8,366,788 - --------------------------------------------------------------- DSP Group, Inc.(a) 400,000 8,450,000 - --------------------------------------------------------------- Engineering Animation, Inc.(a) 435,150 20,506,444 - --------------------------------------------------------------- Gemstar International Group Ltd.(a) 250,000 9,656,250 - --------------------------------------------------------------- Harbinger Corp.(a) 250,000 9,093,750 - --------------------------------------------------------------- HNC Software Inc.(a) 100,000 3,900,000 - --------------------------------------------------------------- Icon CMT Corp.(a) 150,000 3,131,250 - --------------------------------------------------------------- IDT Corp.(a) 175,000 5,370,313 - --------------------------------------------------------------- Integrated Systems, Inc.(a) 200,000 3,775,000 - --------------------------------------------------------------- ISS Group, Inc.(a) 23,000 1,017,750 - --------------------------------------------------------------- Jack Henry & Associates 300,000 10,425,000 - --------------------------------------------------------------- JDA Software Group, Inc.(a) 209,600 10,597,900 - --------------------------------------------------------------- Learning Company, Inc. (The)(a) 250,000 7,156,250 - --------------------------------------------------------------- Legato Systems, Inc.(a) 500,000 15,812,500 - --------------------------------------------------------------- Manugistics Group, Inc.(a) 83,500 5,010,000 - --------------------------------------------------------------- Medical Manager Corp.(a) 350,000 10,346,875 - ---------------------------------------------------------------
MARKET SHARES VALUE COMPUTERS (SOFTWARE & SERVICES)-(CONTINUED) Mercury Interactive Corp.(a) 200,000 $ 8,100,000 - --------------------------------------------------------------- Midway Games Inc.(a) 300,000 5,550,000 - --------------------------------------------------------------- Mobius Management Systems, Inc.(a) 57,300 1,060,050 - --------------------------------------------------------------- Network Solutions, Inc.-Class A(a) 99,800 5,289,400 - --------------------------------------------------------------- NOVA Corp.(a) 300,000 10,200,000 - --------------------------------------------------------------- PC Connection, Inc.(a) 200,000 4,337,500 - --------------------------------------------------------------- Peerless Systems Corp.(a)(b) 600,000 10,537,500 - --------------------------------------------------------------- Platinum Technology, Inc.(a) 200,000 5,100,000 - --------------------------------------------------------------- QuadraMed Corp.(a) 325,000 9,262,500 - --------------------------------------------------------------- Radiant Systems, Inc.(a) 500,000 11,250,000 - --------------------------------------------------------------- RWD Technologies, Inc.(a) 100,000 2,525,000 - --------------------------------------------------------------- Sapient Corp.(a) 150,000 7,406,250 - --------------------------------------------------------------- Security Dynamics Technologies, Inc.(a) 175,000 4,221,875 - --------------------------------------------------------------- Siebel Systems, Inc.(a) 150,000 3,881,250 - --------------------------------------------------------------- Software AG Systems, Inc.(a) 500,000 12,375,000 - --------------------------------------------------------------- Sterling Software, Inc.(a) 200,000 5,287,500 - --------------------------------------------------------------- Systems & Computer Technology Corp.(a) 100,000 5,650,000 - --------------------------------------------------------------- Transaction Systems Architects, Inc.-Class A(a) 200,000 8,400,000 - --------------------------------------------------------------- USWeb Corp.(a) 425,000 9,695,313 - --------------------------------------------------------------- Veritas Software Corp.(a) 400,000 21,900,000 - --------------------------------------------------------------- Visio Corp.(a) 275,000 13,612,500 - --------------------------------------------------------------- Whittman-Hart, Inc.(a) 100,000 4,387,500 - --------------------------------------------------------------- Wind River Systems(a) 250,000 8,656,250 - --------------------------------------------------------------- 429,008,945 - --------------------------------------------------------------- CONSUMER (JEWELRY, NOVELTIES & GIFTS)-0.84% Action Performance Companies, Inc.(a) 500,000 17,312,500 - --------------------------------------------------------------- Blyth Industries, Inc.(a) 400,000 14,675,000 - --------------------------------------------------------------- 31,987,500 - --------------------------------------------------------------- CONSUMER FINANCE-1.05% Federal Agricultural Mortgage Corp.-Class C(a)(b) 172,300 9,304,200 - --------------------------------------------------------------- FIRSTPLUS Financial Group, Inc.(a) 450,000 21,825,000 - --------------------------------------------------------------- IMC Mortgage Co.(a) 600,000 9,562,500 - --------------------------------------------------------------- 40,691,700 - --------------------------------------------------------------- DISTRIBUTORS (FOOD & HEALTH)-0.50% Owens & Minor, Inc. Holding Co. 525,500 9,360,468 - --------------------------------------------------------------- Patterson Dental Co.(a) 150,000 4,415,625 - --------------------------------------------------------------- Richfood Holdings, Inc. 200,000 5,487,500 - --------------------------------------------------------------- 19,263,593 - ---------------------------------------------------------------
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MARKET SHARES VALUE ELECTRICAL EQUIPMENT-3.60% Advanced Lighting Technologies, Inc.(a) 250,000 $ 6,937,500 - --------------------------------------------------------------- AFC Cable Systems, Inc.(a) 150,000 5,212,500 - --------------------------------------------------------------- Avid Technology, Inc.(a) 300,000 13,012,500 - --------------------------------------------------------------- Berg Electronics Corp.(a) 200,000 4,762,500 - --------------------------------------------------------------- Chicago Miniature Lamp, Inc.(a) 150,000 5,756,250 - --------------------------------------------------------------- Encore Wire Corp.(a) 200,000 7,750,000 - --------------------------------------------------------------- Pinnacle Systems, Inc.(a) 350,000 14,087,500 - --------------------------------------------------------------- RELTEC Corp.(a) 23,500 937,062 - --------------------------------------------------------------- Sanmina Corp.(a) 275,000 24,750,000 - --------------------------------------------------------------- Sawtek Inc.(a) 250,000 7,593,750 - --------------------------------------------------------------- SCI Systems, Inc.(a) 300,000 12,356,250 - --------------------------------------------------------------- Symbol Technologies, Inc. 450,000 17,325,000 - --------------------------------------------------------------- Uniphase Corp.(a) 350,000 18,987,500 - --------------------------------------------------------------- 139,468,312 - --------------------------------------------------------------- ELECTRONICS (COMPONENT DISTRIBUTORS)-0.20% Anicom, Inc.(a) 500,000 7,812,500 - --------------------------------------------------------------- ELECTRONICS (DEFENSE)-0.20% Aeroflex Inc.(a) 575,000 7,834,375 - --------------------------------------------------------------- ELECTRONICS (INSTRUMENTATION)-1.02% Aavid Thermal Technologies(a) 200,000 6,987,500 - --------------------------------------------------------------- CellStar Corp.(a) 150,000 4,893,750 - --------------------------------------------------------------- Thermo Optek Corp.(a) 350,000 6,300,000 - --------------------------------------------------------------- ThermoQuest Corp.(a) 300,000 5,362,500 - --------------------------------------------------------------- Waters Corp.(a) 300,000 16,050,000 - --------------------------------------------------------------- 39,593,750 - --------------------------------------------------------------- ELECTRONICS (SEMICONDUCTORS)-3.80% Applied Micro Circuits Corp.(a) 125,000 3,453,125 - --------------------------------------------------------------- ATMI Inc.(a) 150,000 4,181,250 - --------------------------------------------------------------- Burr-Brown Corp.(a) 400,000 12,175,000 - --------------------------------------------------------------- Flextronics International Ltd.(a) 500,000 23,750,000 - --------------------------------------------------------------- Integrated Device Technology, Inc.(a) 750,000 9,046,875 - --------------------------------------------------------------- Lattice Semiconductor Corp.(a) 100,000 4,562,500 - --------------------------------------------------------------- Level One Communications, Inc.(a) 337,500 10,504,688 - --------------------------------------------------------------- Micrel, Inc.(a) 300,000 11,775,000 - --------------------------------------------------------------- Microchip Technology, Inc.(a) 250,000 7,093,750 - --------------------------------------------------------------- PMC-Sierra, Inc.(a) 250,000 11,375,000 - --------------------------------------------------------------- Semtech Corporation(a) 500,000 11,937,500 - --------------------------------------------------------------- Sipex Corp.(a)(b) 700,000 13,912,500 - --------------------------------------------------------------- Vitesse Semiconductor Corp.(a) 400,000 23,075,000 - --------------------------------------------------------------- 146,842,188 - ---------------------------------------------------------------
MARKET SHARES VALUE ENTERTAINMENT-0.28% Cinar Films Inc.-Class B(a) (Canada) 121,000 $ 2,329,250 - --------------------------------------------------------------- SFX Entertainment, Inc.-Class A(a) 250,000 8,625,000 - --------------------------------------------------------------- 10,954,250 - --------------------------------------------------------------- EQUIPMENT (SEMICONDUCTORS)-0.65% Credence Systems Corp.(a) 250,000 6,890,625 - --------------------------------------------------------------- Photronics, Inc.(a) 500,000 18,437,500 - --------------------------------------------------------------- 25,328,125 - --------------------------------------------------------------- FINANCIAL (DIVERSIFIED)-0.92% AmeriTrade Holding Corp.(a) 300,000 8,475,000 - --------------------------------------------------------------- Amresco, Inc.(a) 350,000 12,687,500 - --------------------------------------------------------------- Insignia Financial Group, Inc.-Class A(a) 400,000 10,650,000 - --------------------------------------------------------------- Ocwen Financial Corp.(a) 150,000 3,881,250 - --------------------------------------------------------------- 35,693,750 - --------------------------------------------------------------- FOODS-0.15% Suiza Foods Corp.(a) 100,000 5,925,000 - --------------------------------------------------------------- FOOTWEAR-0.57% Timberland Co. (The)(a) 125,000 10,703,125 - --------------------------------------------------------------- Wolverine World Wide, Inc. 400,000 11,550,000 - --------------------------------------------------------------- 22,253,125 - --------------------------------------------------------------- HEALTH CARE (DRUGS-GENERIC & OTHER)-1.28% Alpharma, Inc.-Class A 495,834 11,280,224 - --------------------------------------------------------------- Biovail Corporation International(a) (Canada) 100,000 4,087,500 - --------------------------------------------------------------- Columbia Laboratories, Inc.(a) 750,000 6,750,000 - --------------------------------------------------------------- Medicis Pharmaceutical Corp.(a) 405,000 17,313,750 - --------------------------------------------------------------- Parexel International Corp.(a) 300,000 10,050,000 - --------------------------------------------------------------- 49,481,474 - --------------------------------------------------------------- HEALTH CARE (HOSPITAL MANAGEMENT)-1.71% Health Management Associates, Inc.-Class A(a) 600,093 18,902,930 - --------------------------------------------------------------- Province Healthcare Co.(a) 299,200 8,265,400 - --------------------------------------------------------------- Quorum Health Group, Inc.(a) 450,000 14,456,250 - --------------------------------------------------------------- Universal Health Services, Inc.-Class B(a) 425,000 24,464,062 - --------------------------------------------------------------- 66,088,642 - --------------------------------------------------------------- HEALTH CARE (LONG TERM CARE)-1.09% Assisted Living Concepts, Inc.(a) 605,000 11,116,875 - --------------------------------------------------------------- Health Care and Retirement Corp.(a) 325,000 13,243,750 - --------------------------------------------------------------- HEALTHSOUTH Corp.(a) 300,000 9,056,250 - ---------------------------------------------------------------
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MARKET SHARES VALUE HEALTH CARE (LONG TERM CARE)-(CONTINUED) Sunrise Assisted Living, Inc.(a) 200,000 $ 8,962,500 - --------------------------------------------------------------- 42,379,375 - --------------------------------------------------------------- HEALTH CARE (MANAGED CARE)-0.95% American Oncology Resources, Inc.(a) 550,000 8,250,000 - --------------------------------------------------------------- Concentra Managed Care, Inc.(a) 600,000 18,675,000 - --------------------------------------------------------------- Express Scripts, Inc.-Class A(a) 125,000 10,000,000 - --------------------------------------------------------------- 36,925,000 - --------------------------------------------------------------- HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-2.99% ADAC Laboratories(a) 350,000 7,612,500 - --------------------------------------------------------------- Arterial Vascular Engineering, Inc.(a) 250,000 8,843,750 - --------------------------------------------------------------- DENTSPLY International Inc. 300,000 9,862,500 - --------------------------------------------------------------- ESC Medical Systems Ltd.(a) (Israel) 47,850 1,555,125 - --------------------------------------------------------------- Henry Schein, Inc.(a) 550,000 21,450,000 - --------------------------------------------------------------- Hologic, Inc.(a) 200,000 4,700,000 - --------------------------------------------------------------- MiniMed, Inc.(a) 150,000 7,500,000 - --------------------------------------------------------------- Physio-Control International Corp.(a) 225,000 5,175,000 - --------------------------------------------------------------- PSS World Medical, Inc.(a) 600,000 13,462,500 - --------------------------------------------------------------- ResMed, Inc.(a) 200,000 7,912,500 - --------------------------------------------------------------- Safeskin Corporation(a) 69,700 2,483,063 - --------------------------------------------------------------- Sybron International Corp.(a) 750,000 19,875,000 - --------------------------------------------------------------- VISX, Inc.(a) 125,000 5,515,625 - --------------------------------------------------------------- 115,947,563 - --------------------------------------------------------------- HEALTH CARE (SPECIALIZED SERVICES)-3.79% American HomePatient, Inc.(a) 65,400 1,205,812 - --------------------------------------------------------------- BioReliance Corp.(a) 274,500 4,254,750 - --------------------------------------------------------------- Boron, LePore & Associates, Inc.(a) 375,000 14,062,500 - --------------------------------------------------------------- Covance, Inc.(a) 350,000 7,503,125 - --------------------------------------------------------------- First Consulting Group, Inc.(a) 200,000 4,800,000 - --------------------------------------------------------------- Hooper Holmes, Inc. 164,900 3,885,456 - --------------------------------------------------------------- Lincare Holdings, Inc.(a) 125,000 10,140,625 - --------------------------------------------------------------- NCS HealthCare, Inc.-Class A(a) 325,000 9,546,875 - --------------------------------------------------------------- Ocular Sciences, Inc.(a) 200,000 5,600,000 - --------------------------------------------------------------- Omnicare, Inc. 500,000 17,125,000 - --------------------------------------------------------------- Orthodontic Centers of America, Inc.(a) 625,000 13,359,375 - --------------------------------------------------------------- RehabCare Group, Inc.(a) 200,000 6,162,500 - --------------------------------------------------------------- Res-Care, Inc.(a) 100,000 3,912,500 - --------------------------------------------------------------- Superior Consultant Holdings Corp.(a) 393,000 15,155,063 - --------------------------------------------------------------- Total Renal Care Holdings, Inc.(a) 300,000 9,937,500 - --------------------------------------------------------------- Transition Systems, Inc.(a) 600,000 13,500,000 - ---------------------------------------------------------------
MARKET SHARES VALUE HEALTH CARE (SPECIALIZED SERVICES)-(CONTINUED) Veterinary Centers of America, Inc.(a) 350,000 $ 6,540,625 - --------------------------------------------------------------- 146,691,706 - --------------------------------------------------------------- HOMEBUILDING-0.54% American Homestar Corp.(a) 600,000 12,450,000 - --------------------------------------------------------------- Toll Brothers, Inc.(a) 300,000 8,362,500 - --------------------------------------------------------------- 20,812,500 - --------------------------------------------------------------- HOUSEHOLD FURNITURE & APPLIANCES-0.20% Ethan Allen Interiors, Inc. 150,000 7,640,625 - --------------------------------------------------------------- HOUSEWARES-1.33% Central Garden and Pet Co.(a) 250,000 8,562,500 - --------------------------------------------------------------- Helen of Troy Ltd.(a) 1,200,000 24,600,000 - --------------------------------------------------------------- Windmere-Durable Holdings Inc.(a) 750,000 18,375,000 - --------------------------------------------------------------- 51,537,500 - --------------------------------------------------------------- INSURANCE (LIFE & HEALTH)-0.18% Penn Treaty American Corp.(a) 225,000 6,862,500 - --------------------------------------------------------------- INSURANCE (MULTI-LINE)-0.22% Century Business Services, Inc.(a) 450,000 8,662,500 - --------------------------------------------------------------- INSURANCE (PROPERTY-CASUALTY)-1.07% CMAC Investment Corp. 300,000 19,368,750 - --------------------------------------------------------------- Executive Risk Inc. 185,000 12,337,188 - --------------------------------------------------------------- Fidelity National Financial, Inc. 150,000 5,531,250 - --------------------------------------------------------------- HCC Insurance Holdings, Inc. 200,000 4,350,000 - --------------------------------------------------------------- 41,587,188 - --------------------------------------------------------------- LAND DEVELOPMENT-0.27% Fairfield Communities, Inc.(a) 450,000 10,518,750 - --------------------------------------------------------------- LEISURE TIME (PRODUCTS)-0.22% North Face, Inc. (The)(a) 200,000 4,487,500 - --------------------------------------------------------------- Speedway Motorsports, Inc.(a) 150,000 4,096,875 - --------------------------------------------------------------- 8,584,375 - --------------------------------------------------------------- LODGING-HOTELS-0.42% American Skiing Co.(a) 450,000 6,975,000 - --------------------------------------------------------------- Prime Hospitality Corp.(a) 450,000 9,309,375 - --------------------------------------------------------------- 16,284,375 - --------------------------------------------------------------- MACHINERY (DIVERSIFIED)-0.50% Applied Power, Inc.-Class A 250,000 9,343,750 - --------------------------------------------------------------- Gardner Denver Machinery Inc.(a) 350,000 9,865,625 - --------------------------------------------------------------- 19,209,375 - ---------------------------------------------------------------
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MARKET SHARES VALUE MANUFACTURING (DIVERSIFIED)-0.16% AMETEK, Inc. 200,000 $ 6,087,500 - --------------------------------------------------------------- MANUFACTURING (SPECIALIZED)-1.07% Coflexip S.A.-ADR (France) 200,000 14,250,000 - --------------------------------------------------------------- Halter Marine Group, Inc.(a) 400,000 7,250,000 - --------------------------------------------------------------- JLG Industries, Inc. 500,000 8,156,250 - --------------------------------------------------------------- Zebra Technologies Corp.(a) 300,000 11,625,000 - --------------------------------------------------------------- 41,281,250 - --------------------------------------------------------------- OFFICE EQUIPMENT & SUPPLIES-1.69% Daisytek International Corp.(a) 750,000 18,187,500 - --------------------------------------------------------------- Herman Miller, Inc. 500,000 15,093,750 - --------------------------------------------------------------- Mail-Well, Inc.(a) 400,000 19,350,000 - --------------------------------------------------------------- United Stationers, Inc.(a) 200,000 12,625,000 - --------------------------------------------------------------- 65,256,250 - --------------------------------------------------------------- OIL & GAS (DRILLING & EQUIPMENT)-5.63% Camco International, Inc. 225,000 15,271,875 - --------------------------------------------------------------- CE Franklin Ltd.(a) 650,000 4,468,750 - --------------------------------------------------------------- Cliffs Drilling Co.(a) 150,000 7,396,875 - --------------------------------------------------------------- Core Laboratories N.V.(a) (Netherlands) 500,000 14,187,500 - --------------------------------------------------------------- Dawson Geophysical Co.(a)(b) 250,000 4,343,750 - --------------------------------------------------------------- EVI, Inc.(a) 450,000 23,962,500 - --------------------------------------------------------------- Friede Goldman International Inc.(a) 150,000 6,037,500 - --------------------------------------------------------------- Global Industries Ltd.(a) 550,000 12,478,125 - --------------------------------------------------------------- Gulf Island Fabrication, Inc.(a) 100,000 2,325,000 - --------------------------------------------------------------- Input/Output, Inc.(a) 400,000 9,950,000 - --------------------------------------------------------------- Marine Drilling Companies, Inc.(a) 300,000 7,293,750 - --------------------------------------------------------------- Maverick Tube Corp.(a) 400,000 6,975,000 - --------------------------------------------------------------- National-Oilwell, Inc.(a) 701,498 26,613,080 - --------------------------------------------------------------- Newpark Resources, Inc.(a) 600,000 14,437,500 - --------------------------------------------------------------- Patterson Energy, Inc.(a) 200,000 2,800,000 - --------------------------------------------------------------- Precision Drilling Corp.(a) (Canada) 250,000 5,968,750 - --------------------------------------------------------------- Pride International, Inc.(a) 400,000 9,725,000 - --------------------------------------------------------------- Tuboscope Vetco International Corp.(a) 400,000 9,475,000 - --------------------------------------------------------------- Varco International, Inc.(a) 500,000 15,375,000 - --------------------------------------------------------------- Veritas DGC, Inc.(a) 350,000 18,965,625 - --------------------------------------------------------------- 218,050,580 - --------------------------------------------------------------- OIL & GAS (EXPLORATION & PRODUCTION)-1.02% Cabot Oil and Gas Corp.-Class A 300,000 7,031,250 - --------------------------------------------------------------- Callon Petroleum Co.(a) 150,000 2,662,500 - --------------------------------------------------------------- Comstock Resources, Inc.(a) 350,000 4,506,250 - --------------------------------------------------------------- Devon Energy Corp. 100,000 3,987,500 - ---------------------------------------------------------------
MARKET SHARES VALUE OIL & GAS (EXPLORATION & PRODUCTION)-(CONTINUED) Newfield Exploration Co.(a) 325,000 $ 7,881,250 - --------------------------------------------------------------- St. Mary Land & Exploration Co. 100,000 3,200,000 - --------------------------------------------------------------- Stolt Comex Seaway, S.A.(a) (United Kingdom) 200,000 6,500,000 - --------------------------------------------------------------- Vintage Petroleum, Inc. 200,000 3,900,000 - --------------------------------------------------------------- 39,668,750 - --------------------------------------------------------------- PERSONAL CARE-1.25% NBTY, Inc.(a) 300,000 6,000,000 - --------------------------------------------------------------- Rexall Sundown, Inc.(a) 700,000 22,356,250 - --------------------------------------------------------------- Steiner Leisure Ltd.(a) 75,000 2,367,188 - --------------------------------------------------------------- Twinlab Corp.(a) 450,000 17,662,500 - --------------------------------------------------------------- 48,385,938 - --------------------------------------------------------------- PUBLISHING-0.22% Meredith Corp. 200,000 8,600,000 - --------------------------------------------------------------- RAILROADS-0.27% MotivePower Industries, Inc.(a) 400,000 10,300,000 - --------------------------------------------------------------- REAL ESTATE INVESTMENT TRUST-0.17% LNR Property Corp. 150,000 4,012,500 - --------------------------------------------------------------- Patriot American Hospitality, Inc. 99,526 2,513,032 - --------------------------------------------------------------- 6,525,532 - --------------------------------------------------------------- RESTAURANTS-2.41% Cheesecake Factory (The)(a) 464,300 11,723,575 - --------------------------------------------------------------- CKE Restaurants, Inc. 300,000 10,387,500 - --------------------------------------------------------------- Dave & Buster's, Inc.(a) 300,000 7,837,500 - --------------------------------------------------------------- Foodmaker, Inc.(a) 300,000 5,700,000 - --------------------------------------------------------------- Landry's Seafood Restaurants, Inc.(a) 375,000 10,687,500 - --------------------------------------------------------------- Papa John's International, Inc.(a) 200,000 8,350,000 - --------------------------------------------------------------- Rainforest Cafe, Inc.(a) 650,000 9,851,563 - --------------------------------------------------------------- Showbiz Pizza Time, Inc.(a) 434,000 16,763,250 - --------------------------------------------------------------- Sonic Corp.(a) 250,000 8,000,000 - --------------------------------------------------------------- TCBY Enterprises, Inc. 475,000 4,185,938 - --------------------------------------------------------------- 93,486,826 - --------------------------------------------------------------- RETAIL (COMPUTERS & ELECTRONICS)-0.97% Best Buy Co., Inc.(a) 100,000 7,025,000 - --------------------------------------------------------------- CDW Computer Centers, Inc.(a) 300,000 14,550,000 - --------------------------------------------------------------- CompUSA, Inc.(a) 125,000 2,320,313 - --------------------------------------------------------------- Tech Data Corp.(a) 275,000 13,715,625 - --------------------------------------------------------------- 37,610,938 - ---------------------------------------------------------------
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MARKET SHARES VALUE RETAIL (DISCOUNTERS)-1.44% Ames Department Stores, Inc.(a) 600,000 $ 14,700,000 - --------------------------------------------------------------- Dollar Tree Stores, Inc.(a) 285,900 15,510,075 - --------------------------------------------------------------- Family Dollar Stores, Inc. 250,000 8,500,000 - --------------------------------------------------------------- 99 Cents Only Stores(a) 262,925 10,024,016 - --------------------------------------------------------------- Stein Mart, Inc.(a) 200,000 7,050,000 - --------------------------------------------------------------- 55,784,091 - --------------------------------------------------------------- RETAIL (FOOD CHAINS)-0.16% Whole Foods Market, Inc.(a) 100,000 6,187,500 - --------------------------------------------------------------- RETAIL (GENERAL MERCHANDISE)-0.51% Fred Meyer, Inc.(a) 437,500 19,632,813 - --------------------------------------------------------------- RETAIL (SPECIALTY)-4.17% BOWLIN Outdoor Advertising & Travel Centers Inc.(a)(b) 220,000 2,172,500 - --------------------------------------------------------------- Finish Line, Inc. (The)-Class A(a) 600,000 14,850,000 - --------------------------------------------------------------- Garden Ridge Corp.(a) 250,000 4,781,250 - --------------------------------------------------------------- Genesco Inc.(a) 700,000 11,856,250 - --------------------------------------------------------------- Inacom Corp.(a) 600,000 21,487,500 - --------------------------------------------------------------- Just for Feet, Inc.(a) 500,000 11,000,000 - --------------------------------------------------------------- Linens 'N Things, Inc.(a) 200,000 12,050,000 - --------------------------------------------------------------- Michaels Stores, Inc.(a) 300,000 9,075,000 - --------------------------------------------------------------- Musicland Stores Corp.(a) 250,000 3,062,500 - --------------------------------------------------------------- O'Reilly Automotive, Inc.(a) 250,000 6,875,000 - --------------------------------------------------------------- Party City Corp.(a) 262,500 7,284,375 - --------------------------------------------------------------- PETsMART, Inc.(a) 1,000,000 11,750,000 - --------------------------------------------------------------- Pier 1 Imports, Inc. 500,000 13,187,500 - --------------------------------------------------------------- Sunglass Hut International, Inc.(a) 400,000 3,825,000 - --------------------------------------------------------------- Trans World Entertainment Corp.(a) 500,000 13,500,000 - --------------------------------------------------------------- Williams-Sonoma, Inc.(a) 100,000 5,493,750 - --------------------------------------------------------------- Zale Corp.(a) 300,000 9,037,500 - --------------------------------------------------------------- 161,288,125 - --------------------------------------------------------------- RETAIL (SPECIALTY-APPAREL)-2.44% Abercrombie & Fitch Co.-Class A(a) 100,000 4,450,000 - --------------------------------------------------------------- American Eagle Outfitters, Inc.(a) 70,050 4,097,925 - --------------------------------------------------------------- Buckle, Inc. (The)(a) 340,000 17,212,500 - --------------------------------------------------------------- Gadzooks, Inc.(a) 200,000 5,250,000 - --------------------------------------------------------------- Goody's Family Clothing, Inc.(a) 200,000 9,900,000 - --------------------------------------------------------------- Men's Wearhouse, Inc. (The)(a) 500,000 21,062,500 - --------------------------------------------------------------- Pacific Sunwear of California(a) 500,000 22,062,500 - --------------------------------------------------------------- Stage Stores, Inc.(a) 96,400 4,958,575 - ---------------------------------------------------------------
MARKET SHARES VALUE RETAIL (SPECIALTY-APPAREL)-(CONTINUED) Wet Seal, Inc.-Class A(a) 200,000 $ 5,525,000 - --------------------------------------------------------------- 94,519,000 - --------------------------------------------------------------- SAVINGS & LOAN COMPANIES-0.24% Webster Financial Corp. 270,000 9,146,250 - --------------------------------------------------------------- SERVICES (ADVERTISING/MARKETING)-0.88% Abacus Direct Corp.(a) 200,000 11,375,000 - --------------------------------------------------------------- Catalina Marketing Corp.(a) 100,000 5,200,000 - --------------------------------------------------------------- Market Facts, Inc.(a) 200,000 4,600,000 - --------------------------------------------------------------- Metris Companies Inc. 225,000 12,754,688 - --------------------------------------------------------------- 33,929,688 - --------------------------------------------------------------- SERVICES (COMMERCIAL & CONSUMER)-2.64% ABR Information Services, Inc.(a) 250,000 7,234,375 - --------------------------------------------------------------- Caribiner International, Inc.(a) 74,500 1,490,000 - --------------------------------------------------------------- Cerner Corp.(a) 475,000 14,160,938 - --------------------------------------------------------------- Championship Auto Racing Teams, Inc.(a) 100,000 1,887,500 - --------------------------------------------------------------- Children's Comprehensive Services, Inc.(a)(b) 436,100 8,176,875 - --------------------------------------------------------------- Equity Corp. International(a) 450,000 11,165,625 - --------------------------------------------------------------- G & K Services, Inc.-Class A 100,000 4,025,000 - --------------------------------------------------------------- INSpire Insurance Solutions, Inc.(a) 150,000 5,043,750 - --------------------------------------------------------------- Iron Mountain, Inc.(a) 100,000 4,200,000 - --------------------------------------------------------------- MSC Industrial Direct Co., Inc.-Class A(a) 160,000 8,140,000 - --------------------------------------------------------------- Regis Corp. 125,000 3,546,875 - --------------------------------------------------------------- Ritchie Bros. Auctioneers Inc.(a) (Canada) 155,100 4,178,006 - --------------------------------------------------------------- Stewart Enterprises, Inc.-Class A 800,000 20,600,000 - --------------------------------------------------------------- Strayer Education, Inc. 230,850 8,483,738 - --------------------------------------------------------------- 102,332,682 - --------------------------------------------------------------- SERVICES (COMPUTER SYSTEMS)-2.53% Analysts International Corp. 200,000 5,800,000 - --------------------------------------------------------------- Cambridge Technology Partners, Inc.(a) 200,000 10,450,000 - --------------------------------------------------------------- Ciber, Inc.(a) 354,000 11,505,000 - --------------------------------------------------------------- Compucom Systems, Inc.(a) 250,000 1,875,000 - --------------------------------------------------------------- Computer Task Group, Inc. 150,000 5,831,250 - --------------------------------------------------------------- Insight Enterprises, Inc.(a) 500,000 19,937,500 - --------------------------------------------------------------- Keane, Inc.(a) 200,000 10,050,000 - --------------------------------------------------------------- Leasing Solutions, Inc.(a)(b) 410,000 11,326,250 - --------------------------------------------------------------- SunGard Data Systems Inc.(a) 600,000 21,375,000 - --------------------------------------------------------------- 98,150,000 - --------------------------------------------------------------- SERVICES (DATA PROCESSING)-4.18% Affiliated Computer Services, Inc.(a) 550,000 19,318,750 - ---------------------------------------------------------------
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MARKET SHARES VALUE SERVICES (DATA PROCESSING)-(CONTINUED) Billing Information Concepts Corp.(a) 900,000 $ 25,200,000 - --------------------------------------------------------------- Computer Horizons Corp.(a) 150,000 5,690,625 - --------------------------------------------------------------- CSG Systems International, Inc.(a) 500,000 22,750,000 - --------------------------------------------------------------- Envoy Corp.(a) 300,000 12,637,500 - --------------------------------------------------------------- FactSet Research Systems, Inc.(a) 190,800 6,678,000 - --------------------------------------------------------------- Hyperion Software Corp.(a) 300,000 13,012,500 - --------------------------------------------------------------- MedQuist, Inc.(a) 200,000 9,750,000 - --------------------------------------------------------------- National Computer Systems, Inc. 400,000 10,000,000 - --------------------------------------------------------------- PMT Services, Inc.(a) 600,000 11,700,000 - --------------------------------------------------------------- Saville Systems Ireland PLC-ADR(a) (Ireland) 500,000 24,937,500 - --------------------------------------------------------------- 161,674,875 - --------------------------------------------------------------- SERVICES (EMPLOYMENT)-1.16% Metamor Worldwide, Inc.(a) 175,000 6,693,750 - --------------------------------------------------------------- RCM Technologies, Inc.(a) 200,000 4,800,000 - --------------------------------------------------------------- Renaissance Worldwide Inc.(a) 300,000 5,381,250 - --------------------------------------------------------------- Robert Half International, Inc.(a) 250,000 13,531,250 - --------------------------------------------------------------- Romac International, Inc.(a) 400,000 10,600,000 - --------------------------------------------------------------- Vincam Group, Inc. (The)(a) 150,000 4,068,750 - --------------------------------------------------------------- 45,075,000 - --------------------------------------------------------------- SERVICES (FACILITIES & ENVIRONMENTAL)-0.33% Cornell Corrections, Inc.(a) 350,000 7,918,750 - --------------------------------------------------------------- Tetra Tech, Inc.(a) 200,000 4,850,000 - --------------------------------------------------------------- 12,768,750 - --------------------------------------------------------------- SPECIALTY PRINTING-0.76% Applied Graphics Technologies, Inc.(a) 75,000 3,750,000 - --------------------------------------------------------------- Consolidated Graphics, Inc.(a) 200,000 11,537,500 - --------------------------------------------------------------- Valassis Communications, Inc.(a) 200,000 7,850,000 - --------------------------------------------------------------- World Color Press, Inc.(a) 200,000 6,400,000 - --------------------------------------------------------------- 29,537,500 - --------------------------------------------------------------- TELECOMMUNICATIONS (CELLULAR/WIRELESS)-0.44% International Telecommunication Data Systems, Inc.(a) 245,050 7,412,763 - --------------------------------------------------------------- Powerwave Technologies, Inc.(a) 300,000 5,662,500 - --------------------------------------------------------------- World Access, Inc.(a) 100,000 3,862,500 - --------------------------------------------------------------- 16,937,763 - --------------------------------------------------------------- TELECOMMUNICATIONS (LONG DISTANCE)-0.15% Pacific Gateway Exchange, Inc.(a) 100,000 5,700,000 - --------------------------------------------------------------- TELEPHONE-0.18% GeoTel Communications Corp.(a) 250,000 6,906,250 - ---------------------------------------------------------------
MARKET SHARES VALUE TEXTILES (APPAREL)-1.04% Ashworth, Inc.(a) 450,000 $ 7,537,500 - --------------------------------------------------------------- Nautica Enterprises, Inc.(a) 150,000 3,731,250 - --------------------------------------------------------------- Quicksilver, Inc.(a) 195,000 3,668,438 - --------------------------------------------------------------- St. John Knits, Inc. 400,000 17,850,000 - --------------------------------------------------------------- Tommy Hilfiger Corp.(a) 125,000 7,625,000 - --------------------------------------------------------------- 40,412,188 - --------------------------------------------------------------- TEXTILES (HOME FURNISHINGS)-0.65% Mohawk Industries, Inc.(a) 375,000 11,578,125 - --------------------------------------------------------------- WestPoint Stevens, Inc.(a) 400,000 13,400,000 - --------------------------------------------------------------- 24,978,125 - --------------------------------------------------------------- TRUCKERS-0.56% Heartland Express, Inc.(a) 150,000 3,731,250 - --------------------------------------------------------------- M.S. Carriers, Inc.(a) 200,000 6,800,000 - --------------------------------------------------------------- Swift Transportation Co., Inc.(a) 376,700 8,617,013 - --------------------------------------------------------------- Werner Enterprises, Inc. 100,000 2,412,500 - --------------------------------------------------------------- 21,560,763 - --------------------------------------------------------------- TRUCKS & PARTS-0.40% Wabash National Corp. 500,000 15,437,500 - --------------------------------------------------------------- WASTE MANAGEMENT-1.64% Allied Waste Industries, Inc.(a) 500,000 13,750,000 - --------------------------------------------------------------- American Disposal Services, Inc.(a) 525,000 21,049,219 - --------------------------------------------------------------- Eastern Environmental Services, Inc.(a) 425,000 11,103,125 - --------------------------------------------------------------- ITEQ, Inc.(a) 775,000 9,881,250 - --------------------------------------------------------------- KTI, Inc.(a)(b) 420,000 7,770,000 - --------------------------------------------------------------- 63,553,594 - --------------------------------------------------------------- Total Common Stocks (Cost $2,398,712,984) 3,661,589,468 - --------------------------------------------------------------- WARRANTS-0.00% Tice Technology Inc. (warrants expiring 07/31/99) 400 300 - --------------------------------------------------------------- Total Warrants (Cost $0) 300 - --------------------------------------------------------------- PREFERRED STOCK-0.33% LODGING-HOTELS-0.33% Royal Caribbean Cruises Ltd.-$3.63 Conv. Pfd. 115,000 12,635,625 - --------------------------------------------------------------- Total Preferred Stock (Cost $7,582,525) 12,635,625 - ---------------------------------------------------------------
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PRINCIPAL MARKET AMOUNT VALUE CONVERTIBLE CORPORATE NOTES-0.33% BROADCASTING (TELEVISION, RADIO & CABLE)-0.06% Jacor Communications Inc., Conv. Sr. LYON, 5.50%, 06/12/11(c) $ 3,200,000 $ 2,486,176 - --------------------------------------------------------------- RETAIL (SPECIALTY)-0.27% Pier 1 Imports, Inc., Conv. Sub. Notes, 5.75%, 10/01/03 4,800,000 10,446,336 - --------------------------------------------------------------- Total Convertible Corporate Notes (Cost $7,801,351) 12,932,512 - ---------------------------------------------------------------
PRINCIPAL MARKET AMOUNT VALUE REPURCHASE AGREEMENTS-4.65%(d) Dean Witter Reynolds, Inc., 5.55%, 05/01/98(e) $ 158,285 $ 158,285 - --------------------------------------------------------------- Lehman Brothers Inc., 5.32%, 05/01/98(f) 180,000,000 180,000,000 - --------------------------------------------------------------- Total Repurchase Agreements (Cost $180,158,285) 180,158,285 - --------------------------------------------------------------- TOTAL INVESTMENTS-99.88% 3,867,316,190 - --------------------------------------------------------------- OTHER ASSETS LESS LIABILITIES-0.12% 4,642,250 - --------------------------------------------------------------- NET ASSETS-100.00% $3,871,958,440 ===============================================================
Investment Abbreviations: ADR - American Depositary Receipt Conv. - Convertible LYON - Liquid Yield Option Notes Pfd. - Preferred Sr. - Senior Sub. - Subordinated Notes to Schedule of Investments: (a)Non-income producing security. (b)Affiliated issuers are those in which the Funds's holdings of an issuer represent 5% or more of the outstanding voting securities of the issuer. The Fund has never owned enough of the outstanding voting securities of any issuer to have control (as defined in the Investment Company Act of 1940) of that issuer. The aggregate market value of affiliated issuers as of 04/30/98 was $97,684,450 which represented 2.52% of the Fund's net assets. (c)Zero coupon bond. Interest rate shown represents the rate of original issue discount. (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 04/30/98 with a maturing value of $300,046,250. Collateralized by $307,111,000, U.S. Government obligations, 0% to 9.40% due 06/10/98 to 09/26/19 with an aggregate market value at 04/30/98 of $306,000,308. (f)Joint repurchase agreement entered into 04/30/98 with a maturing value of $450,066,500. Collateralized by $557,597,000, U.S. Government obligations, 0% to 8.60% due 05/26/98 to 11/12/27 with an aggregate market value at 04/30/98 of $459,003,592. See Notes to Financial Statements. 14 16 STATEMENT OF ASSETS AND LIABILITIES APRIL 30, 1998 (UNAUDITED) ASSETS: Investments, at market value (cost $2,594,255,146) $3,867,316,190 - -------------------------------------------------------- Receivables for: Investments sold 23,734,312 - -------------------------------------------------------- Capital stock sold 4,041,927 - -------------------------------------------------------- Dividends and interest 304,626 - -------------------------------------------------------- Investment for deferred compensation plan 40,221 - -------------------------------------------------------- Other assets 52,585 - -------------------------------------------------------- Total assets 3,895,489,861 - -------------------------------------------------------- LIABILITIES: Payables for: Investments purchased 5,391,378 - -------------------------------------------------------- Capital stock reacquired 14,597,022 - -------------------------------------------------------- Deferred compensation 40,221 - -------------------------------------------------------- Accrued advisory fees 2,009,040 - -------------------------------------------------------- Accrued administrative services fees 9,043 - -------------------------------------------------------- Accrued distribution fees 793,327 - -------------------------------------------------------- Accrued directors' fees 1,791 - -------------------------------------------------------- Accrued transfer agent fees 487,856 - -------------------------------------------------------- Accrued operating expenses 201,743 - -------------------------------------------------------- Total liabilities 23,531,421 - -------------------------------------------------------- Net assets applicable to shares outstanding $3,871,958,440 ======================================================== CAPITAL STOCK, $0.001 PAR VALUE PER SHARE: Authorized 750,000,000 - -------------------------------------------------------- Outstanding 74,453,560 ======================================================== Net asset value and redemption price per share $ 52.01 - -------------------------------------------------------- Offering price per share: (Net asset value of $52.01 divided by 94.50%) $ 55.04 ========================================================
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED) INVESTMENT INCOME: Dividends (net of $5,050 foreign withholding tax) $ 1,730,310 - ------------------------------------------------------- Interest 4,870,213 - ------------------------------------------------------- Total investment income 6,600,523 - ------------------------------------------------------- EXPENSES: Advisory fees 11,599,389 - ------------------------------------------------------- Administrative services fees 53,198 - ------------------------------------------------------- Custodian fees 143,780 - ------------------------------------------------------- Directors' fees 15,522 - ------------------------------------------------------- Distribution fees 4,587,687 - ------------------------------------------------------- Transfer agent fees 2,468,682 - ------------------------------------------------------- Other 507,689 - ------------------------------------------------------- Total expenses 19,375,947 - ------------------------------------------------------- Less: Expenses paid indirectly (52,101) - ------------------------------------------------------- Net expenses 19,323,846 - ------------------------------------------------------- Net investment income (loss) (12,723,323) - ------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES, FUTURES AND OPTION CONTRACTS: Net realized gain (loss) from: Investment securities 140,275,857 - ------------------------------------------------------- Futures contracts (6,640,895) - ------------------------------------------------------- Option contracts 199,322 - ------------------------------------------------------- 133,834,284 - ------------------------------------------------------- Net unrealized appreciation of: Investment securities 173,041,005 - ------------------------------------------------------- Futures contracts 5,238,090 - ------------------------------------------------------- 178,279,095 - ------------------------------------------------------- Net gain from investment securities, futures and option contracts 312,113,379 - ------------------------------------------------------- Net increase in net assets resulting from operations $299,390,056 =======================================================
See Notes to Financial Statements. 15 17 STATEMENT OF CHANGES IN NET ASSETS FOR THE SIX MONTHS ENDED APRIL 30, 1998 AND THE YEAR ENDED OCTOBER 31, 1997 (UNAUDITED)
APRIL 30, OCTOBER 31, 1998 1997 -------------- -------------- OPERATIONS: Net investment income (loss) $ (12,723,323) $ (19,740,330) - --------------------------------------------------------------------------------------------- Net realized gain from investment securities, futures and option contracts 133,834,284 143,240,683 - --------------------------------------------------------------------------------------------- Net unrealized appreciation of investment securities and futures contracts 178,279,095 435,818,451 - --------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 299,390,056 559,318,804 - --------------------------------------------------------------------------------------------- Distributions to shareholders from net realized gains (135,731,032) (138,552,707) - --------------------------------------------------------------------------------------------- Share transactions--net (155,957,893) 692,927,269 - --------------------------------------------------------------------------------------------- Net increase in net assets 7,701,131 1,113,693,366 - --------------------------------------------------------------------------------------------- NET ASSETS: Beginning of period 3,864,257,309 2,750,563,943 - --------------------------------------------------------------------------------------------- End of period $3,871,958,440 $3,864,257,309 ============================================================================================= NET ASSETS CONSIST OF: Capital (par value and additional paid-in) $2,475,181,392 $2,631,139,285 - --------------------------------------------------------------------------------------------- Undistributed net investment income (loss) (12,804,723) (81,400) - --------------------------------------------------------------------------------------------- Undistributed net realized gain from investment securities, futures and option contracts 136,520,727 138,417,475 - --------------------------------------------------------------------------------------------- Unrealized appreciation of investment securities and futures contracts 1,273,061,044 1,094,781,949 - --------------------------------------------------------------------------------------------- $3,871,958,440 $3,864,257,309 =============================================================================================
NOTES TO FINANCIAL STATEMENTS APRIL 30, 1998 (UNAUDITED) NOTE 1-SIGNIFICANT ACCOUNTING POLICIES AIM Aggressive Growth Fund (the "Fund") is a series portfolio of AIM Equity Funds, Inc. (the "Company"). The Company is a Maryland corporation registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of six separate portfolios: AIM Aggressive Growth Fund, AIM Blue Chip Fund, AIM Capital Development Fund, AIM Charter Fund, AIM Constellation Fund and AIM Weingarten Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class. The assets, liabilities and operations of each portfolio are accounted for separately. The Fund has temporarily discontinued public sales of its shares to new investors. 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 common stocks, convertible bonds, convertible preferred stocks and warrants of companies which in the opinion of the Fund's investment advisor are expected to achieve earnings growth over time at a rate in excess of 15% per year. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements. A. Security Valuations--A security listed or traded on an exchange (except convertible bonds) is valued at its last price on the exchange where the security is principally traded, or lacking any sales on a particular day, the security is valued at the mean between the closing bid and asked prices on that day. Each security traded in the over-the-counter market (but not including securities reported on the NASDAQ National Market System) is valued at the mean between the last bid and asked prices based upon quotes furnished by market makers for such securities. If a mean is not available, as is the case in some foreign markets, the closing bid will be used absent a last sales price. Each security reported on the NASDAQ National Market System is valued at the last sales price on the valuation date or absent a last sales price, at the mean of the closing bid and asked prices. Debt obligations (including convertible bonds) are valued on the basis of prices provided by an independent pricing service. Prices provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as yield, type of issue, coupon rate and maturity date. Securities for which market quotations are not readily available or are questionable are valued at fair value as determined in good faith by or under the supervision of the Company's officers in a manner specifically authorized by the Board of Directors of the Company. Short-term obligations having 60 days or less to maturity are valued at amortized cost which approximates market value. Generally, trading in foreign securities is 16 18 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 Directors. B. Securities Transactions, Investment Income and Distributions-- Securities transactions are recorded on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded as earned from settlement date and is recorded on the accrual basis. Dividend income and distributions to shareholders are recorded on the ex-dividend date. C. Federal Income Taxes--The Fund intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. D. Stock Index Futures Contracts--The Fund may purchase or sell stock index futures contracts as a hedge against changes in market conditions. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities as collateral for the account of the broker (the Fund's agent in acquiring the futures position). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by "marking to market" on a daily basis to reflect the market value of the contracts at the end of each day's trading. Variation margin payments are made or received depending upon whether unrealized gains or losses are incurred. When the contracts are closed, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund's basis in the contract. Risks include the possibility of an illiquid market and that a change in the value of contracts may not correlate with changes in the value of the securities being hedged. E. Foreign Currency Transactions--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. F. Foreign Currency Contracts--A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund may enter into a foreign currency contract for the purchase or sale of a security denominated in a foreign currency in order to "lock in" the U.S. dollar price of that security. The Fund could be exposed to risk if counterparties to the contracts are unable to meet the terms of their contracts. G. Covered Call Options--The Fund may write call options, but only on a covered basis; that is, the Fund will own the underlying security. Options written by the Fund normally will have expiration dates between three and nine months from the date written. The exercise price of a call option may be below, equal to, or above the current market value of the underlying security at the time the option is written. When the Fund writes a covered call option, an amount equal to the premium received by the Fund is recorded as an asset and an equivalent liability. The amount of the liability is subsequently "marked-to-market" to reflect the current market value of the option written. The current market value of a written option is the mean between the last bid and asked prices on that day. If a written call option expires on the stipulated expiration date, or if the Fund enters into a closing purchase transaction, the Fund realizes a gain (or a loss if the closing purchase transaction exceeds the premium received when the option was written) without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. If a written option is exercised, the Fund realizes a gain or a loss from the sale of the underlying security and the proceeds of the sale are increased by the premium originally received. A call option gives the purchaser of such option the right to buy, and the writer (the Fund) the obligation to sell, the underlying security at the stated exercise price during the option period. The purchaser of a call option has the right to acquire the security which is the subject of the call option at any time during the option period. During the option period, in return for the premium paid by the purchaser of the option, the Fund has given up the opportunity for capital appreciation above the exercise price should the market price of the underlying security increase, but has retained the risk of loss should the price of the underlying security decline. During the option period the Fund may be required at any time to deliver the underlying security against payment of the exercise price. This obligation is terminated upon the expiration of the option period or at such earlier time at which the Fund effects a closing purchase transaction by purchasing (at a price which may be higher than that received when the call option was written) a call option identical to the one originally written. NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES The Company has entered into a master investment advisory agreement with A I M Advisors, Inc. ("AIM"). Under the terms of the master investment advisory agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.80% 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 six months ended April 30, 1998, AIM was reimbursed $53,198 for such services. 17 19 The Fund, pursuant to a transfer agency and service agreement, has agreed to pay A I M Fund Services, Inc. ("AFS") for certain costs incurred in providing transfer agency services to the Fund. During the six months ended April 30, 1998, AFS was paid $1,256,249 for such services. The Company has entered into a master distribution agreement with A I M Distributors, Inc. ("AIM Distributors") to serve as the distributor for the Fund. The Company has adopted a plan pursuant to rule 12b-1 under the 1940 Act (the "Plan"), whereby the Fund pays to AIM Distributors an annual rate of 0.25% of the Fund's average daily net assets as compensation for services related to the sales and distribution of the Fund's shares. The Plan provides that payments to dealers and financial institutions that provide continuing personal shareholder services to their customers who purchase and own shares of the Fund, in amounts of up to 0.25% of the average net assets of the Fund attributable to the customers of such dealers or financial institutions, may be characterized as a service fee. Any amounts not paid as a service fee under the Plan would constitute an assets-based sales charge. The Plan also imposes a cap on the total amount of sales charges, including asset-based sales charges, that may be paid by the Company with respect to the Fund's shares. During the six months ended April 30, 1998, the Fund paid AIM Distributors $4,587,687 as compensation under the Plan. AIM Distributors received commissions of $489,238 from sales of shares of the Fund's capital stock during the six months ended April 30, 1998. Such commissions are not an expense of the Fund. They are deducted from, and are not included in, the proceeds from sales of capital stock. During the six months ended April 30, 1998, AIM Distributors received $18,644 in contingent deferred sales charges imposed on redemptions of the Fund's capital stock. Certain officers and directors of the Company are officers and directors of AIM, AFS and AIM Distributors. During the six months ended April 30, 1998, the Fund paid legal fees of $3,931 for services rendered by Kramer, Levin, Naftalis & Frankel as counsel to the Company's directors. A member of that firm is a director of the Company. NOTE 3-INDIRECT EXPENSES During the six months ended April 30, 1998 the Fund received reductions in transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian fees of $20,664 and $31,437, respectively, under expense offset arrangements. The effect of the above arrangements resulted in a reduction of the Fund's total expenses of $52,101 during the six months ended April 30, 1998. NOTE 4-DIRECTORS' FEES Directors' fees represent remuneration paid or accrued to each director who is not an "interested person" of AIM. The Company may invest directors' fees, if so elected by a director, in mutual fund shares in accordance with a deferred compensation plan. NOTE 5-BANK BORROWINGS The Fund is a participant in a committed line of credit facility with a syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to the lesser of (i) $500,000,000 or (ii) the limits set by its prospectus for borrowings. The Fund and other funds advised by AIM which are parties to the line of credit may borrow on a first come, first served basis. Interest on borrowings under the line of credit is payable on maturity or prepayment date. During the six months ended April 30, 1998, the Fund did not borrow under the line of credit agreement. The funds which are party to the line of credit are charged a commitment fee of 0.05% on the unused balance of the committed line. The commitment fee is allocated among the funds based on their respective average net assets for the period. Pursuant to an amendment to the line of credit agreement effective May 1, 1998, the Fund may borrow up to the lesser of (i) $1,000,000,000 or (ii) the limits set by the prospectus for borrowings. NOTE 6-INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities) purchased and sold during the six months ended April 30, 1998 were $1,184,973,837 and $1,507,980,673, respectively. The amount of unrealized appreciation (depreciation) of investment securities as of April 30, 1998 is as follows: Aggregate unrealized appreciation of investment securities $ 1,312,858,065 - ----------------------------------------------------------- Aggregate unrealized (depreciation) of investment securities (40,093,252) - ----------------------------------------------------------- Net unrealized appreciation of investment securities $ 1,272,764,813 ===========================================================
Cost of investment for tax purposes is $2,594,551,377. NOTE 7-CALL OPTIONS CONTRACTS WRITTEN Transactions in call options written during the six months ended April 30, 1998 are summarized as follows:
CALL OPTION CONTRACTS --------------------- NUMBER OF PREMIUMS CONTRACTS RECEIVED --------- --------- Beginning of period -- -- - --------------------------------------------------------- Written 741 $ 205,435 - --------------------------------------------------------- Closed (741) (205,435) - --------------------------------------------------------- End of period -- -- =========================================================
18 20 NOTE 8-CAPITAL STOCK Changes in capital stock outstanding during the six months ended April 30, 1998 and the year ended October 31, 1997 were as follows:
APRIL 30, 1998 OCTOBER 31, 1997 ----------------------------- ----------------------------- SHARES AMOUNT SHARES AMOUNT ----------- --------------- ----------- --------------- Sold 19,456,290 $ 935,911,259 41,558,826 $ 1,826,781,148 - -------------------------------------------------------------------------------------------------------------------------- Issued as reinvestment of dividends 2,928,346 126,973,169 3,068,800 127,938,198 - -------------------------------------------------------------------------------------------------------------------------- Reacquired (25,268,458) (1,218,842,321) (28,514,602) (1,261,792,077) - -------------------------------------------------------------------------------------------------------------------------- (2,883,822) $ (155,957,893) 16,113,024 $ 692,927,269 ==========================================================================================================================
NOTE 9-FINANCIAL HIGHLIGHTS Shown below are the financial highlights for a share of capital stock outstanding during the six months ended April 30, 1998, each of the years in the four-year period ended October 31, 1997, the ten month period ended October 31, 1993 and the year ended December 31, 1992.
OCTOBER 31, APRIL 30, -------------------------------------------------------------- DECEMBER 31, 1998 1997 1996 1995 1994 1993 1992(a) ---------- ---------- ---------- ---------- -------- -------- ------------ Net asset value, beginning of period $ 49.97 $ 44.93 $ 40.13 $ 28.37 $ 23.85 $ 18.52 $ 16.06 - --------------------------------- ---------- ---------- ---------- ---------- -------- -------- ------- Income from investment operations: Net investment income (loss) (0.17) (0.26) (0.32) (0.04) (0.05) (0.02) (0.03) - --------------------------------- ---------- ---------- ---------- ---------- -------- -------- ------- Net gains (losses) on securities (both realized and unrealized) 3.99 7.60 6.09 11.80 4.57 5.35 3.41 - --------------------------------- ---------- ---------- ---------- ---------- -------- -------- ------- Total from investment operations 3.82 7.34 5.77 11.76 4.52 5.33 3.38 - --------------------------------- ---------- ---------- ---------- ---------- -------- -------- ------- Less distributions: Distributions from net realized gains (1.78) (2.30) (0.97) -- -- -- (0.92) - --------------------------------- ---------- ---------- ---------- ---------- -------- -------- ------- Net asset value, end of period $ 52.01 $ 49.97 $ 44.93 $ 40.13 $ 28.37 $ 23.85 $ 18.52 ================================= ========== ========== ========== ========== ======== ======== ======= Total return(b) 8.35% 17.35% 14.77% 41.45% 18.96% 28.78% 21.34% ================================= ========== ========== ========== ========== ======== ======== ======= Ratios/supplemental data: Net assets, end of period (000s omitted) $3,871,958 $3,864,257 $2,750,564 $2,245,554 $687,238 $217,256 $38,238 ================================= ========== ========== ========== ========== ======== ======== ======= Ratio of expenses to average net assets(c) 1.06%(d)(e) 1.06% 1.11% 1.08% 1.07% 1.00%(g) 1.25% ================================= ========== ========== ========== ========== ======== ======== ======= Ratio of net investment income (loss) to average net assets(f) (0.69)%(d) (0.65)% (0.76)% (0.19)% (0.26)% (0.24)%(g) (0.59)% ================================= ========== ========== ========== ========== ======== ======== ======= Portfolio turnover rate 35% 73% 79% 52% 75% 61% 164% ================================= ========== ========== ========== ========== ======== ======== ======= Average broker commission rate paid(h) $ 0.0510 $ 0.0540 $ 0.0545 N/A N/A N/A N/A ================================= ========== ========== ========== ========== ======== ======== =======
(a) The Fund changed investment advisors on June 30, 1992. (b) Does not deduct sales charges and are not annualized for periods less than one year. (c) After fee waivers and/or expense reimbursements. Ratios of expenses to average net assets prior to fee waivers and/or expense reimbursements were 1.15%, 1.09%, 1.17% (annualized), and 1.65%, for 1995-1992. (d) Ratios are annualized and based on average net assets of $3,700,565,197. (e) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly, the ratio of expenses to average net assets would have been 1.05% (annualized). (f) After fee waivers and/or expense reimbursements. Ratios of net investment income (loss) to average net assets prior to fee waivers and/or expense reimbursements were (0.26)%, (0.28)%, (0.41)% (annualized), and (0.99)%, for 1995-1992. (g) Annualized. (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. 19 21 Directors & Officers
BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND Charles T. Bauer Charles T. Bauer 11 Greenway Plaza Chairman Chairman Suite 100 A I M Management Group Inc. Houston, TX 77046 Robert H. Graham Bruce L. Crockett President INVESTMENT ADVISOR Director ACE Limited; John J. Arthur A I M Advisors, Inc. Formerly Director, President, and Senior Vice President and Treasurer 11 Greenway Plaza Chief Executive Officer Suite 100 COMSAT Corporation Carol F. Relihan Houston, TX 77046 Senior Vice President and Secretary Owen Daly II TRANSFER AGENT Director Gary T. Crum Cortland Trust Inc. Senior Vice President A I M Fund Services, Inc. P.O. Box 4739 Edward K. Dunn Jr. Jonathan C. Schoolar Houston, TX 77210-4739 Chairman, Mercantile Mortgage Corp.; Senior Vice President Formerly Vice Chairman and President, CUSTODIAN Mercantile-Safe Deposit & Trust Co.; and Dana R. Sutton President, Mercantile Bankshares Vice President and Assistant Treasurer State Street Bank and Trust Company 225 Franklin Street Jack Fields Melville B. Cox Boston, MA 02110 Chief Executive Officer Vice President Texana Global, Inc.; COUNSEL TO THE FUND Formerly Member Renee A. Bamford of the U.S. House of Representatives Assistant Secretary Ballard Spahr Andrews & Ingersoll, LLP Carl Frischling P. Michelle Grace 1735 Market Street Partner Assistant Secretary Philadelphia, PA 19103 Kramer, Levin, Naftalis & Frankel Jeffrey H. Kupor COUNSEL TO THE DIRECTORS Robert H. Graham Assistant Secretary President and Chief Executive Officer Kramer, Levin, Naftalis & Frankel A I M Management Group Inc. Nancy L. Martin 919 Third Avenue Assistant Secretary New York, NY 10022 John F. Kroeger Formerly Consultant Ofelia M. Mayo DISTRIBUTOR Wendell & Stockel Associates, Inc. Assistant Secretary A I M Distributors, Inc. Lewis F. Pennock Lisa A. Moss 11 Greenway Plaza Attorney Assistant Secretary Suite 100 Houston, TX 77046 Ian W. Robinson Kathleen J. Pflueger Consultant; Formerly Executive Assistant Secretary Vice President and Chief Financial Officer Samuel D. Sirko Bell Atlantic Management Assistant Secretary Services, Inc. Stephen I. Winer Louis S. Sklar Assistant Secretary Executive Vice President Hines Interests Mary J. Benson Limited Partnership Assistant Treasurer
20 22 -------------------------- Current shareholders can call our AIM Investor Line at 800-246-5463 for 24-hour-a-day account information. -------------------------- 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 may build your investment by regularly purchasing additional shares. Pre-authorized checks for $50 or more can be drafted monthly from your personal checking account. o EASY ACCESS TO YOUR MONEY. Your shares may be redeemed at net asset value any day the New York Stock Exchange is open. The price of shares sold may be more or less than their original cost, depending on market conditions. o SYSTEMATIC WITHDRAWAL PLAN. You may elect to receive checks of at least $50 monthly or quarterly through a systematic withdrawal plan. o EXCHANGE PRIVILEGE. As your goals change, you may exchange all or part of your assets for those of other funds within the same share class of The AIM Family of Funds--Registered Trademark--. The exchange privilege may be modified or discontinued for any of the AIM funds. Certain restrictions apply. o RETIREMENT PLANS. You may purchase shares of 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. 23 THE AIM FAMILY OF FUNDS--REGISTERED TRADEMARK-- FOR 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 FOR GROWTH OF CAPITAL AIM Advisor International Value Fund [PHOTO OF AIM Blue Chip Fund 11 GREENWAY PLAZA AIM Global Growth Fund APPEARS HERE] AIM International Equity Fund AIM Select Growth Fund** AIM Value Fund AIM Weingarten Fund FOR 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 FOR HIGH CURRENT INCOME OR CURRENT INCOME AIM High Yield Fund AIM Global Income Fund AIM Income Fund FOR 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 FOR 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 mutual fund industry since 1976 and managed approximately $89 *AIM Aggressive Growth Fund was closed to new billion in assets for more than 4.4 million investors on June 5, 1997. shareholders, including individual investors, corporate clients, and financial institutions, **On May 1, 1998, AIM Growth Fund was renamed as of March 31, 1998. The AIM Family of Funds AIM Select Growth Fund. For more complete - --Registered Trademark-- is distributed nationwide, information about any AIM Fund(s), including sales and AIM today ranks among the nation's top 15 charges and expenses, ask your financial consultant mutual fund companies in assets under management, or securities dealer for a free prospectus(es). according to Lipper Analytical Services, Inc. Please read the prospectus(es) carefully before you invest or send money. INVEST WITH DISCIPLINE-SM-
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