<PAGE>
[AIM LOGO APPEARS HERE]
[COLLAGE APPEARS HERE]
AIM CONSTELLATION FUND
ANNUAL REPORT
OCTOBER 31, 1995
<PAGE>
AIM CONSTELLATION FUND
For shareholders who seek capital appreciation through investments in common
stocks, with emphasis on medium-size and smaller emerging growth companies.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
* AIM Constellation 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 the maximum
5.50% sales charge.
* 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.
* The Fund's portfolio composition may change and there is no assurance the
Fund will continue to hold these same securities.
* Past performance cannot guarantee comparable future results.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
* Lipper Analytical Services, Inc. is an independent mutual fund performance
monitor. The unmanaged Lipper Mid-Cap Fund Index represents an average of the
performance of the 30 largest mid-cap mutual funds tracked by Lipper.
* Standard & Poor's Corporation is a credit-rating agency. The unmanaged
Standard & Poor's Composite Index of 500 Stocks (S&P 500) is widely regarded
by investors as representative of the stock market in general. The Standard &
Poor's 400 Mid-Cap Index (S&P 400) is an unmanaged index comprising common
stocks of approximately 400 mid-capitalization companies. The Dow Jones
Industrial Average (DJIA) is an unmanaged composite of the performance of 30
large-company stocks.
* The NASDAQ (National Association of Securities Dealers Automated Quotation
system) Composite Index is a group of more than 4,500 unmanaged over-the-
counter securities widely regarded by investors to be representative of the
small- and medium-size company stock universe.
* An investment cannot be made in any indexes listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect sales
charges.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the Fund.
<PAGE>
A Message from
the Chairman
DEAR FELLOW SHAREHOLDER:
A surge in the equity markets helped push AIM Constellation
[PHOTO OF Fund to an outstanding total return of 33.43% for the
CHARLES T. BAUER, fiscal year ended October 31, 1995. The Fund outperformed
CHAIRMAN OF THE all major benchmark indexes and was widely recognized in
BOARD OF THE such major financial publications as The Wall Street
FUND APPEARS HERE] Journal, Investor's Business Daily, Money and Mutual Funds
Magazine.
Your Fund's total return exceeded that of the NASDAQ
Composite Index (33.26%), the Standard & Poor's 500 (26.36%), the Dow Jones
Industrial Average (24.92%), and the Standard & Poor's 400 (21.18%) during the
reporting period. This successful performance accounts in part for the Fund's
dramatic growth in assets, from $3.8 billion as the fiscal year opened to $7.1
billion as the fiscal year closed, an increase of almost 90%.
It has, indeed, been a memorable year for AIM Constellation Fund and AIM
overall. Since January, AIM's net assets under management have grown from
approximately $27 billion to approximately $40 billion. AIM now serves more than
2 million shareholders like you who continue to count on our expertise and
diligence in the management of your investment.
Nevertheless, we feel compelled to remind shareholders that market cycles come
and go, and such performance as we have enjoyed this year is unlikely to
continue uninterrupted. In terms of market performance, many analysts are
cautioning investors to rein in their expectations, noting that it would be
unrealistic to expect stock market growth of more than 25% a second year in a
row. That is why you should keep in mind that those who have retained a long-
term perspective have generally enjoyed the greatest returns on their
investment.
AIM's disciplined earnings-driven strategy is an ongoing evaluation of market
opportunity, and as the market continues to climb, our job becomes more
challenging. Therefore, even as we relish the success of a good year, our focus
is on the year ahead.
The budget debate over such retirement benefits as Medicare and Social
Security only accentuates the need to build your own retirement nest egg,
independent of any benefits which may--or may not--be available to you when the
time comes. For many in the baby boomer generation, that's just 10 years away.
It is our hope that you continue to rely on AIM Constellation Fund to help you
build your financial future. As always, we are ready to respond to your
questions or comments about this report. Please call Client Services at 800-959-
4246 during normal business hours. For automated account information 24 hours a
day, call the AIM Investor Line toll-free at 800-246-5463.
Respectfully submitted,
/S/ CHARLES T. BAUER
Charles T. Bauer
Chairman
<PAGE>
Management's
Discussion & Analysis
TECHNOLOGY STOCKS PROPEL MARKETS
TO RECORD LEVELS
-----------
The much-noted aging of
the American population,
combined with an ongoing
search for ways to contain
health-care costs, has
created significant
opportunities.
-----------
The cover of Money magazine's November 1994 Forecast Issue read, "Make 12% or
more in 1995." After the dismal stock market returns in 1994, 12% may have
sounded like euphoria to some. Little did we know.
Healthy corporate profits exceeded analysts' expectations and propelled stocks
through record highs in 1995. The strength was broad-based, resuscitating large-
capitalization stocks, which had been out of favor for three years. The popular
DJIA sailed past 4000 on February 23, 1995, and then topped 5000 on November 21,
1995.
Spearheaded by the powerful technology stock advance, the broader NASDAQ
overtook its large-cap cousins in June of 1995 to finish the reporting period
well ahead of the pack.
The stars of the technology group were inarguably the semiconductor stocks. As
of June 30, 1995, semiconductor stocks were up an astonishing 94% in just six
months, according to Barron's. Other technology sectors were also strong, such
as aerospace and defense, software, and industrial technology companies. Also
strong were beneficiaries of stable interest rates such as banks and thrifts,
and consumer cyclical stocks in airlines, leisure and recreation companies, and
restaurants.
In September and October, the market took a well-deserved respite as concern
surfaced that third-quarter 1995 earnings reports, particularly in the
technology group, would fall below expectations. Some earnings disappointment in
certain big names such as Intel, Microsoft, Nokia, and IBM initiated profit-
taking, which temporarily suspended the market's advance. Of the companies
reporting earnings in the third quarter of 1995, I/B/E/S International Inc.
reported in The Wall Street Journal that 55% were higher than analysts'
expectations, with 14% on target, and 31% below expectations. These results
compared favorably with second-quarter reports, of which 57% exceeded
expectations and 30% were below target.
With investor confidence renewed, at least for the near term, the market
gathered strength for its next advance. Focus turned from corporate earnings to
the growing gridlock in Congress over the proposals to balance the burgeoning
budget. The Federal Reserve Board declined to implement its much-anticipated
interest rate cut pending some positive resolution to the budget debate.
YOUR INVESTMENT PORTFOLIO
Holdings in the following three sectors provided a major portion of your Fund's
33.43% total return during the fiscal year covered by this report.
. TECHNOLOGY. Once again, the Fund's most extensive holdings were in the
technology sector. The Fund's portfolio included both Microsoft, which
introduced its much-publicized Windows 95 operating system, and Intel, which
brought out the Pentium chip. The Fund also held a position in Ascend
Communications, Inc., a provider of access to the Internet. Another holding,
Fiserv,
- --------------------------------------------------------------------------------
MORNINGSTAR RATINGS* (as of 10/31/95)
<TABLE>
<CAPTION>
FUNDS IN
PERIOD RATING EQUITY CATEGORY
------ ------ ---------------
<S> <C> <C>
Overall ***** NA
10 Years ***** 487
5 Years ***** 931
3 Years **** 1,300
</TABLE>
================================================================================
LIPPER RANKINGS** (as of 10/31/95)
<TABLE>
<CAPTION>
RANK VS. ALL
MUTUAL FUNDS PERCENTILE
RANK TRACKED BY LIPPER RANK
- ---- ----------------- ----------
<S> <C> <C>
10 Years 4 of 1,189 1%
5 Years 28 of 2,727 2%
3 Years 74 of 3,921 2%
1 Year 158 of 7,234 3%
</TABLE>
*Morningstar's rating system of one (lowest) to five (highest) stars is based on
risk and return ratios for three-, five-, and 10-year periods and considers all
loads and fees. Ratings compare funds of similar investment objectives and
represent past performance. **Fund percentage rankings are based on total
returns and are vs. all mutual funds tracked by Lipper, excluding sales charges
and including fees and expenses. Of course, past performance cannot guarantee
comparable future results.
- --------------------------------------------------------------------------------
See important Fund disclosure inside front cover.
2
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION (as of 10/31/95)
TOP 10 HOLDINGS TOP 10 INDUSTRIES
1. DELL COMPUTER CORP. 1. SEMICONDUCTORS
2. CISCO SYSTEMS, INC. 2. COMPUTER SOFTWARE/
3. APPLIED MATERIALS, INC. SERVICES
4. COMPUTER ASSOCIATES 3. MEDICAL (PATIENT SERVICES)
INTERNATIONAL, INC. 4. RETAIL (STORES)
5. MICRON TECHNOLOGY, INC. 5. COMPUTER NETWORKING
6. LSI LOGIC CORP. 6. COMPUTER PERIPHERALS
7. 3COM CORP. 7. TELECOMMUNICATIONS
8. TERADYNE, INC. 8. FINANCE (CONSUMER CREDIT)
9. ALTERA CORP. 9. MEDICAL (INSTRUMENTS/PRODUCTS)
10. ORACLE SYSTEMS CORP. 10. COMPUTER MINI/PCS
- --------------------------------------------------------------------------------
Inc., a manager of financial information, is expected to be an important
participant in the anticipated trend toward home banking.
In addition, the Fund's holdings shifted from makers of generic computer chips
to companies that produce more sophisticated capital equipment such as Ultratech
Stepper, Inc. A stepper is a machine that imprints circuits on silicon wafers,
and Ultratech's stepper is about half as expensive as rival machines.
. HEALTH CARE. The much-noted aging of the American population, combined
with an ongoing search for ways to contain health-care costs, has created
significant opportunities. The portfolio includes health maintenance
organizations with increasing enrollments such as Healthsource, Inc. It also
includes such firms as Invacare Corp., a provider of home health care, an
important strategy for reducing health-care costs.
Health care is a sector where technological advances can save both lives and
costs. For example, AIM Constellation's portfolio includes Boston Scientific
Corp., a manufacturer of medical devices, including stents that are inserted
into cardiac blood vessels during balloon angioplasty, increasing the
effectiveness of this procedure.
. CYCLICAL CONSUMER INDUSTRIES. A new focus for the Fund during the
reporting period was specialty retailers. The Fund was attracted to two
interesting trends: independent "superstores," which have attracted significant
business from community malls, and the emerging niche retailers who target mail
order customers by offering attractive pricing, better selection, superior
distribution systems, and the convenience of catalogue shopping.
The Fund added such mail order retailers as Micro Warehouse Inc. and Corporate
Express, Inc., which deliver computers, software, and office supplies. Other
portfolio holdings included medical supply mail order vendors Cardinal Health
Inc. and Omnicare Inc.
In addition to the aforementioned trends, the Fund also profited from the
recent surge in mergers and acquisitions. The Fund held a position in Cordis
Corp. at the time of the company's takeover by Johnson & Johnson late in 1995.
Of course, the Fund's portfolio composition is subject to change, and there is
no guarantee the Fund will continue to hold the same securities.
OUTLOOK FOR THE FUTURE
At this writing, the market has surpassed the Dow 5000 level. Yet many analysts
maintain that this aging bull market--the Dow has gone a record 61 months
without experiencing a 10% correction--may have plenty of steam left. Barron's
recently reported analysts' estimates that projected the Dow well past 5500
during the coming year.
Of course, a significant complement of market strategists also believe a
correction is due.
Rather than make any projections of future market performance, AIM remains
committed to its disciplined investment strategy, which helps us determine, on a
company-by-company basis, which stocks to own and which to sell-without the
guesswork of market timing.
See important Fund disclosure inside front cover.
3
<PAGE>
Long-Term
Performance
GROWTH OF A $10,000 INVESTMENT
- --------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
For periods ended October 31, 1995
<TABLE>
<CAPTION>
<S> <C>
10 Years 21.71%
5 Years 28.91
1 Year 26.06
</TABLE>
- --------------------------------------
- -----------------------------------------------------------------------------
S&P 400 NASDAQ AIM
Mid-Cap Index Composite Index Constellation Fund
10/85 10000 10000 9454
10/86 13194 12332 13863
10/87 12389 11051 13531
10/88 15020 13074 16686
10/89 19621 15575 22608
10/90 16979 11275 18952
10/91 27356 18561 33705
10/92 30304 20687 38701
10/93 36805 26638 49770
10/94 37688 26577 53480
10/95 45670 35416 71356
Past performance cannot guarantee comparable future results.
- -----------------------------------------------------------------------------
AIM Constellation Fund's performance figures are historical and reflect
reinvestment of all distributions, changes in net asset value, and the effect of
the Fund's 5.50% maximum sales charge. 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.
Standard & Poor's Corporation (S&P) is a credit-rating agency. The Standard &
Poor's 400 Mid-Cap Index is an unmanaged index comprising common stocks of
approximately 400 mid-capitalization companies. The NASDAQ (National Association
of Securities Dealers Automated Quotation System) Composite Index is a group of
more than 4,500 unmanaged over-the-counter securities widely regarded by
investors to be representative of the small- and medium-size company stock
universe.
An investment cannot be made in any indexes listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect sales
charges.
See important Fund disclosure inside front cover.
4
<PAGE>
Financials
SCHEDULE OF INVESTMENTS
October 31, 1995
<TABLE>
<C> <S> <C>
SHARES MARKET VALUE
DOMESTIC COMMON STOCKS-87.10%
ADVERTISING/BROADCASTING-0.35%
228,200 Belo (A.H.) Corp. $ 7,901,425
- --------------------------------------------------------------------
525,000 Infinity Broadcasting Corp.-Class A(a) 17,062,500
- --------------------------------------------------------------------
24,963,925
- --------------------------------------------------------------------
AUTOMOBILE/TRUCKS PARTS & TIRES-0.37%
400,000 Echlin Inc. 14,300,000
- --------------------------------------------------------------------
625,000 Mark IV Industries, Inc. 12,187,500
- --------------------------------------------------------------------
26,487,500
- --------------------------------------------------------------------
BEVERAGES-0.50%
750,000 Canandaigua Wine Co., Inc.-Class A(a) 36,000,000
- --------------------------------------------------------------------
BIOTECHNOLOGY-0.13%
102,400 Chiron Corp.(a) 9,318,400
- --------------------------------------------------------------------
BUILDING MATERIALS-0.11%
241,500 Black & Decker Corp. 8,180,812
- --------------------------------------------------------------------
BUSINESS SERVICES-1.73%
194,800 Equifax, Inc. 7,597,200
- --------------------------------------------------------------------
806,500 Healthcare COMPARE Corp.(a) 29,840,500
- --------------------------------------------------------------------
100,000 Interim Services Inc.(a) 2,975,000
- --------------------------------------------------------------------
1,300,000 Manpower Inc. 35,262,500
- --------------------------------------------------------------------
700,000 Olsten Corp. 26,950,000
- --------------------------------------------------------------------
900,691 Value Health, Inc.(a) 20,603,307
- --------------------------------------------------------------------
123,228,507
- --------------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.35%
928,700 Airgas Inc.(a) 24,726,637
- --------------------------------------------------------------------
COMPUTER MINI/PCS-2.95%
1,050,000 COMPAQ Computer Corp.(a) 58,537,500
- --------------------------------------------------------------------
2,000,000 Dell Computer Corp.(a) 93,250,000
- --------------------------------------------------------------------
750,000 Sun Microsystems, Inc.(a) 58,500,000
- --------------------------------------------------------------------
210,287,500
- --------------------------------------------------------------------
COMPUTER NETWORKING-5.77%
500,000 ALANTEC Corp.(a) 17,875,000
- --------------------------------------------------------------------
200,000 Ascend Communications, Inc.(a) 13,000,000
- --------------------------------------------------------------------
</TABLE>
5
<PAGE>
Financials
<TABLE>
<C> <S> <C>
SHARES MARKET VALUE
Computer Networking-(continued)
1,000,000 Bay Networks, Inc.(a) $ 66,250,000
- ---------------------------------------------------------------------
550,000 Cabletron Systems, Inc.(a) 43,243,750
- ---------------------------------------------------------------------
900,000 Cheyenne Software, Inc.(a) 18,787,500
- ---------------------------------------------------------------------
500,000 CIDCO, Inc.(a) 14,812,500
- ---------------------------------------------------------------------
1,200,000 Cisco Systems, Inc.(a) 93,000,000
- ---------------------------------------------------------------------
812,800 FORE Systems, Inc.(a) 43,078,400
- ---------------------------------------------------------------------
500,000 Network Equipment Technologies, Inc.(a) 16,312,500
- ---------------------------------------------------------------------
336,800 Optical Data Systems, Inc.(a) 10,061,900
- ---------------------------------------------------------------------
1,600,000 3Com Corp.(a) 75,200,000
- ---------------------------------------------------------------------
411,621,550
- ---------------------------------------------------------------------
COMPUTER PERIPHERALS-4.77%
800,000 Adaptec Inc.(a) 35,600,000
- ---------------------------------------------------------------------
1,125,000 Alliance Semiconductor Corp.(a) 34,593,750
- ---------------------------------------------------------------------
615,500 Cerner, Inc.(a) 16,310,750
- ---------------------------------------------------------------------
600,000 Digi International, Inc.(a) 16,050,000
- ---------------------------------------------------------------------
200,000 Filenet Corp.(a) 9,075,000
- ---------------------------------------------------------------------
257,200 Komag, Inc.(a) 14,660,400
- ---------------------------------------------------------------------
800,000 Microchip Technology, Inc.(a) 31,750,000
- ---------------------------------------------------------------------
400,000 Oak Technology, Inc.(a) 21,900,000
- ---------------------------------------------------------------------
1,604,600 Oracle Systems Corp.(a) 70,000,675
- ---------------------------------------------------------------------
500,000 Read-Rite Corp.(a) 17,437,500
- ---------------------------------------------------------------------
600,000 Seagate Technology Inc.(a) 26,850,000
- ---------------------------------------------------------------------
500,000 U.S. Robotics Corp.(a) 46,250,000
- ---------------------------------------------------------------------
340,478,075
- ---------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES-10.80%
1,025,000 Acclaim Entertainment, Inc.(a) 24,215,625
- ---------------------------------------------------------------------
505,900 Adobe Systems, Inc. 28,836,300
- ---------------------------------------------------------------------
1,000,000 BMC Software, Inc.(a) 35,625,000
- ---------------------------------------------------------------------
500,000 Broderbund Software, Inc.(a) 34,687,500
- ---------------------------------------------------------------------
1,125,000 Cadence Design Systems, Inc.(a) 36,281,250
- ---------------------------------------------------------------------
879,300 Ceridian Corp.(a) 38,249,550
- ---------------------------------------------------------------------
1,500,000 Computer Associates International, Inc. 82,500,000
- ---------------------------------------------------------------------
2,000,000 Computervision Corp.(a) 23,500,000
- ---------------------------------------------------------------------
550,000 Electronic Arts, Inc.(a) 20,143,750
- ---------------------------------------------------------------------
418,000 Fiserv, Inc.(a) 10,763,500
- ---------------------------------------------------------------------
741,200 FTP Software, Inc.(a) 20,012,400
- ---------------------------------------------------------------------
</TABLE>
6
<PAGE>
Financials
<TABLE>
<C> <S> <C>
SHARES MARKET VALUE
Computer Software/Services-(continued)
600,000 HBO & Co. $ 42,450,000
- -----------------------------------------------------------------------
200,000 Hyperion Software Corp.(a) 9,850,000
- -----------------------------------------------------------------------
1,200,000 Informix Corp.(a) 34,950,000
- -----------------------------------------------------------------------
300,000 Microsoft Corp.(a) 30,000,000
- -----------------------------------------------------------------------
642,900 Network General Corp.(a) 26,680,350
- -----------------------------------------------------------------------
700,000 PairGain Technologies, Inc.(a) 29,925,000
- -----------------------------------------------------------------------
800,000 Parametric Technology Corp.(a) 53,500,000
- -----------------------------------------------------------------------
300,000 Platinum Technology, Inc.(a) 5,475,000
- -----------------------------------------------------------------------
600,000 Policy Management Systems Corp.(a) 28,275,000
- -----------------------------------------------------------------------
500,000 Rational Software Corp.(a) 7,812,500
- -----------------------------------------------------------------------
737,300 SoftKey International Inc.(a) 23,224,950
- -----------------------------------------------------------------------
500,000 Sterling Software, Inc.(a) 23,062,500
- -----------------------------------------------------------------------
600,000 Sybase, Inc.(a) 23,550,000
- -----------------------------------------------------------------------
1,000,000 Symantec Corp.(a) 24,312,500
- -----------------------------------------------------------------------
1,415,700 Synopsys, Inc.(a) 53,088,750
- -----------------------------------------------------------------------
770,971,425
- -----------------------------------------------------------------------
CONGLOMERATES-0.18%
205,991 Tyco International Ltd. 12,513,953
- -----------------------------------------------------------------------
CONSUMER NON-DURABLES-0.16%
252,000 Department 56, Inc.(a) 11,434,500
- -----------------------------------------------------------------------
COSMETICS & TOILETRIES-0.47%
1,360,000 General Nutrition, Inc.(a) 33,830,000
- -----------------------------------------------------------------------
ELECTRONIC COMPONENTS/MISCELLANEOUS-2.46%
200,000 Ametek, Inc. 3,525,000
- -----------------------------------------------------------------------
600,000 Amphenol Corp.(a) 12,975,000
- -----------------------------------------------------------------------
146,200 AVX Corp. 4,550,475
- -----------------------------------------------------------------------
300,000 Methode Electronics, Inc. 6,900,000
- -----------------------------------------------------------------------
156,250 Molex, Inc. 5,156,250
- -----------------------------------------------------------------------
234,375 Molex, Inc.-Class A 7,207,031
- -----------------------------------------------------------------------
187,500 Parker-Hannifin Corp. 6,328,125
- -----------------------------------------------------------------------
300,000 Recoton Corp.(a) 6,675,000
- -----------------------------------------------------------------------
750,000 Symbol Technologies, Inc.(a) 26,156,250
- -----------------------------------------------------------------------
400,000 Tektronix, Inc. 23,700,000
- -----------------------------------------------------------------------
2,177,800 Teradyne, Inc.(a) 72,684,075
- -----------------------------------------------------------------------
175,857,206
- -----------------------------------------------------------------------
</TABLE>
7
<PAGE>
Financials
<TABLE>
<C> <S> <C>
SHARES MARKET VALUE
ELECTRONIC/PC DISTRIBUTORS-0.89%
650,000 Arrow Electronics, Inc.(a) $ 32,987,500
- --------------------------------------------------------------------
600,000 Avnet, Inc. 30,225,000
- --------------------------------------------------------------------
63,212,500
- --------------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-3.83%
500,000 ADVANTA Corp.-Class A 19,375,000
- --------------------------------------------------------------------
500,000 ADVANTA Corp.-Class B 17,875,000
- --------------------------------------------------------------------
1,100,000 Credit Acceptance Corp.(a) 25,850,000
- --------------------------------------------------------------------
650,000 First USA, Inc. 29,900,000
- --------------------------------------------------------------------
1,300,000 Green Tree Financial Corp. 34,612,500
- --------------------------------------------------------------------
1,600,000 MBNA Corp. 59,000,000
- --------------------------------------------------------------------
1,220,800 Medaphis Corp.(a) 38,760,400
- --------------------------------------------------------------------
2,500,000 Mercury Finance Co. 48,125,000
- --------------------------------------------------------------------
273,497,900
- --------------------------------------------------------------------
FUNERAL SERVICES-1.46%
814,100 Loewen Group, Inc. 32,602,181
- --------------------------------------------------------------------
1,366,400 Service Corp. International 54,826,800
- --------------------------------------------------------------------
500,000 Stewart Enterprises, Inc.-Class A 16,875,000
- --------------------------------------------------------------------
104,303,981
- --------------------------------------------------------------------
GAMING-0.69%
1,000,000 Mirage Resorts, Inc.(a) 32,750,000
- --------------------------------------------------------------------
750,000 Players International, Inc.(a) 8,062,500
- --------------------------------------------------------------------
476,200 Trump Hotels & Casino Resorts, Inc.(a) 8,095,400
- --------------------------------------------------------------------
48,907,900
- --------------------------------------------------------------------
HOME BUILDING-0.34%
750,000 Clayton Homes, Inc. 19,687,500
- --------------------------------------------------------------------
125,000 Oakwood Homes Corp. 4,687,500
- --------------------------------------------------------------------
24,375,000
- --------------------------------------------------------------------
HOTELS/MOTELS-0.88%
145,900 Doubletree Corp.(a) 3,209,800
- --------------------------------------------------------------------
600,000 Hospitality Franchise Systems, Inc.(a) 36,750,000
- --------------------------------------------------------------------
750,000 La Quinta Inns, Inc. 19,312,500
- --------------------------------------------------------------------
162,500 Promus Companies Inc.(a) 3,575,000
- --------------------------------------------------------------------
62,847,300
- --------------------------------------------------------------------
</TABLE>
8
<PAGE>
Financials
<TABLE>
<C> <S> <C>
SHARES MARKET VALUE
INSURANCE (LIFE & HEALTH)-0.07%
150,000 Equitable of Iowa Companies $ 5,250,000
- ------------------------------------------------------------------
LEISURE & RECREATION-0.46%
429,300 Avid Technology, Inc.(a) 18,781,875
- ------------------------------------------------------------------
500,000 Mattel, Inc. 14,375,000
- ------------------------------------------------------------------
33,156,875
- ------------------------------------------------------------------
MACHINE TOOLS-0.17%
400,000 Kennametal Inc. 12,450,000
- ------------------------------------------------------------------
MACHINERY (HEAVY)-0.08%
131,000 AGCO Corp. 5,862,250
- ------------------------------------------------------------------
MACHINERY (MISCELLANEOUS)-0.39%
600,000 Thermo Electron Corp.(a) 27,600,000
- ------------------------------------------------------------------
MEDICAL (DRUGS)-1.28%
1,000,000 Cardinal Health, Inc. 51,375,000
- ------------------------------------------------------------------
125,800 Forest Laboratories, Inc.(a) 5,204,975
- ------------------------------------------------------------------
1,000,000 Mylan Laboratories, Inc. 19,000,000
- ------------------------------------------------------------------
350,000 Watson Pharmaceuticals, Inc.(a) 15,662,500
- ------------------------------------------------------------------
91,242,475
- ------------------------------------------------------------------
MEDICAL (INSTRUMENTS/PRODUCTS)-3.00%
1,000,000 Biomet, Inc.(a) 16,625,000
- ------------------------------------------------------------------
910,400 Boston Scientific Corp.(a) 38,350,600
- ------------------------------------------------------------------
300,000 Cordis Corp.(a) 33,150,000
- ------------------------------------------------------------------
154,300 Heart Technology, Inc.(a) 4,397,550
- ------------------------------------------------------------------
500,800 Idexx Laboratories, Inc.(a) 20,407,600
- ------------------------------------------------------------------
689,000 Invacare Corp. 17,397,250
- ------------------------------------------------------------------
400,000 Medtronic Inc. 23,100,000
- ------------------------------------------------------------------
500,000 Nellcor, Inc.(a) 28,750,000
- ------------------------------------------------------------------
515,800 St. Jude Medical Inc.(a) 27,466,350
- ------------------------------------------------------------------
100,000 Stryker Corp. 4,512,500
- ------------------------------------------------------------------
214,156,850
- ------------------------------------------------------------------
MEDICAL (PATIENT SERVICES)-10.04%
400,000 American Medical Response, Inc.(a) 11,550,000
- ------------------------------------------------------------------
1,750,000 Apria Healthcare Group, Inc.(a) 37,843,750
- ------------------------------------------------------------------
1,128,000 Columbia/HCA Healthcare Corp. 55,413,000
- ------------------------------------------------------------------
900,000 Community Health Systems, Inc.(a) 28,575,000
- ------------------------------------------------------------------
</TABLE>
9
<PAGE>
Financials
<TABLE>
<C> <S> <C>
SHARES MARKET VALUE
Medical (Patient Services)-(continued)
500,000 Foundation Health Corp.(a) $ 21,187,500
- ---------------------------------------------------------------------------
700,000 Genesis Health Ventures, Inc.(a) 20,212,500
- ---------------------------------------------------------------------------
1,500,000 Health Care and Retirement Corp.(a) 44,062,500
- ---------------------------------------------------------------------------
1,792,125 Health Management Associates, Inc.-Class A(a) 38,530,688
- ---------------------------------------------------------------------------
732,600 Healthsource, Inc.(a) 38,827,800
- ---------------------------------------------------------------------------
2,500,000 Healthsouth Corp.(a) 65,312,500
- ---------------------------------------------------------------------------
1,250,000 Horizon Healthcare Corp.(a) 25,312,500
- ---------------------------------------------------------------------------
1,000,000 Integrated Health Services, Inc.(a) 22,875,000
- ---------------------------------------------------------------------------
1,300,000 Lincare Holdings Inc.(a) 32,337,500
- ---------------------------------------------------------------------------
600,000 Living Centers of America, Inc.(a) 15,525,000
- ---------------------------------------------------------------------------
1,250,000 Manor Care, Inc. 40,937,500
- ---------------------------------------------------------------------------
600,000 Omnicare Inc. 21,750,000
- ---------------------------------------------------------------------------
1,250,000 OrNda HealthCorp(a) 22,031,250
- ---------------------------------------------------------------------------
600,000 Oxford Health Plans, Inc.(a) 46,950,000
- ---------------------------------------------------------------------------
150,000 Pacificare Health Systems, Inc.-Class A(a) 10,575,000
- ---------------------------------------------------------------------------
150,000 Pacificare Health Systems, Inc.-Class B(a) 10,912,500
- ---------------------------------------------------------------------------
350,000 PhyCor, Inc.(a) 12,862,500
- ---------------------------------------------------------------------------
600,000 Quorum Health Group Inc.(a) 12,862,500
- ---------------------------------------------------------------------------
900,000 Sybron International Corp. 38,250,000
- ---------------------------------------------------------------------------
434,000 Theratx Inc.(a) 4,882,500
- ---------------------------------------------------------------------------
1,350,000 Vencor, Inc.(a) 37,462,500
- ---------------------------------------------------------------------------
717,041,488
- ---------------------------------------------------------------------------
OFFICE PRODUCTS-0.45%
300,000 Avery Dennison Corp. 13,425,000
- ---------------------------------------------------------------------------
517,100 Reynolds & Reynolds Co.-Class A 18,421,688
- ---------------------------------------------------------------------------
31,846,688
- ---------------------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES-0.09%
400,000 Smith International, Inc.(a) 6,400,000
- ---------------------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.19%
250,000 Champion International Corp. 13,375,000
- ---------------------------------------------------------------------------
POLLUTION CONTROL-0.33%
225,000 Asyst Technologies, Inc.(a) 9,450,000
- ---------------------------------------------------------------------------
658,000 USA Waste Services, Inc.(a) 13,818,000
- ---------------------------------------------------------------------------
23,268,000
- ---------------------------------------------------------------------------
PUBLISHING-0.10%
187,900 Harcourt General, Inc. 7,445,538
- ---------------------------------------------------------------------------
</TABLE>
10
<PAGE>
Financials
<TABLE>
<C> <S> <C>
SHARES MARKET VALUE
RESTAURANTS-0.74%
312,100 Applebee's International, Inc. $ 8,777,813
- ---------------------------------------------------------------------
850,000 Cracker Barrel Old Country Store, Inc. 14,450,000
- ---------------------------------------------------------------------
400,000 Morrison Restaurants Inc. 6,250,000
- ---------------------------------------------------------------------
750,000 Outback Steakhouse, Inc.(a) 23,531,250
- ---------------------------------------------------------------------
53,009,063
- ---------------------------------------------------------------------
RETAIL (FOOD & DRUG)-1.46%
300,000 Casey's General Stores, Inc. 6,900,000
- ---------------------------------------------------------------------
652,500 Eckerd Corp.(a) 25,855,313
- ---------------------------------------------------------------------
1,000,000 Kroger Co.(a) 33,375,000
- ---------------------------------------------------------------------
800,000 Safeway, Inc.(a) 37,800,000
- ---------------------------------------------------------------------
103,930,313
- ---------------------------------------------------------------------
RETAIL (STORES)-7.35%
696,500 AutoZone, Inc.(a) 17,238,375
- ---------------------------------------------------------------------
410,100 Baby Superstore, Inc.(a) 19,377,225
- ---------------------------------------------------------------------
1,000,000 Bed Bath & Beyond, Inc.(a) 31,250,000
- ---------------------------------------------------------------------
18,900 CDW Computer Centers, Inc.(a) 916,650
- ---------------------------------------------------------------------
625,000 Circuit City Stores, Inc. 20,859,375
- ---------------------------------------------------------------------
1,000,000 Consolidated Stores Corp.(a) 23,125,000
- ---------------------------------------------------------------------
572,200 Corporate Express, Inc.(a) 14,948,725
- ---------------------------------------------------------------------
1,399,975 Dollar General Corp. 34,299,387
- ---------------------------------------------------------------------
500,000 Gap, Inc. 19,687,500
- ---------------------------------------------------------------------
900,000 Gymboree Corp.(a) 20,362,500
- ---------------------------------------------------------------------
800,200 Heilig-Meyers Co. 14,703,675
- ---------------------------------------------------------------------
558,000 Kohl's Corp.(a) 25,319,250
- ---------------------------------------------------------------------
400,000 MacFrugals Bargains Close-Outs, Inc.(a) 4,750,000
- ---------------------------------------------------------------------
600,100 Men's Wearhouse, Inc. (The)(a) 23,403,900
- ---------------------------------------------------------------------
837,900 Micro Warehouse Inc.(a) 37,286,550
- ---------------------------------------------------------------------
1,006,450 Office Depot, Inc.(a) 28,809,630
- ---------------------------------------------------------------------
150,000 Petco Animal Supplies, Inc.(a) 4,200,000
- ---------------------------------------------------------------------
153,900 PetSmart, Inc.(a) 5,155,650
- ---------------------------------------------------------------------
1,000,000 Sports Authority, Inc. (The)(a) 21,750,000
- ---------------------------------------------------------------------
1,850,000 Staples Inc.(a) 49,256,250
- ---------------------------------------------------------------------
750,000 Sunglass Hut International, Inc.(a) 20,437,500
- ---------------------------------------------------------------------
800,000 Talbots, Inc. 19,400,000
- ---------------------------------------------------------------------
255,700 Tandy Corp. 12,625,188
- ---------------------------------------------------------------------
1,246,300 Viking Office Products, Inc.(a) 55,460,350
- ---------------------------------------------------------------------
524,622,680
- ---------------------------------------------------------------------
</TABLE>
11
<PAGE>
Financials
<TABLE>
<C> <S> <C>
SHARES MARKET VALUE
SCIENTIFIC INSTRUMENTS-0.82%
780,000 Millipore Corp. $ 27,592,500
- ----------------------------------------------------------------
600,000 Varian Associates, Inc. 30,825,000
- ----------------------------------------------------------------
58,417,500
- ----------------------------------------------------------------
SEMICONDUCTORS-16.86%
1,200,000 Altera Corp.(a) 72,600,000
- ----------------------------------------------------------------
1,325,000 Analog Devices, Inc.(a) 47,865,625
- ----------------------------------------------------------------
1,800,000 Applied Materials, Inc.(a) 90,225,000
- ----------------------------------------------------------------
2,200,000 Atmel Corp.(a) 68,750,000
- ----------------------------------------------------------------
800,000 Cirrus Logic Corp.(a) 33,700,000
- ----------------------------------------------------------------
501,450 Credence Systems Corp.(a) 18,741,694
- ----------------------------------------------------------------
1,000,000 Cypress Semiconductor Corp.(a) 35,250,000
- ----------------------------------------------------------------
300,000 Electroglas, Inc.(a) 21,075,000
- ----------------------------------------------------------------
150,000 Gasonics International Corp.(a) 4,950,000
- ----------------------------------------------------------------
2,500,000 Integrated Device Technology, Inc. 47,500,000
- ----------------------------------------------------------------
400,000 Intel Corp. 27,950,000
- ----------------------------------------------------------------
967,000 International Rectifier Corp.(a) 43,635,875
- ----------------------------------------------------------------
800,000 KLA Instruments Corp.(a) 34,200,000
- ----------------------------------------------------------------
850,000 LAM Research Corp.(a) 51,743,750
- ----------------------------------------------------------------
580,700 Lattice Semiconductor Corp.(a) 22,792,475
- ----------------------------------------------------------------
1,000,000 Linear Technology Corp. 43,750,000
- ----------------------------------------------------------------
1,700,000 LSI Logic Corp.(a) 80,112,500
- ----------------------------------------------------------------
313,800 Maxim Integrated Products, Inc.(a) 23,456,550
- ----------------------------------------------------------------
1,000,000 MEMC Electronic Materials, Inc.(a) 32,000,000
- ----------------------------------------------------------------
1,150,000 Micron Technology, Inc. 81,218,750
- ----------------------------------------------------------------
558,900 Novellus Systems, Inc.(a) 38,494,238
- ----------------------------------------------------------------
409,000 SCI Systems, Inc.(a) 14,366,125
- ----------------------------------------------------------------
600,000 Sierra Semiconductor Corp.(a) 10,725,000
- ----------------------------------------------------------------
400,000 Silicon Valley Group, Inc.(a) 12,950,000
- ----------------------------------------------------------------
1,000,000 Solectron Corp.(a) 40,250,000
- ----------------------------------------------------------------
333,400 Tencor Instruments(a) 14,211,175
- ----------------------------------------------------------------
770,000 Texas Instruments Inc. 52,552,500
- ----------------------------------------------------------------
32,200 Ultratech Stepper, Inc.(a) 1,288,000
- ----------------------------------------------------------------
430,000 Vishay Intertechnology, Inc.(a) 15,157,500
- ----------------------------------------------------------------
1,500,000 VLSI Technology, Inc.(a) 35,250,000
- ----------------------------------------------------------------
1,500,000 Xilinx, Inc.(a) 69,000,000
- ----------------------------------------------------------------
500,000 Zilog, Inc.(a) 17,750,000
- ----------------------------------------------------------------
1,203,511,757
- ----------------------------------------------------------------
</TABLE>
12
<PAGE>
Financials
<TABLE>
<C> <S> <C>
SHARES MARKET VALUE
SHOES & RELATED APPAREL-0.44%
500,000 Nine West Group, Inc.(a) $ 22,250,000
- -----------------------------------------------------------------
300,000 Wolverine World Wide, Inc. 9,000,000
- -----------------------------------------------------------------
31,250,000
- -----------------------------------------------------------------
TELECOMMUNICATIONS-3.00%
400,000 ADC Telecommunications, Inc.(a) 16,000,000
- -----------------------------------------------------------------
450,000 Allen Group Inc. 11,025,000
- -----------------------------------------------------------------
500,000 Andrew Corp.(a) 21,125,000
- -----------------------------------------------------------------
700,000 Aspect Telecommunications Corp.(a) 24,062,500
- -----------------------------------------------------------------
425,000 DSC Communications Corp.(a) 15,725,000
- -----------------------------------------------------------------
250,000 Glenayre Technologies, Inc.(a) 16,062,500
- -----------------------------------------------------------------
512,600 Octel Communications Corp.(a) 17,492,475
- -----------------------------------------------------------------
600,000 Scientific-Atlanta, Inc. 7,425,000
- -----------------------------------------------------------------
350,000 StrataCom, Inc.(a) 21,525,000
- -----------------------------------------------------------------
249,100 Tekelec(a) 3,611,950
- -----------------------------------------------------------------
750,000 Tellabs, Inc.(a) 25,500,000
- -----------------------------------------------------------------
112,500 TransPro, Inc. 1,237,500
- -----------------------------------------------------------------
400,000 U.S. Long Distance Corp.(a) 5,150,000
- -----------------------------------------------------------------
875,000 WorldCom, Inc.(a) 28,546,875
- -----------------------------------------------------------------
214,488,800
- -----------------------------------------------------------------
TELEPHONE-0.02%
55,700 Century Telephone Enterprises, Inc. 1,615,300
- -----------------------------------------------------------------
TEXTILES-0.47%
600,000 Nautica Enterprises, Inc.(a) 20,550,000
- -----------------------------------------------------------------
348,700 Tommy Hilfiger Corp.(a) 13,294,188
- -----------------------------------------------------------------
33,844,188
- -----------------------------------------------------------------
TRUCKING-0.10%
391,800 TNT Freightways Corp. 7,052,400
- -----------------------------------------------------------------
Total Domestic Common Stocks 6,217,881,736
- -----------------------------------------------------------------
</TABLE>
13
<PAGE>
Financials
<TABLE>
<C> <S> <C>
SHARES MARKET VALUE
FOREIGN STOCKS & OTHER EQUITY INTERESTS-4.14%
AUSTRALIA-0.09%
480,832 Broken Hill Proprietary Co. Ltd. (Conglomerates) $ 6,512,182
- -------------------------------------------------------------------------------
CANADA-0.22%
900,000 Corel Corp. (Computer Software/Services)(a) 15,412,500
- -------------------------------------------------------------------------------
FINLAND-0.25%
23,170 Nokia Corp. (Telecommunications) 1,325,527
- -------------------------------------------------------------------------------
300,000 Nokia Corp.-ADR (Telecommunications) 16,725,000
- -------------------------------------------------------------------------------
18,050,527
- -------------------------------------------------------------------------------
FRANCE-0.23%
20,000 LVMH Moet Hennessy Louis Vuitton (Beverages-
Alcoholic) 3,979,469
- -------------------------------------------------------------------------------
50,580 Roussel-Uclaf (Medical-Drugs) 8,295,364
- -------------------------------------------------------------------------------
12,650 Sidel S.A. (Machinery-Miscellaneous) 4,392,487
- -------------------------------------------------------------------------------
16,667,320
- -------------------------------------------------------------------------------
GERMANY-0.06%
13,000 Mannesmann A.G. (Machinery-Miscellaneous) 4,278,834
- -------------------------------------------------------------------------------
HONG KONG-0.15%
1,000,000 Hutchison Whampoa Ltd. (Conglomerates) 5,509,655
- -------------------------------------------------------------------------------
628,000 Sun Hung Kai Properties Ltd. (Real Estate) 5,015,585
- -------------------------------------------------------------------------------
10,525,240
- -------------------------------------------------------------------------------
INDONESIA-0.06%
1,250,000 PT Bank International Indonesia (Banking) 4,375,826
- -------------------------------------------------------------------------------
IRELAND-0.13%
221,100 Elan Corp. PLC-ADR (Medical-Drugs)(a) 8,871,638
- -------------------------------------------------------------------------------
ISRAEL-0.22%
250,000 Lannet Data Communications Ltd. (Computer
Networking)(a) 7,187,500
- -------------------------------------------------------------------------------
225,000 Teva Pharmaceutical Industries Ltd.-ADR (Medical-
Drugs) 8,831,250
- -------------------------------------------------------------------------------
16,018,750
- -------------------------------------------------------------------------------
ITALY-0.05%
1,074,000 Telecom Italia Mobile S.p.A.
(Telecommunications)(a) 1,806,395
- -------------------------------------------------------------------------------
1,074,000 Telecom Italia S.p.A. (Telecommunications) 1,645,363
- -------------------------------------------------------------------------------
3,451,758
- -------------------------------------------------------------------------------
JAPAN-0.07%
120,000 Tokyo Electron Ltd. (Electronic
Components/Miscellaneous) 5,208,466
- -------------------------------------------------------------------------------
MALAYSIA-0.11%
938,000 Malayan Banking Berhad (Banking) 7,567,493
- -------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
Financials
<TABLE>
<C> <S> <C>
SHARES MARKET VALUE
NETHERLANDS-0.72%
400,000 ASM Lithography Holding N.V. (Semiconductors)(a) $ 19,850,000
- ------------------------------------------------------------------------------
400,000 Madge, N.V. (Computer Networking)(a) 16,750,000
- ------------------------------------------------------------------------------
270,500 Philips Electronics N.V.-New York Shares-ADR
(Electronic Components/Miscellaneous) 10,448,063
- ------------------------------------------------------------------------------
32,850 Ver Ned Uitgever Bezit (Publishing) 4,605,392
- ------------------------------------------------------------------------------
51,653,455
- ------------------------------------------------------------------------------
SPAIN-0.01%
8,100 Acerinox, S.A. (Metals-Miscellaneous) 852,771
- ------------------------------------------------------------------------------
SWEDEN-0.96%
140,000 Astra AB (Medical-Drugs) 5,059,784
- ------------------------------------------------------------------------------
60,500 Autoliv AB (Automobile/Trucks Parts & Tires) 3,471,147
- ------------------------------------------------------------------------------
2,811,600 Telefonaktiebolaget L.M. Ericsson-ADR
(Telecommunications) 60,054,089
- ------------------------------------------------------------------------------
68,585,020
- ------------------------------------------------------------------------------
SWITZERLAND-0.12%
3,500 BBC Brown Boveri Ltd. (Engineering &
Construction) 4,060,160
- ------------------------------------------------------------------------------
5,000 Ciba-Geigy Ltd. (Chemicals) 4,329,252
- ------------------------------------------------------------------------------
8,389,412
- ------------------------------------------------------------------------------
UNITED KINGDOM-0.69%
2,700,000 Burton Group PLC (Retail-Stores) 4,300,790
- ------------------------------------------------------------------------------
1,075,000 Danka Business Systems PLC-ADR (Office
Automation) 36,012,500
- ------------------------------------------------------------------------------
390,000 Granada Group PLC (Leisure & Recreation) 4,165,138
- ------------------------------------------------------------------------------
210,000 Thorn EMI PLC (Leisure & Recreation) 4,890,593
- ------------------------------------------------------------------------------
49,369,021
- ------------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests 295,790,213
- ------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
Financials
<TABLE>
<C> <S> <C>
PRINCIPAL
AMOUNT MARKET VALUE
MASTER NOTE AGREEMENT-1.07%
$76,500,000 Citicorp Securities, Inc., 6.125%,
03/11/96(b) $ 76,500,000
- -------------------------------------------------------------------------------
REPURCHASE AGREEMENTS-4.27%(c)
43,781,167 Daiwa Securities America, Inc., 5.90%,
11/01/95(d) 43,781,167
- -------------------------------------------------------------------------------
261,000,000 Goldman, Sachs & Co. Inc., 5.90%, 11/01/95(e) 261,000,000
- -------------------------------------------------------------------------------
Total Repurchase Agreements 304,781,167
- -------------------------------------------------------------------------------
U.S. TREASURY SECURITIES-3.77%
U.S. TREASURY BILLS-3.06%(f)
195,000,000(g) 5.48%, 11/16/95 194,561,135
- -------------------------------------------------------------------------------
25,000,000 5.22%, 06/27/96 24,132,000
- -------------------------------------------------------------------------------
218,693,135
- -------------------------------------------------------------------------------
U.S. TREASURY NOTES-0.71%
15,000,000 5.50%, 04/30/96 15,000,900
- -------------------------------------------------------------------------------
35,000,000 7.625%, 04/30/96 35,357,000
- -------------------------------------------------------------------------------
50,357,900
- -------------------------------------------------------------------------------
Total U.S. Treasury Securities 269,051,035
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS-100.35% 7,164,004,151
- -------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-(0.35)% (24,736,094)
- -------------------------------------------------------------------------------
NET ASSETS-100.00% $7,139,268,057
===============================================================================
</TABLE>
Abbreviation:
ADR--American Depositary Receipt
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) The Fund may demand prepayment of notes purchased under the Master Note
Purchase Agreement upon notice to the issuer. Interest rates on master
notes are redetermined periodically. Rate shown is the rate in effect on
October 31, 1995.
(c) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value as being 102 percent of the sales price of
the repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds managed by
the investment advisor.
(d) Joint repurchase agreement entered into 10/31/95 with a maturing value of
$401,494,641. Collateralized by $353,853,000 U.S. Treasury obligations,
8.375% due 08/15/08.
(e) Joint repurchase agreement entered into 10/31/95 with a maturing value of
$360,681,783. Collateralized by $341,411,000 U.S. Treasury obligations,
5.625% to 12.00% due 11/15/95 to 02/15/25.
(f) U.S. Treasury bills are traded on a discount basis. In such cases the
interest rate shown represents the rate of discount paid or received at the
time of purchase by the Fund.
(g) A portion of the principal balance was pledged as collateral to cover
margin requirements for open futures contracts. See Note 7.
See Notes to Financial Statements.
16
<PAGE>
Financials
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $5,084,052,318) $7,164,004,151
- ------------------------------------------------------------------------
Foreign currencies, at market value (cost $13,642,266) 13,495,706
- ------------------------------------------------------------------------
Receivables for:
Investments sold 28,101,604
- ------------------------------------------------------------------------
Capital stock sold 50,215,325
- ------------------------------------------------------------------------
Dividends and interest 1,095,114
- ------------------------------------------------------------------------
Investment for deferred compensation plan 35,624
- ------------------------------------------------------------------------
Other assets 100,373
- ------------------------------------------------------------------------
Total assets 7,257,047,897
- ------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 57,630,332
- ------------------------------------------------------------------------
Capital stock reacquired 50,907,595
- ------------------------------------------------------------------------
Variation margin 1,239,750
- ------------------------------------------------------------------------
Deferred compensation 35,624
- ------------------------------------------------------------------------
Accrued advisory fees 3,602,549
- ------------------------------------------------------------------------
Accrued administrative services fees 14,663
- ------------------------------------------------------------------------
Accrued directors' fees 3,850
- ------------------------------------------------------------------------
Accrued distribution fees 2,624,668
- ------------------------------------------------------------------------
Accrued transfer agent fees 439,464
- ------------------------------------------------------------------------
Accrued operating expenses 1,281,345
- ------------------------------------------------------------------------
Total liabilities 117,779,840
- ------------------------------------------------------------------------
Net assets applicable to shares outstanding $7,139,268,057
========================================================================
NET ASSETS:
Class A $7,000,350,013
========================================================================
Institutional Class $ 138,918,044
========================================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Class A:
Authorized 750,000,000
- ------------------------------------------------------------------------
Outstanding 295,483,948
========================================================================
Institutional Class:
Authorized 200,000,000
- ------------------------------------------------------------------------
Outstanding 5,775,803
========================================================================
CLASS A:
Net asset value and redemption price per share $23.69
========================================================================
Offering price per share:
(Net asset value of $23.69 divided by 94.50%) $25.07
========================================================================
INSTITUTIONAL CLASS:
Net asset value, offering and redemption price per share $24.05
========================================================================
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
Financials
STATEMENT OF OPERATIONS
For the year ended October 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $322,914 foreign withholding tax) $ 14,062,451
- --------------------------------------------------------------------------
Interest 27,896,762
- --------------------------------------------------------------------------
Total investment income 41,959,213
- --------------------------------------------------------------------------
EXPENSES:
Advisory fees 31,803,884
- --------------------------------------------------------------------------
Administrative services fees 173,257
- --------------------------------------------------------------------------
Custodian fees 568,906
- --------------------------------------------------------------------------
Directors' fees 44,198
- --------------------------------------------------------------------------
Distribution fees-Class A 14,905,705
- --------------------------------------------------------------------------
Transfer agent fees-Class A 9,158,530
- --------------------------------------------------------------------------
Transfer agent fees-Institutional Class 5,273
- --------------------------------------------------------------------------
Other 2,078,095
- --------------------------------------------------------------------------
Total expenses 58,737,848
- --------------------------------------------------------------------------
Less fees waived by advisor (761,655)
- --------------------------------------------------------------------------
Net expenses 57,976,193
- --------------------------------------------------------------------------
Net investment income (loss) (16,016,980)
- --------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENT SECURITIES,
FOREIGN CURRENCIES AND FUTURES CONTRACTS:
Net realized gain on sales of:
Investment securities 198,443,948
- --------------------------------------------------------------------------
Foreign currencies 225,354
- --------------------------------------------------------------------------
Futures contracts 38,758,395
- --------------------------------------------------------------------------
237,427,697
- --------------------------------------------------------------------------
Unrealized appreciation (depreciation) of:
Investment securities 1,310,161,937
- --------------------------------------------------------------------------
Foreign currencies (529,855)
- --------------------------------------------------------------------------
Futures contracts (2,597,985)
- --------------------------------------------------------------------------
1,307,034,097
- --------------------------------------------------------------------------
Net gain on investment securities, foreign currencies and
futures contracts 1,544,461,794
- --------------------------------------------------------------------------
Net increase in net assets resulting from operations $1,528,444,814
==========================================================================
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
Financials
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (16,016,980) $ (4,773,452)
- -----------------------------------------------------------------------------
Net realized gain on sales of investment
securities,
foreign currencies and futures contracts 237,427,697 113,271,698
- -----------------------------------------------------------------------------
Unrealized appreciation of investment
securities,
foreign currencies and futures contracts 1,307,034,097 137,121,005
- -----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 1,528,444,814 245,619,251
- -----------------------------------------------------------------------------
Distributions to shareholders from net
realized gains on investment securities:
Class A (107,823,749) --
- -----------------------------------------------------------------------------
Institutional Class (1,218,145) --
- -----------------------------------------------------------------------------
Share transactions - net:
Class A 1,878,176,040 726,623,024
- -----------------------------------------------------------------------------
Institutional Class 75,813,810 24,797,834
- -----------------------------------------------------------------------------
Net increase in net assets 3,373,392,770 997,040,109
- -----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 3,765,875,287 2,768,835,178
- -----------------------------------------------------------------------------
End of period $7,139,268,057 $3,765,875,287
=============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $4,828,771,443 $2,890,417,744
- -----------------------------------------------------------------------------
Undistributed net investment income (loss) (54,010) --
- -----------------------------------------------------------------------------
Undistributed net realized gain on sales of
investment securities, foreign currencies
and futures contracts 231,637,155 103,578,171
- -----------------------------------------------------------------------------
Unrealized appreciation of investment
securities, foreign currencies and futures
contracts 2,078,913,469 771,879,372
- -----------------------------------------------------------------------------
$7,139,268,057 $3,765,875,287
=============================================================================
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
Financials
NOTES TO FINANCIAL STATEMENTS
October 31, 1995
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM Constellation 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 four diversified portfolios:
AIM Constellation Fund, AIM Weingarten Fund, AIM Charter Fund and AIM
Aggressive Growth Fund. The Fund currently offers two different classes of
shares: the Class A shares (formerly "Retail Class") and the Institutional
Class. Matters affecting each portfolio or class will be voted on exclusively
by the shareholders of such portfolio or class. The assets, liabilities and
operations of each portfolio are accounted for separately. Information
presented in these financial statements pertains only to the Fund. The
following is a summary of significant accounting policies followed by the Fund
in the preparation of its financial statements.
A. Security Valuations - A security listed or traded on an exchange is valued
at its last sales price on the exchange where the security is principally
traded, or lacking any sales on a particular day, the security is valued at
the mean between the closing bid and asked prices on that day. Each security
traded in the over-the-counter market (but not including securities reported
on the NASDAQ National Market System) is valued at the mean between the last
bid and asked prices based upon quotes furnished by market makers for such
securities. If a mean is not available, as is the case in some foreign
markets, the closing bid will be used absent a last sales price. Each
security reported on the NASDAQ National Market System is valued at the last
sales price on the valuation date or absent a last sales price, at the mean
of the closing bid and asked prices. Debt obligations that are issued or
guaranteed by the U.S. Treasury are valued on the basis of prices provided by
an independent pricing service. Prices provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as yield, type of issue, coupon rate and maturity
date. Securities for which market quotations are not readily available 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 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 accounted for on a trade date basis. Realized gains or
losses on sales are computed on the specific identification of securities
sold. Interest income is recorded as earned from settlement date and is
recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date. On October 31, 1995,
$326,819 was reclassified from undistributed net realized gains to
undistributed net investment income (loss) as a result of differing book/tax
treatments of foreign currency transactions. In addition, $15,636,151 was
reclassified from net investment income (loss) to paid-in capital as a
result of a net operating tax loss. Net assets of the Fund were unaffected
by the reclassifications discussed above.
C. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
D. Expenses - Operating expenses directly attributable to a class of shares are
charged to that class' operations. Expenses which are applicable to both
classes, e.g. advisory fees, are allocated between them.
E. Foreign Currency Translations - Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are translated
into U.S. dollar amounts on the respective dates of such transactions.
F. Foreign Currency Contracts - A forward 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 forward 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. 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
20
<PAGE>
Financials
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES-CONTINUED
"marking to market" on a daily basis to reflect the market value of the
contracts at the end of each day's trading. Variation margin payments are made
or received depending upon whether unrealized gains or losses are incurred.
When the contracts are closed, the Fund recognizes a realized gain or loss
equal to the difference between the proceeds from, or cost of, the closing
transaction and the Fund's basis in the contract. Risks include the
possibility of an illiquid market and the change in the value of the contracts
may not correlate with changes in the value of the securities being hedged.
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 1.0% of
the first $30 million of the Fund's average daily net assets, plus 0.75% of the
Fund's average daily net assets in excess of $30 million to and including $150
million, plus 0.625% of the Fund's average daily net assets in excess of $150
million. AIM has agreed to voluntarily waive a portion of its advisory fees
paid by the Fund to AIM to the extent necessary to reduce the fees paid by the
Fund at net asset levels higher than those currently incorporated in the
present advisory fee schedule. AIM will receive a fee calculated at the annual
rate of 1.0% of the first $30 million of the Fund's average daily net assets,
plus 0.75% of the Fund's average daily net assets in excess of $30 million to
and including $150 million, plus 0.625% of the Fund's average daily net assets
in excess of $150 million to and including $2 billion, plus 0.60% of the Fund's
average daily net assets in excess of $2 billion. During the year ended October
31, 1995, AIM waived fees of $761,655. The waiver is entirely voluntary and the
Board of Directors would be advised of any decision by AIM to discontinue the
waiver. Under the terms of a master sub-advisory agreement between AIM and
A I M Capital Management, Inc. ("AIM Capital"), AIM pays AIM Capital 50% of the
amount paid by the Fund to AIM. These agreements require AIM to reduce its fees
or, if necessary, make payments to the Fund to the extent required to satisfy
any expense limitations imposed by the securities laws or regulations
thereunder of any state in which the Fund's shares are qualified for sale.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the year ended October 31, 1995, AIM
was reimbursed $173,257 for such services.
The Fund, pursuant to a transfer agency and services agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency
services to the Class A shares. During the year ended October 31, 1995, AFS was
paid $4,943,213 for such services. During the year ended October 31, 1995, the
Fund paid A I M Institutional Fund Services, Inc. ("AIFS") with respect to the
Institutional Class $2,790 for shareholder and transfer agency services.
Effective July 1, 1995, AIFS became the exclusive transfer agent for the
Institutional Class of the Fund.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A shares and a master distribution agreement with Fund Management Company
("FMC") to serve as the distributor for the Institutional Class. The Company
has adopted a Plan pursuant to Rule 12b-1 under the 1940 Act (the "Plan"), with
respect to the Class A shares, whereby the Fund pays AIM Distributors an annual
rate of 0.30% of the Class A shares average daily net assets as compensation
for services related to the sales and distribution of the Class A 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 Class A shares, in amounts of up to 0.25% of the average net
assets of the Class A shares attributable to the customers of such dealers or
financial institutions, may be characterized as a service fee. The Plan also
provides that payments in excess of service fees are characterized as an asset-
based sales charge under the Plan. 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 Class A shares. During the year ended
October 31, 1995, the Class A shares paid AIM Distributors $14,905,705 as
compensation under the Plan.
AIM Distributors received commissions of $13,146,761 from Class A capital
stock transactions during the year ended October 31, 1995. 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. Certain officers and directors of the
Company are officers and directors of AIM, AIM Capital, AIM Distributors, AFS,
AIFS and FMC.
During the year ended October 31, 1995 the Fund paid legal fees of $14,394 for
services rendered by Kramer, Levin, Naftalis, Nessen, Kamin & Frankel as
counsel to the Company's directors. A member of that firm is a director of the
Company.
NOTE 3 - DIRECTORS' FEES
Director's fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if
so elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
21
<PAGE>
Financials
NOTE 4 - BANK BORROWINGS
The Fund has a $83,100,000 committed line of credit with a financial
institution syndicate with Chemical Bank of New York as the administrative
agent. Interest on borrowings under the line of credit is payable on maturity
or prepayment date. During the period July 20, 1995 (effective date of Credit
Agreement) through October 31, 1995, the Fund did not borrow under the line of
credit agreement. The Fund is charged a commitment fee, payable quarterly, at
the rate of 1/10 of 1% per annum on the unused balance of the Fund's
commitment.
NOTE 5 - AFFILIATED COMPANY TRANSACTIONS
Affiliated issuers, as defined in the 1940 Act, are issuers in which the Fund
held 5% or more of the outstanding voting securities. A summary of transactions
for each issuer who is or was an affiliate at or during the year ended October
31, 1995, is as follows:
<TABLE>
<CAPTION>
SHARE SHARE MARKET
BALANCE BALANCE VALUE
OCTOBER 31, PURCHASES REALIZED DIVIDEND OCTOBER 31, OCTOBER 31,
NAME OF ISSUER: 1994 COST SALES COST GAIN INCOME 1995 1995
<S> <C> <C> <C> <C> <C> <C> <C>
Roosevelt Financial
Group, Inc. 315,000 $0 $4,779,251 $392,937 $30,943 $0 $0
===============================================================================================
</TABLE>
NOTE 6 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the year ended October 31,
1995 was $4,071,335,941 and $2,213,924,196, respectively. The amount of
unrealized appreciation (depreciation) of investment securities as of October
31, 1995, on a tax basis, is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $2,178,971,166
- -----------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (99,425,248)
- -----------------------------------------------------------------------------
Net unrealized appreciation of investment securities $2,079,545,918
=============================================================================
</TABLE>
Cost of investments for tax purposes is $5,084,458,233.
NOTE 7- FUTURES CONTRACT
On October 31, 1995, $9,668,000 U.S. Treasury bills were pledged as collateral
to cover margin requirements for futures contracts.
Futures contracts outstanding at October 31, 1995:
(Contracts--$500 times index/delivery month/commitment)
<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION
(DEPRECIATION)
<S> <C>
S&P 500 Index 370 contracts/Dec95/Buy $ 749,250
S&P 500 Index 500 contracts/Mar96/Buy (1,642,375)
=====================================================
</TABLE>
NOTE 8 - CAPITAL STOCK
Changes in the capital stock outstanding for the years ended October 31, 1995
and 1994 were as follows:
<TABLE>
<CAPTION>
1995 1994
----------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
------------ --------------- ----------- --------------
<S> <C> <C> <C> <C>
Sold:
Institutional Class 5,036,915 $ 105,368,663 1,908,947 $ 33,070,778
- -----------------------------------------------------------------------------------
Class A 214,014,863 4,411,919,689 100,598,652 1,751,901,830
- -----------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Institutional Class 60,580 1,019,563 -- --
- -----------------------------------------------------------------------------------
Class A 6,006,043 99,940,399 -- --
- -----------------------------------------------------------------------------------
Reacquired:
Institutional Class (1,476,157) (30,574,416) (474,909) (8,272,944)
- -----------------------------------------------------------------------------------
Class A (128,002,913) (2,633,684,048) (58,902,798) (1,025,278,806)
- -----------------------------------------------------------------------------------
95,639,331 $ 1,953,989,850 43,129,892 $ 751,420,858
===================================================================================
</TABLE>
22
<PAGE>
Financials
NOTE 9 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a Class A share
outstanding during each of the years in the seven-year period ended October 31,
1995, the ten months ended October 31, 1988, and each of the years in the two-
year period ended December 31, 1987.(a)
<TABLE>
<CAPTION>
OCTOBER 31,
-------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988(b)
---------- ---------- ---------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $18.31 $17.04 $13.25 $11.72 $6.59 $9.40 $7.34 $6.35
- ------------------------ ---------- ---------- ---------- -------- -------- ------- ------- -------
Income from investment
operations:
Net investment income
(loss) (0.05) (0.02) (0.04) (0.04) (0.03) (0.03) 0.01 (0.03)
- ------------------------ ---------- ---------- ---------- -------- -------- ------- ------- -------
Net gains (losses) on
securities (both
realized
and unrealized) 5.95 1.29 3.83 1.76 5.16 (1.23) 2.46 1.02
- ------------------------ ---------- ---------- ---------- -------- -------- ------- ------- -------
Total from investment
operations 5.90 1.27 3.79 1.72 5.13 (1.26) 2.47 0.99
- ------------------------ ---------- ---------- ---------- -------- -------- ------- ------- -------
Less distributions:
Dividends from net
investment income -- -- -- -- -- (0.01) -- --
- ------------------------ ---------- ---------- ---------- -------- -------- ------- ------- -------
Distributions from
capital gains (0.52) -- -- (0.19) -- (1.54) (0.41) --
- ------------------------ ---------- ---------- ---------- -------- -------- ------- ------- -------
Total distributions (0.52) -- -- (0.19) -- (1.55) (0.41) --
- ------------------------ ---------- ---------- ---------- -------- -------- ------- ------- -------
Net asset value, end of
period $23.69 $18.31 $17.04 $13.25 $11.72 $6.59 $9.40 $7.34
======================== ========== ========== ========== ======== ======== ======= ======= =======
Total return(c) 33.43 % 7.45 % 28.60 % 14.82 % 77.85 % (16.17)% 35.50% 15.59 %
======================== ========== ========== ========== ======== ======== ======= ======= =======
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $7,000,350 $3,726,029 $2,756,497 $966,472 $342,835 $83,304 $74,731 $78,272
======================== ========== ========== ========== ======== ======== ======= ======= =======
Ratio of expenses to
average net assets 1.2 %(d) 1.2 % 1.2 % 1.2 % 1.4 % 1.4 % 1.4% 1.3 %(e)
======================== ========== ========== ========== ======== ======== ======= ======= =======
Ratio of net investment
income (loss) to
average net assets (0.3)%(d) (0.2)% (0.3)% (0.4)% (0.4)% (0.4)% 0.1% (0.6)%(e)
======================== ========== ========== ========== ======== ======== ======= ======= =======
Portfolio turnover rate 45 % 79 % 70 % 62 % 109 % 192 % 149 % 131 %
======================== ========== ========== ========== ======== ======== ======= ======= =======
Borrowings for the
period:
Amount of debt
outstanding at end of
period (000s omitted) -- -- -- -- -- -- $9,610 $5,266
======================== ========== ========== ========== ======== ======== ======= ======= =======
Average amount of debt
outstanding during the
period (000s
omitted)(f) -- -- -- -- -- $2,344 $2,609 $2,148
======================== ========== ========== ========== ======== ======== ======= ======= =======
Average number of shares
outstanding during the
period (000s
omitted)(f) 244,731 182,897 124,101 55,902 21,205 11,397 10,050 10,845
======================== ========== ========== ========== ======== ======== ======= ======= =======
Average amount of debt
per share during the
period -- -- -- -- -- $0.21 $0.26 $0.20
======================== ========== ========== ========== ======== ======== ======= ======= =======
<CAPTION>
DECEMBER 31,
-------------------
1987 1986(b)
--------- ---------
<S> <C> <C>
Net asset value,
beginning of period $10.58 $10.90
- ------------------------- --------- ---------
Income from investment
operations:
Net investment income
(loss) (0.05) (0.07)
- ------------------------- --------- ---------
Net gains (losses) on
securities (both
realized
and unrealized) 0.36 3.13
- ------------------------- --------- ---------
Total from investment
operations 0.31 3.06
- ------------------------- --------- ---------
Less distributions:
Dividends from net
investment income -- --
- ------------------------- --------- ---------
Distributions from
capital gains (4.54) (3.38)
- ------------------------- --------- ---------
Total distributions (4.54) (3.38)
- ------------------------- --------- ---------
Net asset value, end of
period $6.35 $10.58
========================= ========= =========
Total return(c) 2.85 % 28.56 %
========================= ========= =========
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $71,418 $78,885
========================= ========= =========
Ratio of expenses to
average net assets 1.1 % 1.1 %
========================= ========= =========
Ratio of net investment
income (loss) to
average net assets (0.4)% (0.5)%
========================= ========= =========
Portfolio turnover rate 135 % 107 %
========================= ========= =========
Borrowings for the
period:
Amount of debt
outstanding at end of
period (000s omitted) $109 $3,740
========================= ========= =========
Average amount of debt
outstanding during the
period (000s
omitted)(f) $2,366 $3,188
========================= ========= =========
Average number of shares
outstanding during the
period (000s
omitted)(f) 9,668 8,519
========================= ========= =========
Average amount of debt
per share during the
period $0.24 $0.37
========================= ========= =========
</TABLE>
(a) Per share information has been restated to reflect a 2 for 1 stock split,
effected in the form of a dividend, on June 19, 1987.
(b) The Fund changed investment advisors on September 30, 1988 and May 1, 1986.
(c) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(d) Ratios are based on average net assets of $4,968,568,278.
(e) Annualized.
(f) Averages computed on a daily basis.
23
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
AIM Constellation Fund:
We have audited the accompanying statement of assets and liabilities of the AIM
Constellation Fund (a portfolio of AIM Equity Funds, Inc.), including the
schedule of investments, as of October 31, 1995, and the related statement of
operations for the year then ended, the statement of changes in net assets for
each of the years in the two-year period then ended, and the financial
highlights for each of the years in the seven-year period then ended, the ten
months ended October 31, 1988, and the year ended December 31, 1987. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
Constellation Fund as of October 31, 1995, and the results of its operations
for the year then ended, the changes in its net assets for each of the years in
the two-year period then ended, and the financial highlights for each of the
years in the seven-year period then ended, the ten months ended October 31,
1988, and the year ended December 31, 1987, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
December 8, 1995
24
<PAGE>
<TABLE>
<S> <C> <C>
Directors & Officers
BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
11 Greenway Plaza
Charles T. Bauer Charles T. Bauer Suite 1919
Chairman and Chief Executive Officer Chairman Houston, TX 77046
A I M Management Group Inc.
Robert H. Graham INVESTMENT ADVISOR
Bruce L. Crockett President A I M Advisors, Inc.
Director, President, and Chief 11 Greenway Plaza
Executive Officer John J. Arthur Suite 1919
COMSAT Corporation Senior Vice President and Treasurer Houston, TX 77046
Owen Daly II Gary T. Crum TRANSFER AGENT
Director Senior Vice President A I M Fund Services, Inc.
Cortland Trust Inc. P.O. Box 4739
Jonathan C. Schoolar Houston, TX 77210-4739
Carl Frischling Senior Vice President
Partner CUSTODIAN
Kramer, Levin, Naftalis, Nessen, Carol F. Relihan State Street Bank and Trust Company
Kamin & Frankel Vice President and Secretary 225 Franklin Street
Boston, MA 02110
Robert H. Graham Melville B. Cox
President and Chief Operating Officer Vice President COUNSEL TO THE FUND
A I M Management Group Inc. Ballard Spahr
Dana R. Sutton Andrews & Ingersoll
John F. Kroeger Vice President and Assistant Treasurer 1735 Market Street
Formerly, Consultant Philadelphia, PA 19103
Wendell & Stockel Associates, Inc. P. Michelle Grace
Assistant Secretary COUNSEL TO THE DIRECTORS
Lewis F. Pennock Kramer, Levin, Naftalis,
Attorney Nancy L. Martin Nessen, Kamin & Frankel
Assistant Secretary 919 Third Avenue
Ian W. Robinson New York, NY 10022
Consultant; Former Executive Ofelia M. Mayo
Vice President and Assistant Secretary DISTRIBUTOR
Chief Financial Officer A I M Distributors, Inc.
Bell Atlantic Management Kathleen J. Pflueger 11 Greenway Plaza
Services, Inc. Assistant Secretary Suite 1919
Houston, TX 77046
Louis S. Sklar Samuel D. Sirko
Executive Vice President Assistant Secretary AUDITORS
Hines Interests KPMG Peat Marwick LLP
Limited Partnership Stephen I. Winer 700 Louisiana
Assistant Secretary NationsBank Bldg.
Houston, TX 77002
Mary J. Benson
Assistant Treasurer
</TABLE>
REQUIRED FEDERAL INCOME TAX INFORMATION
AIM Constellation Fund distributed long-term capital gains of $0.52 per share
during its tax year ended October 31, 1995.
<PAGE>
<TABLE>
<S> <C>
[PICTURE THE AIM FAMILY OF FUNDS(R)
APPEARS
HERE] AGGRESSIVE GROWTH
AIM Aggressive Growth Fund*
AIM Constellation Fund
AIM Global Aggressive Growth Fund
GROWTH
AIM Global Growth Fund
AIM Growth Fund
AIM International Equity Fund
AIM Value Fund
AIM Weingarten Fund
GROWTH AND INCOME
AIM Balanced Fund
AIM Charter Fund
INCOME AND GROWTH
AIM Global Utilities Fund**
HIGH CURRENT INCOME
AIM High Yield Fund
CURRENT INCOME
AIM Global Income Fund
AIM Income Fund
CURRENT TAX-FREE INCOME
AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of CT
AIM Tax-Free Intermediate Shares
CURRENT INCOME AND HIGH DEGREE
OF SAFETY
AIM Intermediate Government Fund***
HIGH DEGREE OF SAFETY AND
CURRENT INCOME
AIM Limited Maturity Treasury Shares
STABILITY, LIQUIDITY, AND
CURRENT INCOME
AIM Money Market Fund
STABILITY, LIQUIDITY, AND
CURRENT TAX-FREE INCOME
AIM Tax-Exempt Cash Fund
*AIM Aggressive Growth Fund was closed
to new investors on July 18, 1995. **On
May 1, 1995, AIM Utilities Fund broadened
its investment strategy to permit up to
80% of its total assets to be invested in
foreign securities, and was renamed
AIM Management Group has provided leadership AIM Global Utilities Fund. ***On
in the mutual fund industry since 1976 and September 25, 1995, AIM Government
currently manages approximately $40 billion Securities Fund became AIM Intermediate
in assets for more than 2 million shareholders, Government Fund. For more complete
including individual investors, corporate clients, information about any AIM Fund(s), including
and financial institutions. The AIM Family of sales charges and expenses, ask your
Funds(R) is distributed nationwide, and AIM financial consultant or securities dealer
today ranks among the nation's top 20 mutual for a free prospectus(es). Please read the
companies in assets under management, according prospectus(es) carefully before you invest
to Lipper Analytical Services, Inc. or send money.
[AIM LOGO -------------------
APPEARS BULK RATE
HERE] U.S. POSTAGE
PAID
HOUSTON, TX
A I M Distributors, Inc. Permit No. 1919
11 Greenway Plaza, Suite 1919 -------------------
Houston, TX 77046
</TABLE>
