<PAGE> 1
[COVER PHOTO COMPOSITE APPEARS HERE]
AIM CONSTELLATION FUND
[AIM LOGO APPEARS HERE] SEMIANNUAL REPORT APRIL 30, 1996
<PAGE> 2
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:
o 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
a sales charge. When sales charges are included, Fund performance
reflects the maximum 5.50% sales charge.
o The Fund's investment return and principal value will fluctuate so
that an investor's shares, when redeemed, may be worth more or less
than their original cost.
o The Fund's portfolio composition is subject to change and there is no
assurance the Fund will continue to hold any one particular security.
o Past performance cannot guarantee comparable future results.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o Lipper Analytical Services, Inc., is an independent mutual fund
performance monitor. The unmanaged Lipper Mid-Cap Fund Index
represents an average of the performance of the 30 largest mid-cap
mutual funds tracked by Lipper.
o Standard & Poor's Corporation (S&P) 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 Mid-Cap Index (S&P 400) is an unmanaged
index comprising common stocks of approximately 400 mid-capitalization
companies.
o The Dow Jones Industrial Average (DJIA) is an unmanaged composite of
the performance of 30 large-company stocks.
o 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.
o An investment cannot be made in the 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> 3
A Message from
the Chairman
Dear Shareholder:
"Past performance cannot guarantee comparable future results."
As a mutual fund investor, you've seen this disclaimer on every
piece of mail you've ever received about your fund. You've seen
it so often that you probably don't even think about it or
question what it means. But you should.
[PHOTO of That sentence about past performance is true now more than
Charles T. ever. These days it bluntly means: "Don't expect the 25% to 35%
Bauer, returns you received last year." Don't automatically expect the
Chairman of 15% to 20% returns of the past decade, either. History shows
the Board of that the average annual return is about 9% to 10%. If you're
the Fund, investing in mutual funds with expectations of double-digit
APPEARS HERE] returns every year, you will be disappointed. Maybe not today,
but sometime in the future.
What is a realistic expectation for 1996? In this uncertain
market, it is easier to discuss what is unrealistic. Last year's
performance was an anomaly--the equivalent of euphoria. To
expect a repeat is unrealistic.
I realize I am sounding a warning bell during the mutual fund
industry's best year ever. Investors like you poured $99 billion into stock
mutual funds during the first four months of 1996--the highest inflows on
record. At $3 trillion in assets, the industry has grown 1,500 times over the
past 50 years. If we are to sustain that growth, we must have the public's
confidence. Our industry has a long-standing reputation for honesty and
integrity. To maintain that reputation as our assets swell into the trillions,
we must make sure that we don't promise anything we can't produce.
The industry's concern about investors' expectations goes beyond
stamping all our advertising with a standard disclaimer about performance.
Mutual fund leaders recently met for a conference in New York, and foremost on
our minds was educating investors about market volatility.
A whole generation of investors has seen nothing but a bull market,
which started in 1982. Except for the 1987 market crash, they've enjoyed a
heady rise. They may expect the same throughout this decade. I've been in the
mutual fund industry for more than 25 years, and I have seen a 5% to 10% market
correction about every five years. The last major correction was in 1990. If
history is any kind of teacher, we are overdue.
The challenge for investors is not to panic when the market takes a
downturn. We have another saying in the industry: "Focus on time, not timing."
Over time, the stock market has proven to be the only investment that
consistently beats inflation. But investing in it takes a long-term view. Market
timing--trying to play the market and "rescue" your money in a downturn--has
proven to be an inefficient strategy for most investors.
The challenge for the mutual fund industry is to keep your trust
during a bear market. The industry has survived and thrived because of its
built-in integrity: By law, we must operate in the best interests of our
shareholders.
The mutual fund industry is among the most regulated in the country.
The Investment Company Act of 1940, which governs our industry, protects
shareholders against self-dealing, conflicts of interest, misappropriation of
funds, and other fraudulent activities.
The industry also polices itself. At AIM we have an exhaustive code of
ethics that governs each of our 1,150 employees.
(continued)
-----------------------
At $3 trillion
in assets, the industry
has grown 1,500 times
over the past 50 years.
If we are to sustain
that growth, we must
have the public's
confidence.
-----------------------
<PAGE> 4
A Message from
the Chairman
On a very basic level, it boils down to this: We are dealing with your
money, and if we lose your trust, we lose our business.
We are vulnerable to even the hint of impropriety. That's why the
mutual fund industry is set up to avoid even the perception of self-dealing.
Fund managers succeed to the extent that they attract and keep investors. If
they lose your faith, managers ultimately will fail.
Mutual funds are highly liquid investments. Any time you choose, you
can pull out of a fund and receive a redemption price reflective of the market
that day. If you become dissatisfied with a fund manager, it's easy to leave
and go elsewhere. With more than 7,000 funds available, it's a buyers' market.
The next time you read, "Past performance cannot guarantee comparable
future results," think about your own expectations as an investor. We cannot
promise you another year like 1995. But we can promise to manage your money
with honesty and integrity.
Respectfully submitted,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
On the following pages is a complete discussion of your Fund's performance and
investment strategy. If you have any questions or comments about this report,
please call our Client Services department 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.
2
<PAGE> 5
Management's
Discussion & Analysis
[Graphic] AIM CONSTELLATION FUND
DIVERSIFIES MIX IN VOLATILE 1996
Uncertainty plagued the performance of the stock markets through most of the
six-month period ended April 30, 1996. The period was one of the most volatile
on record, as sweeping point swings whipsawed the markets.
What caused the roller coaster ride? Investors believed that 1995's
prime stock market conditions--robust corporate earnings, moderate economic
growth, and mild inflation--would not continue. To some extent, they were right.
Net income of many U.S. companies fell in the fourth quarter of 1995. Among the
hardest hit were technology stocks, which had been market favorites. Growth in
the economy slowed in the fourth quarter to an annual rate of 0.5% according to
The Wall Street Journal.
In late 1995, investors flocked from technology stocks to blue-chip
stocks and waited for the Federal Reserve Bank Board to spur the economy by
cutting interest rates. The Fed did lower rates in December and January, but
market watchers anticipated that further cuts were possible.
In March, everything changed. The Labor Department released the first
of two stunningly strong monthly employment reports, and the Dow Jones
Industrial Average fell 171 points in one day. Fed Chairman Alan Greenspan
cautioned about growing wage pressures. Suddenly the economy appeared to be
overheating, and analysts voiced concern that the Fed might have to raise
interest rates to slow it down. That never happened.
In less than two weeks, the markets warmed to the idea of a growing
economy, and major indexes advanced to near-record levels. Greenspan testified
before Congress: "The economy has weathered recent sluggishness and is back on
track for steady growth with low inflation."
By April 1996, reports offered a mixed picture of the economy. Job
growth slowed, but consumer income and spending levels rose and factory orders
surged. Corporate earnings in first quarter 1996 were better than expected.
I/B/E/S International, a Wall Street firm that tabulates corporate earnings
estimates, reported that earnings of 54% of the companies it surveyed exceeded
analysts' expectations.
Though the markets remained skittish, stocks resumed their advance
toward record levels.
YOUR INVESTMENT PORTFOLIO
AIM Constellation Fund's total return was 10.21% during the six-month period
ended April 30,
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
PORTFOLIO HOLDINGS (AS OF APRIL 30, 1996)
- --------------------------------------------------------------------------------------
<S> <C>
Top 10 Securities Top 10 Industries
1. Cisco Systems, Inc. 1. Computer Software/Services
2. FORE Systems, Inc. 2. Medical (Patient Services)
3. Parametric Technology Corp. 3. Retail (Stores)
4. HEALTHSOUTH Corp. 4. Finance (Consumer Credit)
5. Computer Associates International, Inc. 5. Computer Networking
6. Cardinal Health, Inc. 6. Telecommunications
7. MBNA Corp. 7. Semiconductors
8. HBO & Co. 8. Computer Peripherals
9. Oracle Systems Corp. 9. Medical (Instruments/Products)
10. Service Corp. International 10. Medical (Drugs)
</TABLE>
---------------------
AIM Constellation
Fund's total return
was 10.21%
during the
six-month period
ended April 30, 1996.
---------------------
3
<PAGE> 6
Management's
Discussion & Analysis
-------------------------------
AIM Constellation
Fund responded to
volatile markets
by adding new names
to its portfolio,
taking it from
276 to 306 holdings
over the
past six months.
-------------------------------
1996. The Fund attracted approximately 83,000 new investors over the period,
and net assets grew from $7.14 billion to $10.03 billion.
AIM Constellation Fund responded to volatile markets by adding new
names to its portfolio, taking it from 276 to 306 holdings over the past six
months. The Fund also further diversified its mix of securities by shaving its
weighting in technology stocks from 45% to 35%. It shifted its emphasis to
health care stocks, which made up about 24% of the portfolio, and consumer
cyclicals like retail stocks, which made up about 20% of the Fund. As always,
the Fund focused on companies with earnings momentum.
TECHNOLOGY: High-tech firms were by no means down for the count, but
the euphoria of 1995 subsided. AIM Constellation Fund managers hold technology
stocks that may benefit from a major technology upgrade occurring within U.S.
corporations as they buy more powerful computers, build PC networks, and log
onto the Internet.
The Fund shifted assets out of hardware sectors and focused on
industry leaders in software and networking. The Fund's top technology
holdings included software makers Parametric Technology Corp., and Computer
Associates International, Inc., and computer networking equipment makers Cisco
Systems, Inc. and FORE Systems, Inc.
HEALTH CARE: The Fund increased its holdings in health care over the
past six months from 14% to about 17% of net assets. It focused on one of the
industry's most prevalent trends: consolidation of doctors' practices.
Dentists, orthodontists and others specialists are merging their businesses to
compete against managed care companies. New names added to the Fund reflect this
trend: MedPartners/Mullikin, Inc., OccuSystems, Inc., Orthodontic Centers of
America, Inc., and Physician Reliance Network, Inc., among others.
CONSUMER CYCLICALS: After a dismal Christmas, earnings picked up for
retailers in the first quarter of 1996. Several factors were at work:
o Weak demand last year prompted retailers to cut inventory and
operating costs,
o Technology allowed improved tracking and distribution of inventory,
o Sales have increased in California, the nation's leading indicator of
sales.
The Fund increased its holdings in consumer cyclicals and focused on
specialty retailers including PetSmart, Inc., Staples Inc., The Gap Inc.,
Viking Office Products, Inc., and Sunglass Hut International.
Of course, the Fund's composition is subject to change and there is no
guarantee it will continue to hold any one particular security.
- -------------------------------------------------------------------------------
MORNINGSTAR RATINGS
As of April 30, 1996
- -------------------------------------------------------------------------------
FUNDS IN
EQUITY
PERIOD RATING CATEGORY
--------- ------ --------
OVERALL ***** NA
3 years **** 1,505
5 years ***** 978
10 years ***** 520
- -------------------------------------------------------------------------------
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, expenses, and fees. Ratings compare funds of similar investment
objectives and represent past performance, which is no guarantee of comparable
future results.
- -------------------------------------------------------------------------------
LIPPER RANKINGS
As of April 30, 1996
- -------------------------------------------------------------------------------
RANK VS.
ALL MUTUAL FUNDS PERCENTILE
PERIOD TRACKED BY LIPPER RANK
-------- ---------------- ----------
1 year 436 of 7,911 6%
3 years 131 of 4,500 3%
5 years 43 of 2,886 2%
10 years 9 of 1,278 1%
- ------------------------------------------------------------------------------
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.
4
<PAGE> 7
Long-Term
Performance
OUTLOOK
All signs point to continued stock market volatility. Until investors gain a
clearer picture of the momentum of the U.S. economy, financial markets
probably will continue to vacillate.
The outlook for corporate earnings is mixed for the second quarter of
1996. Growth in specific industries--including technology, health care and
retail--is expected to continue. One possible dampener: a rise in interest
rates, which would increase the cost of borrowing and erode profits.
What should AIM Constellation Fund investors expect from the rest of
1996? With the markets in a constant state of flux, it is easier to discuss what
not to expect. There is no guarantee the Fund will return 35.45% as it did in
fiscal year 1995. Historically, the stock market has generated an average total
return of about 10%, according to Ibbotson Associates.
AIM Constellation Fund portfolio managers deal with market volatility
through diversification and a disciplined investment strategy that focuses on
earnings growth as the foremost criterion for stock selection. It is a
time-tested strategy that has led the Fund to an outstanding average annual
return over the past 10 years as shown by the chart below.
- -------------------------------------------------------------------------------
Growth of a $10,000 Investment
- -------------------------------------------------------------------------------
10 years ended April 30, 1996
Past performance cannot guarantee comparable future results.
AIM CONSTELLATION FUND
(W/SALES CHARGES) S&P 400 NASDAQ COMPOSITE INDEX
---------------------- ------- ----------------------
4/86 $9,452 $10,000 $10,000
4/87 13,087 11,790 10,902
4/88 11,171 11,214 9,896
4/89 13,662 13,771 11,156
4/90 16,221 15,007 10,961
4/91 19,406 18,835 12,648
4/92 24,844 22,605 15,100
4/93 29,331 25,874 17,259
4/94 35,052 28,405 19,148
4/95 39,691 31,195 22,022
4/96 54,427 42,044 31,065
- -------------------------------------------------------------------------------
Source: Towers Data Systems HYPO(R)
Your Fund's total return includes sales charges, expenses, and management fees.
For Fund performance calculations and descriptions of indexes cited on this
page, please refer to the inside front cover.
--------------------------------------
AVERAGE ANNUAL
TOTAL RETURNS
As of March 31, 1996
(the most recent calendar quarter)
10 Years 18.08%
5 Years 19.80
1 Year 24.96
--------------------------------------
5
<PAGE> 8
Investor
Awareness
- ------------------------------
Your financial
consultant can assist
you in
developing an
asset allocation strategy
and selecting the
appropriate investments
to help you
meet your
long-term
investment goals.
- ------------------------------
ASSET ALLOCATION HELPS YOU MANAGE
YOUR INVESTMENTS IN CHANGING MARKETS
Every mutual fund investor would like to invest in a market that only goes
up--a tide that floats all ships. The truth is, markets also decline. But market
changes do not affect all investments the same way. Some investments may
benefit from a market trend when others do not.
Market changes are not the only factors an investor must manage. There
are a number of important considerations with every investment including
investment risk, and investment risk takes many forms:
o MARKET RISK. The prices of some investments will fluctuate according to
changes in the market.
o INTEREST RATE RISK. The value of some investments, such as
fixed-income securities, will rise and fall as interest rates change.
o REINVESTMENT RISK. When interest rates fall, investors face the
possibility that investment income cannot be reinvested at higher
rates previously available.
o INFLATION RISK. Inflation can cause the value of some investments to
erode as the cost of living increases.
o CURRENCY RATE RISK. Investments valued in U.S. dollars will rise and
fall according to the dollar's value against other world currencies.
To manage these changing conditions, investors have learned to
diversify their assets across a wide variety of investments. For most investors,
mutual funds offer convenient and affordable methods to diversify their assets.
For as little as $500, an investor has access to a portfolio of hundreds of
professionally selected securities.
When you invest in more than one fund, you increase the level of
diversification. You also gain another important benefit. Since mutual funds
are managed according to specific investment objectives, such as growth or
income, you can invest in mutual funds with different investment objectives
to create a personalized investment plan which suits your unique financial
objectives. This investment strategy is called asset allocation.
Mutual fund investors tend to seek growth, or current income, or some
combination of both. Generally, investors who choose to assume more
investment risk get the potential for a higher return. With asset
allocation, you can fine-tune your investment plan to be more
conservative, or more aggressive, depending on your personal financial
goals and risk tolerance.
Your financial consultant can assist you in developing an asset
allocation strategy and selecting the appropriate investments to help you
meet your long-term investment goals.
6
<PAGE> 9
Financials
SCHEDULE OF INVESTMENTS
April 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<C> <S> <C>
DOMESTIC COMMON STOCKS-82.13%
ADVERTISING/BROADCASTING-0.68%
453,100 American Radio Systems Corp.(a) $ 15,292,125
- ----------------------------------------------------------------------------------------------
500,000 Chancellor Corp.(a) 12,750,000
- ----------------------------------------------------------------------------------------------
787,500 Infinity Broadcasting Corp.-Class A(a) 22,837,500
- ----------------------------------------------------------------------------------------------
1,000,000 Paxson Communications Corp.(a) 14,875,000
- ----------------------------------------------------------------------------------------------
60,700 True North Communications, Inc. 1,600,962
- ----------------------------------------------------------------------------------------------
67,355,587
- ----------------------------------------------------------------------------------------------
AUTOMOBILE/TRUCK PARTS & TIRES-0.14%
656,250 Mark IV Industries, Inc. 13,617,187
- ----------------------------------------------------------------------------------------------
BANKING-0.48%
1,000,000 Bank of Boston Corp. 48,375,000
- ----------------------------------------------------------------------------------------------
BIOTECHNOLOGY-0.25%
450,000 Guidant Corp. 25,256,250
- ----------------------------------------------------------------------------------------------
BUSINESS SERVICES-1.54%
500,000 AccuStaff, Inc.(a) 14,875,000
- ----------------------------------------------------------------------------------------------
50,800 APAC Teleservices, Inc.(a) 3,937,000
- ----------------------------------------------------------------------------------------------
180,900 Career Horizons, Inc.(a) 6,376,725
- ----------------------------------------------------------------------------------------------
600,000 CUC International, Inc.(a) 19,725,000
- ----------------------------------------------------------------------------------------------
389,600 Equifax, Inc. 9,545,200
- ----------------------------------------------------------------------------------------------
493,900 Healthcare COMPARE Corp.(a) 23,275,037
- ----------------------------------------------------------------------------------------------
1,000,000 Manpower, Inc. 37,000,000
- ----------------------------------------------------------------------------------------------
1,050,000 Olsten Corp. 31,893,750
- ----------------------------------------------------------------------------------------------
390,000 PhyMatrix Corp.(a) 7,410,000
- ----------------------------------------------------------------------------------------------
154,037,712
- ----------------------------------------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.58%
1,857,400 Airgas, Inc.(a) 39,934,100
- ----------------------------------------------------------------------------------------------
500,000 IMC Global, Inc. 18,437,500
- ----------------------------------------------------------------------------------------------
58,371,600
- ----------------------------------------------------------------------------------------------
COMPUTER MINI/PCS-1.59%
400,000 CDW Computer Centers, Inc.(a) 30,950,000
- ----------------------------------------------------------------------------------------------
600,000 COMPAQ Computer Corp.(a) 27,975,000
- ----------------------------------------------------------------------------------------------
1,000,000 Dell Computer Corp.(a) 45,875,000
- ----------------------------------------------------------------------------------------------
1,000,000 Sun Microsystems, Inc.(a) 54,250,000
- ----------------------------------------------------------------------------------------------
159,050,000
- ----------------------------------------------------------------------------------------------
COMPUTER NETWORKING-4.93%
1,053,000 Ascend Communications, Inc.(a) 64,759,500
- ----------------------------------------------------------------------------------------------
550,000 Cabletron Systems, Inc.(a) 41,456,250
- ----------------------------------------------------------------------------------------------
750,000 Cascade Communications Corp.(a) 75,187,500
- ----------------------------------------------------------------------------------------------
500,000 CIDCO, Inc.(a) 17,875,000
- ----------------------------------------------------------------------------------------------
2,000,000 Cisco Systems, Inc.(a) 103,750,000
- ----------------------------------------------------------------------------------------------
1,293,100 FORE Systems, Inc.(a) 102,154,900
- ----------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 10
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<C> <S> <C>
Computer Networking-continued
200,000 Network Equipment Technologies, Inc.(a) $ 5,100,000
- ----------------------------------------------------------------------------------------------
212,400 Shiva Corp.(a) 12,690,900
- ----------------------------------------------------------------------------------------------
571,200 Sync Research, Inc.(a) 11,281,200
- ----------------------------------------------------------------------------------------------
1,200,000 3Com Corp.(a) 55,350,000
- ----------------------------------------------------------------------------------------------
304,300 Xircom, Inc.(a) 4,906,837
- ----------------------------------------------------------------------------------------------
494,512,087
- ----------------------------------------------------------------------------------------------
COMPUTER PERIPHERALS-3.29%
1,043,900 Adaptec Inc.(a) 60,024,250
- ----------------------------------------------------------------------------------------------
1,750,000 EMC Corp.(a) 35,875,000
- ----------------------------------------------------------------------------------------------
514,400 Komag, Inc.(a) 17,232,400
- ----------------------------------------------------------------------------------------------
500,000 Microchip Technology, Inc.(a) 12,750,000
- ----------------------------------------------------------------------------------------------
2,445,450 Oracle Systems Corp.(a) 82,533,937
- ----------------------------------------------------------------------------------------------
750,000 Seagate Technology Inc.(a) 43,500,000
- ----------------------------------------------------------------------------------------------
500,000 U.S. Robotics Corp.(a) 78,250,000
- ----------------------------------------------------------------------------------------------
330,165,587
- ----------------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES-12.10%
200,000 Bisys Group, Inc. (The)(a) 7,650,000
- ----------------------------------------------------------------------------------------------
1,000,000 BMC Software, Inc.(a) 60,875,000
- ----------------------------------------------------------------------------------------------
1,193,300 Cadence Design Systems, Inc.(a) 62,349,925
- ----------------------------------------------------------------------------------------------
954,700 Ceridian Corp.(a) 45,586,925
- ----------------------------------------------------------------------------------------------
1,250,000 Computer Associates International, Inc. 91,718,750
- ----------------------------------------------------------------------------------------------
300,000 Computer Sciences Corp.(a) 22,200,000
- ----------------------------------------------------------------------------------------------
2,000,000 Computervision Corp.(a) 24,250,000
- ----------------------------------------------------------------------------------------------
510,000 CSG Systems International, Inc.(a) 16,320,000
- ----------------------------------------------------------------------------------------------
200,000 CyCare Systems, Inc.(a) 7,300,000
- ----------------------------------------------------------------------------------------------
1,000,000 DST Systems, Inc.(a) 36,750,000
- ----------------------------------------------------------------------------------------------
75,400 Electronics For Imaging, Inc.(a) 4,599,400
- ----------------------------------------------------------------------------------------------
465,000 First Data Corp. 35,340,000
- ----------------------------------------------------------------------------------------------
700,000 HBO & Co. 83,125,000
- ----------------------------------------------------------------------------------------------
250,000 HPR, Inc.(a) 10,750,000
- ----------------------------------------------------------------------------------------------
306,900 IDX Systems Corp.(a) 11,278,575
- ----------------------------------------------------------------------------------------------
299,900 Imnet Systems, Inc.(a) 9,896,700
- ----------------------------------------------------------------------------------------------
750,000 Informix Corp.(a) 19,781,250
- ----------------------------------------------------------------------------------------------
332,700 Intuit, Inc.(a) 17,300,400
- ----------------------------------------------------------------------------------------------
637,500 McAfee Associates, Inc.(a) 39,046,875
- ----------------------------------------------------------------------------------------------
625,000 Microsoft Corp.(a) 70,859,375
- ----------------------------------------------------------------------------------------------
76,200 National Data Corp. 2,686,050
- ----------------------------------------------------------------------------------------------
1,092,500 Network General Corp.(a) 48,206,562
- ----------------------------------------------------------------------------------------------
700,000 PairGain Technologies, Inc.(a) 66,850,000
- ----------------------------------------------------------------------------------------------
2,400,000 Parametric Technology Corp.(a) 96,600,000
- ----------------------------------------------------------------------------------------------
750,000 Physician Computer Network, Inc.(a) 8,437,500
- ----------------------------------------------------------------------------------------------
600,000 Rational Software Corp.(a) 32,025,000
- ----------------------------------------------------------------------------------------------
194,900 Red Brick Systems, Inc.(a) 11,547,825
- ----------------------------------------------------------------------------------------------
2,000,000 S3, Inc.(a) 28,250,000
- ----------------------------------------------------------------------------------------------
73,600 Shared Medical Systems Corp. 5,041,600
- ----------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE> 11
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
Computer Software/Services-continued
775,000 SoftKey International, Inc.(a) $ 21,700,000
- ----------------------------------------------------------------------------------------------
1,000,000 Sterling Commerce, Inc.(a) 35,000,000
- ----------------------------------------------------------------------------------------------
500,000 Sterling Software, Inc.(a) 38,875,000
- ----------------------------------------------------------------------------------------------
1,100,000 Structural Dynamics Research Corp.(a) 35,062,500
- ----------------------------------------------------------------------------------------------
500,000 SunGard Data Systems, Inc.(a) 16,625,000
- ----------------------------------------------------------------------------------------------
500,000 Symantec Corp.(a) 8,062,500
- ----------------------------------------------------------------------------------------------
1,500,000 Synopsys, Inc.(a) 61,875,000
- ----------------------------------------------------------------------------------------------
120,100 Transition Systems, Inc.(a) 2,912,425
- ----------------------------------------------------------------------------------------------
500,000 Verity, Inc.(a) 17,187,500
- ----------------------------------------------------------------------------------------------
1,213,922,637
- ----------------------------------------------------------------------------------------------
CONGLOMERATES-0.16%
411,982 Tyco International Ltd. 15,912,805
- ----------------------------------------------------------------------------------------------
COSMETICS & TOILETRIES-0.29%
1,500,000 General Nutrition, Inc.(a) 29,250,000
- ----------------------------------------------------------------------------------------------
ELECTRONIC COMPONENTS/MISCELLANEOUS-1.48%
200,000 Ametek, Inc. 3,850,000
- ----------------------------------------------------------------------------------------------
600,000 Amphenol Corp.(a) 15,825,000
- ----------------------------------------------------------------------------------------------
837,700 Anixter International, Inc.(a) 14,659,750
- ----------------------------------------------------------------------------------------------
500,000 Berg Electronics, Inc.(a) 13,312,500
- ----------------------------------------------------------------------------------------------
500,000 BMC Industries, Inc.(a) 13,375,000
- ----------------------------------------------------------------------------------------------
500,000 Cable Design Technologies Corp.(a) 16,500,000
- ----------------------------------------------------------------------------------------------
450,000 Methode Electronics, Inc. 7,537,500
- ----------------------------------------------------------------------------------------------
234,375 Molex, Inc.-Class A 7,031,250
- ----------------------------------------------------------------------------------------------
187,500 Parker-Hannifin Corp. 7,921,875
- ----------------------------------------------------------------------------------------------
200,100 Recoton Corp.(a) 3,801,900
- ----------------------------------------------------------------------------------------------
750,000 Symbol Technologies, Inc.(a) 34,687,500
- ----------------------------------------------------------------------------------------------
300,000 Thermo Instrument Systems, Inc.(a) 9,900,000
- ----------------------------------------------------------------------------------------------
148,402,275
- ----------------------------------------------------------------------------------------------
ELECTRONIC/PC DISTRIBUTORS-0.72%
600,000 Arrow Electronics, Inc.(a) 30,075,000
- ----------------------------------------------------------------------------------------------
800,000 Avnet, Inc. 42,200,000
- ----------------------------------------------------------------------------------------------
72,275,000
- ----------------------------------------------------------------------------------------------
FINANCE (ASSET MANAGEMENT)-0.09%
350,000 Imperial Credit Industries, Inc.(a) 9,100,000
- ----------------------------------------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-5.45%
500,000 ADVANTA Corp.-Class A 25,062,500
- ----------------------------------------------------------------------------------------------
500,000 ADVANTA Corp.-Class B 27,937,500
- ----------------------------------------------------------------------------------------------
400,000 Beneficial Corp. 22,100,000
- ----------------------------------------------------------------------------------------------
500,000 Capital One Financial Corp. 14,750,000
- ----------------------------------------------------------------------------------------------
200,000 Cityscape Financial Corp.(a) 8,750,000
- ----------------------------------------------------------------------------------------------
1,260,700 Credit Acceptance Corp.(a) 23,638,125
- ----------------------------------------------------------------------------------------------
650,000 First USA, Inc. 36,562,500
- ----------------------------------------------------------------------------------------------
1,750,000 Green Tree Financial Corp. 59,062,500
- ----------------------------------------------------------------------------------------------
750,000 Household International, Inc. 51,843,750
- ----------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 12
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<C> <S> <C>
Finance (Consumer Credit)-continued
3,000,000 MBNA Corp. $ 85,125,000
- ----------------------------------------------------------------------------------------------
1,244,700 Medaphis Corp.(a) 57,411,787
- ----------------------------------------------------------------------------------------------
1,000,000 Money Store, Inc.(The) 25,250,000
- ----------------------------------------------------------------------------------------------
750,000 Olympic Financial Ltd.(a) 16,687,500
- ----------------------------------------------------------------------------------------------
501,000 PMT Services, Inc.(a) 14,466,375
- ----------------------------------------------------------------------------------------------
450,000 Student Loan Marketing Association 32,962,500
- ----------------------------------------------------------------------------------------------
350,000 SunAmerica, Inc. 19,075,000
- ----------------------------------------------------------------------------------------------
822,900 United Companies Financial Corp. 26,332,800
- ----------------------------------------------------------------------------------------------
547,017,837
- ----------------------------------------------------------------------------------------------
FOOD/PROCESSING-0.22%
688,400 Richfood Holdings, Inc.(a) 22,459,050
- ----------------------------------------------------------------------------------------------
FUNERAL SERVICES-1.02%
1,500,000 Service Corp. International 79,687,500
- ----------------------------------------------------------------------------------------------
500,000 Stewart Enterprises, Inc.-Class A 22,875,000
- ----------------------------------------------------------------------------------------------
102,562,500
- ----------------------------------------------------------------------------------------------
GAMING-1.01%
750,000 GTECH Holdings Corp.(a) 21,281,250
- ----------------------------------------------------------------------------------------------
1,000,000 Mirage Resorts, Inc.(a) 52,375,000
- ----------------------------------------------------------------------------------------------
865,800 Trump Hotels & Casino Resorts, Inc.(a) 28,030,275
- ----------------------------------------------------------------------------------------------
101,686,525
- ----------------------------------------------------------------------------------------------
HOME BUILDING-0.24%
1,000,000 Clayton Homes, Inc. 18,500,000
- ----------------------------------------------------------------------------------------------
125,000 Oakwood Homes Corp. 5,578,125
- ----------------------------------------------------------------------------------------------
24,078,125
- ----------------------------------------------------------------------------------------------
HOTELS/MOTELS-0.95%
145,900 Doubletree Corp.(a) 4,705,275
- ----------------------------------------------------------------------------------------------
1,200,000 Hospitality Franchise Systems, Inc.(a) 61,650,000
- ----------------------------------------------------------------------------------------------
162,500 Promus Companies, Inc.(a) 4,610,937
- ----------------------------------------------------------------------------------------------
560,300 Sun International Hotels, Ltd.(a) 23,952,825
- ----------------------------------------------------------------------------------------------
94,919,037
- ----------------------------------------------------------------------------------------------
INSURANCE (LIFE & HEALTH)-0.51%
500,000 Compdent Corp.(a) 22,125,000
- ----------------------------------------------------------------------------------------------
150,000 Equitable of Iowa Companies 5,287,500
- ----------------------------------------------------------------------------------------------
1,000,000 Riscorp, Inc.(a) 23,625,000
- ----------------------------------------------------------------------------------------------
51,037,500
- ----------------------------------------------------------------------------------------------
INSURANCE (MULTI-LINE PROPERTY)-0.54%
1,000,000 MGIC Investment Corp.(a) 54,250,000
- ----------------------------------------------------------------------------------------------
LEISURE & RECREATION-0.85%
1,000,000 Callaway Golf Co. 26,750,000
- ----------------------------------------------------------------------------------------------
744,400 Harley-Davidson, Inc. 32,846,650
- ----------------------------------------------------------------------------------------------
625,000 Mattel, Inc. 16,250,000
- ----------------------------------------------------------------------------------------------
361,200 Speedway Motorsports, Inc.(a) 9,662,100
- ----------------------------------------------------------------------------------------------
85,508,750
- ----------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 13
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<C> <S> <C>
MACHINE TOOLS-0.15%
400,000 Kennametal, Inc. $ 15,150,000
- ----------------------------------------------------------------------------------------------
MACHINERY (MISCELLANEOUS)-0.72%
775,000 Pall Corp. 21,700,000
- ----------------------------------------------------------------------------------------------
500,000 Pentair, Inc. 13,625,000
- ----------------------------------------------------------------------------------------------
600,000 Thermo Electron Corp.(a) 36,975,000
- ----------------------------------------------------------------------------------------------
72,300,000
- ----------------------------------------------------------------------------------------------
MEDICAL (DRUGS)-1.77%
1,400,000 Cardinal Health, Inc. 87,850,000
- ----------------------------------------------------------------------------------------------
380,000 Express Scripts, Inc.-Class A(a) 18,810,000
- ----------------------------------------------------------------------------------------------
234,900 Jones Medical Industries, Inc. 12,273,525
- ----------------------------------------------------------------------------------------------
1,000,000 Mylan Laboratories, Inc. 19,500,000
- ----------------------------------------------------------------------------------------------
217,100 Parexel International Corp.(a) 10,692,175
- ----------------------------------------------------------------------------------------------
600,000 Watson Pharmaceuticals, Inc.(a) 28,500,000
- ----------------------------------------------------------------------------------------------
177,625,700
- ----------------------------------------------------------------------------------------------
MEDICAL (INSTRUMENTS/PRODUCTS)-3.07%
650,000 Advanced Technology Laboratories, Inc.(a) 21,125,000
- ----------------------------------------------------------------------------------------------
125,700 Arterial Vascular Engineering, Inc.(a) 5,530,800
- ----------------------------------------------------------------------------------------------
500,000 Biomet, Inc.(a) 7,375,000
- ----------------------------------------------------------------------------------------------
1,014,552 Boston Scientific Corp.(a) 43,752,555
- ----------------------------------------------------------------------------------------------
500,000 CardioThoracic Systems Inc.(a) 11,812,500
- ----------------------------------------------------------------------------------------------
600,000 CONMED Corp.(a) 17,850,000
- ----------------------------------------------------------------------------------------------
550,000 DENTSPLY International, Inc. 22,962,500
- ----------------------------------------------------------------------------------------------
137,400 Endosonics Corp.(a) 2,387,325
- ----------------------------------------------------------------------------------------------
1,000,000 Idexx Laboratories, Inc.(a) 44,500,000
- ----------------------------------------------------------------------------------------------
689,000 Invacare Corp. 17,914,000
- ----------------------------------------------------------------------------------------------
700,000 Medtronic Inc. 37,187,500
- ----------------------------------------------------------------------------------------------
398,900 Nellcor Puritan Bennett, Inc.(a) 19,546,100
- ----------------------------------------------------------------------------------------------
300,000 Physician Sales & Service, Inc.(a) 8,100,000
- ----------------------------------------------------------------------------------------------
260,000 Quintiles Transnational Corp.(a) 19,045,000
- ----------------------------------------------------------------------------------------------
400,000 Spine-Tech, Inc.(a) 11,600,000
- ----------------------------------------------------------------------------------------------
100,000 Stryker Corp. 4,837,500
- ----------------------------------------------------------------------------------------------
225,000 Target Therapeutics, Inc.(a) 12,206,250
- ----------------------------------------------------------------------------------------------
307,732,030
- ----------------------------------------------------------------------------------------------
MEDICAL (PATIENT SERVICES)-12.01%
400,000 American Medical Response, Inc.(a) 14,800,000
- ----------------------------------------------------------------------------------------------
160,000 American Oncology Resources, Inc.(a) 7,640,000
- ----------------------------------------------------------------------------------------------
2,325,000 Apria Healthcare Group, Inc.(a) 79,050,000
- ----------------------------------------------------------------------------------------------
1,200,000 Columbia/HCA Healthcare Corp. 63,750,000
- ----------------------------------------------------------------------------------------------
900,000 Community Health Systems, Inc.(a) 39,037,500
- ----------------------------------------------------------------------------------------------
500,000 Foundation Health Corp.(a) 19,562,500
- ----------------------------------------------------------------------------------------------
1,050,000 Genesis Health Ventures, Inc.(a) 31,106,250
- ----------------------------------------------------------------------------------------------
1,500,000 Health Care & Retirement Corp.(a) 55,312,500
- ----------------------------------------------------------------------------------------------
1,792,125 Health Management Associates, Inc.-Class A(a) 57,348,000
- ----------------------------------------------------------------------------------------------
1,465,200 Healthsource, Inc.(a) 49,999,950
- ----------------------------------------------------------------------------------------------
2,500,000 HEALTHSOUTH Corp.(a) 92,812,500
- ----------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 14
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<C> <S> <C>
Medical (Patient Services)-continued
1,350,000 Lincare Holdings, Inc.(a) $ 52,396,875
- ----------------------------------------------------------------------------------------------
1,000,000 Living Centers of America, Inc.(a) 37,000,000
- ----------------------------------------------------------------------------------------------
1,250,000 Manor Care, Inc. 50,156,250
- ----------------------------------------------------------------------------------------------
1,800,000 MedPartners/Mullikin, Inc.(a) 51,975,000
- ----------------------------------------------------------------------------------------------
430,000 OccuSystems Inc.(a) 12,470,000
- ----------------------------------------------------------------------------------------------
1,250,000 Omnicare Inc. 75,000,000
- ----------------------------------------------------------------------------------------------
1,500,000 OrNda HealthCorp(a) 41,250,000
- ----------------------------------------------------------------------------------------------
262,100 Orthodontic Centers of America, Inc.(a) 10,352,950
- ----------------------------------------------------------------------------------------------
1,498,600 Oxford Health Plans, Inc.(a) 75,679,300
- ----------------------------------------------------------------------------------------------
197,200 Pacificare Health Systems, Inc.-Class A(a) 15,973,200
- ----------------------------------------------------------------------------------------------
300,000 Pacificare Health Systems, Inc.-Class B(a) 25,162,500
- ----------------------------------------------------------------------------------------------
700,000 PhyCor, Inc.(a) 34,475,000
- ----------------------------------------------------------------------------------------------
450,000 Physician Reliance Network, Inc.(a) 19,462,500
- ----------------------------------------------------------------------------------------------
600,000 Quorum Health Group Inc.(a) 15,225,000
- ----------------------------------------------------------------------------------------------
2,000,000 Sybron Corp.(a) 50,500,000
- ----------------------------------------------------------------------------------------------
2,000,000 Tenet Healthcare Corp.(a) 41,000,000
- ----------------------------------------------------------------------------------------------
496,000 Total Renal Care Holdings Inc.(a) 18,972,000
- ----------------------------------------------------------------------------------------------
3,400 Universal Health Services, Inc. 188,700
- ----------------------------------------------------------------------------------------------
2,000,000 Vencor, Inc.(a) 67,500,000
- ----------------------------------------------------------------------------------------------
1,205,158,475
- ----------------------------------------------------------------------------------------------
OFFICE AUTOMATION-0.24%
650,000 Corporate Express, Inc.(a) 24,293,750
- ----------------------------------------------------------------------------------------------
OFFICE PRODUCTS-0.44%
300,000 Avery Dennison Corp. 17,100,000
- ----------------------------------------------------------------------------------------------
194,700 BT Office Products International Inc.(a) 3,382,912
- ----------------------------------------------------------------------------------------------
517,100 Reynolds & Reynolds Co.-Class A 23,915,875
- ----------------------------------------------------------------------------------------------
44,398,787
- ----------------------------------------------------------------------------------------------
OIL & GAS (EXPLORATION)-0.04%
138,200 Belco Oil & Gas Corp.(a) 3,990,525
- ----------------------------------------------------------------------------------------------
OIL & GAS (SERVICES)-0.14%
200,000 Chesapeake Energy Corp.(a) 14,150,000
- ----------------------------------------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES-0.12%
400,000 Smith International, Inc.(a) 11,900,000
- ----------------------------------------------------------------------------------------------
POLLUTION CONTROL-0.21%
828,500 USA Waste Services, Inc.(a) 21,541,000
- ----------------------------------------------------------------------------------------------
PUBLISHING-0.09%
258,200 Gartner Group, Inc.(a) 8,843,350
- ----------------------------------------------------------------------------------------------
RESTAURANTS-0.92%
843,600 Applebee's International, Inc. 22,355,400
- ----------------------------------------------------------------------------------------------
250,000 Cracker Barrel Old Country Store, Inc. 5,906,250
- ----------------------------------------------------------------------------------------------
500,000 Lone Star Steakhouse & Saloon, Inc.(a) 20,687,500
- ----------------------------------------------------------------------------------------------
750,000 Outback Steakhouse, Inc.(a) 30,093,750
- ----------------------------------------------------------------------------------------------
514,200 Planet Hollywood International, Inc.(a) 13,047,825
- ----------------------------------------------------------------------------------------------
92,090,725
- ----------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 15
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<C> <S> <C>
RETAIL (FOOD & DRUG)-1.77%
300,000 Casey's General Stores, Inc. $ 6,468,750
- ----------------------------------------------------------------------------------------------
631,400 Eckerd Corp.(a) 30,149,350
- ----------------------------------------------------------------------------------------------
1,000,000 Kroger Co.(a) 41,125,000
- ----------------------------------------------------------------------------------------------
2,000,000 Safeway, Inc.(a) 67,500,000
- ----------------------------------------------------------------------------------------------
1,000,000 Vons Companies, Inc. (The) 32,000,000
- ----------------------------------------------------------------------------------------------
177,243,100
- ----------------------------------------------------------------------------------------------
RETAIL (STORES)-9.78%
1,000,000 AutoZone, Inc.(a) 36,500,000
- ----------------------------------------------------------------------------------------------
131,700 Barnett, Inc.(a) 3,094,950
- ----------------------------------------------------------------------------------------------
850,000 Bed Bath & Beyond, Inc.(a) 50,203,125
- ----------------------------------------------------------------------------------------------
235,000 Boise Cascade Office Products Corp.(a) 18,388,750
- ----------------------------------------------------------------------------------------------
1,000,000 Consolidated Stores Corp.(a) 36,000,000
- ----------------------------------------------------------------------------------------------
300,000 Dayton-Hudson Corp. 28,650,000
- ----------------------------------------------------------------------------------------------
500,000 Dillard Department Stores, Inc. 20,062,500
- ----------------------------------------------------------------------------------------------
625,093 Dollar General Corp. 16,486,847
- ----------------------------------------------------------------------------------------------
2,000,000 Gap, Inc. (The) 60,250,000
- ----------------------------------------------------------------------------------------------
700,000 Global DirectMail Corp.(a) 27,475,000
- ----------------------------------------------------------------------------------------------
1,000,000 Gymboree Corp.(a) 25,875,000
- ----------------------------------------------------------------------------------------------
725,000 Heilig-Meyers Co. 14,953,125
- ----------------------------------------------------------------------------------------------
1,163,600 Kohl's Corp.(a) 39,998,762
- ----------------------------------------------------------------------------------------------
900,150 Men's Wearhouse, Inc. (The)(a) 33,305,550
- ----------------------------------------------------------------------------------------------
500,000 Meyer (Fred), Inc.(a) 14,375,000
- ----------------------------------------------------------------------------------------------
1,130,900 Micro Warehouse, Inc.(a) 48,628,700
- ----------------------------------------------------------------------------------------------
327,800 Nordstrom, Inc. 16,676,825
- ----------------------------------------------------------------------------------------------
250,000 Oakley, Inc.(a) 11,500,000
- ----------------------------------------------------------------------------------------------
1,499,950 Office Depot, Inc.(a) 33,561,381
- ----------------------------------------------------------------------------------------------
625,000 Orchard Supply Hardware Stores Corp.(a) 16,640,625
- ----------------------------------------------------------------------------------------------
700,000 Pep Boys-Manny, Moe & Jack 23,362,500
- ----------------------------------------------------------------------------------------------
675,000 Petco Animal Supplies, Inc.(a) 19,406,250
- ----------------------------------------------------------------------------------------------
1,400,000 PetSmart, Inc.(a) 62,125,000
- ----------------------------------------------------------------------------------------------
400,000 Ross Stores, Inc. 13,800,000
- ----------------------------------------------------------------------------------------------
3,375,000 Staples Inc.(a) 64,125,000
- ----------------------------------------------------------------------------------------------
2,000,000 Sunglass Hut International, Inc.(a) 58,500,000
- ----------------------------------------------------------------------------------------------
1,000,000 Sports Authority, Inc. (The)(a) 29,750,000
- ----------------------------------------------------------------------------------------------
500,000 Talbots, Inc. 14,375,000
- ----------------------------------------------------------------------------------------------
1,128,500 Tech Data Corp.(a) 22,005,750
- ----------------------------------------------------------------------------------------------
91,700 Tiffany & Co. 5,983,425
- ----------------------------------------------------------------------------------------------
500,000 TJX Companies, Inc. 14,750,000
- ----------------------------------------------------------------------------------------------
746,200 U.S. Office Products Co.(a) 26,863,200
- ----------------------------------------------------------------------------------------------
1,246,300 Viking Office Products, Inc.(a) 73,999,062
- ----------------------------------------------------------------------------------------------
981,671,327
- ----------------------------------------------------------------------------------------------
SEMICONDUCTORS-4.49%
360,900 Altera Corp.(a) 19,037,475
- ----------------------------------------------------------------------------------------------
2,000,000 Analog Devices, Inc.(a) 51,500,000
- ----------------------------------------------------------------------------------------------
919,300 Atmel Corp.(a) 36,772,000
- ----------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 16
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<C> <S> <C>
Semiconductors-continued
750,000 Intel Corp. $ 50,812,500
- ----------------------------------------------------------------------------------------------
1,934,000 International Rectifier Corp.(a) 43,515,000
- ----------------------------------------------------------------------------------------------
800,000 Lattice Semiconductor Corp.(a) 26,200,000
- ----------------------------------------------------------------------------------------------
500,000 Linear Technology Corp. 17,187,500
- ----------------------------------------------------------------------------------------------
1,500,000 LSI Logic Corp.(a) 54,000,000
- ----------------------------------------------------------------------------------------------
979,200 MEMC Electronic Materials, Inc.(a) 48,837,600
- ----------------------------------------------------------------------------------------------
850,000 SCI Systems, Inc.(a) 36,443,750
- ----------------------------------------------------------------------------------------------
600,100 Sierra Semiconductor Corp.(a) 9,826,637
- ----------------------------------------------------------------------------------------------
500,000 Solectron Corp.(a) 22,250,000
- ----------------------------------------------------------------------------------------------
500,000 Vitesse Semiconductor Corp.(a) 14,937,500
- ----------------------------------------------------------------------------------------------
500,000 Zilog, Inc.(a) 18,812,500
- ----------------------------------------------------------------------------------------------
450,132,462
- ----------------------------------------------------------------------------------------------
SHOES & RELATED APPAREL-0.72%
1,000,000 Nine West Group, Inc.(a) 42,875,000
- ----------------------------------------------------------------------------------------------
1,500,000 Thrifty PayLess Holdings, Inc.(a) 20,250,000
- ----------------------------------------------------------------------------------------------
300,000 Wolverine World Wide, Inc. 9,262,500
- ----------------------------------------------------------------------------------------------
72,387,500
- ----------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-4.95%
95,800 ACC Corp. 3,209,300
- ----------------------------------------------------------------------------------------------
400,000 ADC Telecommunications, Inc.(a) 16,800,000
- ----------------------------------------------------------------------------------------------
800,000 Allen Group Inc. 19,800,000
- ----------------------------------------------------------------------------------------------
1,500,000 Andrew Corp.(a) 72,000,000
- ----------------------------------------------------------------------------------------------
700,000 Aspect Telecommunications Corp.(a) 40,250,000
- ----------------------------------------------------------------------------------------------
1,000,000 Frontier Corp. 31,625,000
- ----------------------------------------------------------------------------------------------
1,000,000 Glenayre Technologies, Inc.(a) 46,500,000
- ----------------------------------------------------------------------------------------------
1,000,000 Octel Communications Corp.(a) 44,750,000
- ----------------------------------------------------------------------------------------------
418,400 Premier Technologies, Inc.(a) 15,794,600
- ----------------------------------------------------------------------------------------------
980,000 Premisys Communications, Inc.(a) 42,875,000
- ----------------------------------------------------------------------------------------------
1,350,000 Scientific-Atlanta, Inc. 24,975,000
- ----------------------------------------------------------------------------------------------
200,000 TCSI Corp.(a) 6,550,000
- ----------------------------------------------------------------------------------------------
950,000 Tellabs, Inc.(a) 52,487,500
- ----------------------------------------------------------------------------------------------
112,500 TransPro, Inc. 829,687
- ----------------------------------------------------------------------------------------------
400,000 U.S. Long Distance Corp.(a) 10,300,000
- ----------------------------------------------------------------------------------------------
625,000 United States Satellite Broadcasting Co., Inc.(a) 21,406,250
- ----------------------------------------------------------------------------------------------
1,000,000 WorldCom, Inc.(a) 47,000,000
- ----------------------------------------------------------------------------------------------
497,152,337
- ----------------------------------------------------------------------------------------------
TELEPHONE-0.02%
55,700 Century Telephone Enterprises, Inc. 1,824,175
- ----------------------------------------------------------------------------------------------
TEXTILES-1.00%
1,000,000 Liz Claiborne, Inc. 36,375,000
- ----------------------------------------------------------------------------------------------
600,000 Nautica Enterprises, Inc.(a) 27,900,000
- ----------------------------------------------------------------------------------------------
800,700 Tommy Hilfiger Corp.(a) 36,431,850
- ----------------------------------------------------------------------------------------------
100,706,850
- ----------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE> 17
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<C> <S> <C>
TRANSPORTATION-0.17%
500,000 JB Hunt Transport. Services, Inc. $ 10,187,500
- ----------------------------------------------------------------------------------------------
236,500 Rural/Metro Corp.(a) 7,006,312
- ----------------------------------------------------------------------------------------------
17,193,812
- ----------------------------------------------------------------------------------------------
TRUCKING-0.20%
600,000 American Freightways Corp.(a) 9,075,000
- ----------------------------------------------------------------------------------------------
500,600 TNT Freightways Corp.(a) 11,326,075
- ----------------------------------------------------------------------------------------------
20,401,075
- ----------------------------------------------------------------------------------------------
Total Domestic Common Stocks 8,241,010,031
- ----------------------------------------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY INTERESTS-4.14%
CANADA-0.87%
600,000 Agrium, Inc. (Chemicals) 7,725,000
- ----------------------------------------------------------------------------------------------
1,250,000 Gandalf Technologies, Inc. (Computer Networking)(a) 22,187,500
- ----------------------------------------------------------------------------------------------
750,000 Newbridge Networks NV (Computer Networking)(a) 48,281,250
- ----------------------------------------------------------------------------------------------
464,000 PC DOCS Group International, Inc. (Computer
Software/Services)(a) 9,599,000
- ----------------------------------------------------------------------------------------------
87,792,750
- ----------------------------------------------------------------------------------------------
FRANCE-0.12%
50,580 Roussel-Uclaf (Medical-Drugs) 11,921,904
- ----------------------------------------------------------------------------------------------
HONG KONG-0.06%
628,000 Sun Hung Kai Properties Ltd. (Real Estate) 5,987,331
- ----------------------------------------------------------------------------------------------
INDONESIA-0.06%
1,250,000 PT Bank International Indonesia (Banking) 6,146,882
- ----------------------------------------------------------------------------------------------
IRELAND-0.49%
750,000 Elan Corp. PLC-ADR (Medical Drugs)(a) 49,593,750
- ----------------------------------------------------------------------------------------------
ISRAEL-0.43%
1,250,000 ECI Telecom. Ltd. (Computer Networking) 32,656,250
- ----------------------------------------------------------------------------------------------
225,000 Teva Pharmaceutical Industries, Ltd.-ADR (Medical-Drugs) 10,096,875
- ----------------------------------------------------------------------------------------------
42,753,125
- ----------------------------------------------------------------------------------------------
ITALY-0.05%
1,074,000 Telecom Italia Mobile S.p.A. (Telecommunications)(a) 2,355,649
- ----------------------------------------------------------------------------------------------
1,074,000 Telecom Italia S.p.A. (Telecommunications) 2,183,754
- ----------------------------------------------------------------------------------------------
4,539,403
- ----------------------------------------------------------------------------------------------
JAPAN-0.04%
120,000 Tokyo Electron Ltd. (Electronic Components/Miscellaneous) 4,462,501
- ----------------------------------------------------------------------------------------------
MALAYSIA-0.09%
938,000 Malayan Banking Berhad (Banking) 9,141,860
- ----------------------------------------------------------------------------------------------
NETHERLANDS-0.33%
926,700 Madge Networks N.V. (Computer Networking)(a) 27,337,650
- ----------------------------------------------------------------------------------------------
328,500 Ver Ned Uitgever Bezit (Publishing) 5,521,330
- ----------------------------------------------------------------------------------------------
32,858,980
- ----------------------------------------------------------------------------------------------
SWEDEN-0.66%
3,250,000 Telefonaktiebolaget L.M. Ericsson-ADR (Telecommunications) 66,218,750
- ----------------------------------------------------------------------------------------------
SWITZERLAND-0.06%
5,000 Ciba-Geigy Ltd. (Chemicals) 5,802,996
- ----------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE> 18
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
UNITED KINGDOM-0.88%
2,700,000 Burton Group PLC (Retail-Stores) $ 6,360,830
- ----------------------------------------------------------------------------------------------
1,500,000 Danka Business Systems PLC-ADR (Office Automation) 72,000,000
- ----------------------------------------------------------------------------------------------
390,000 Granada Group PLC (Leisure & Recreation) 4,834,637
- ----------------------------------------------------------------------------------------------
172,700 Thorn EMI PLC (Leisure & Recreation) 4,790,000
- ----------------------------------------------------------------------------------------------
87,985,467
- ----------------------------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests 415,205,699
- ----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
MASTER NOTE AGREEMENT-0.76%
$76,500,000 Citicorp Securities, Inc., 5.625%, 09/09/96(b) 76,500,000
- ----------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS-2.84%(c)
203,100 Daiwa Securities America, Inc., 5.34%, 05/01/96(d) 203,100
- ----------------------------------------------------------------------------------------------
100,000,000 Lehman Brothers Inc., 5.35%, 05/01/96(e) 100,000,000
- ----------------------------------------------------------------------------------------------
185,000,000 Nikko Securities Co. International, Inc., 5.40%,
05/01/96(f) 185,000,000
- ----------------------------------------------------------------------------------------------
Total Repurchase Agreements 285,203,100
- ----------------------------------------------------------------------------------------------
U.S. TREASURY SECURITIES-9.90%
U.S. TREASURY BILLS-8.15%(g)
72,000,000 4.99%, 06/27/96(h) 71,444,820
- ----------------------------------------------------------------------------------------------
120,000,000 4.73%, 07/05/96(h) 118,953,600
- ----------------------------------------------------------------------------------------------
200,000,000 4.94%, 07/11/96(h) 198,090,000
- ----------------------------------------------------------------------------------------------
400,000,000 4.99%, 07/25/96(h) 395,384,000
- ----------------------------------------------------------------------------------------------
35,000,000 4.53%, 02/06/97 33,587,050
- ----------------------------------------------------------------------------------------------
817,459,470
- ----------------------------------------------------------------------------------------------
U.S. TREASURY NOTES-1.75%
75,000,000 6.125%, 07/31/96 75,183,000
- ----------------------------------------------------------------------------------------------
50,000,000 6.50%, 09/30/96(h) 50,247,000
- ----------------------------------------------------------------------------------------------
50,000,000 8.00%, 10/15/96 50,588,500
- ----------------------------------------------------------------------------------------------
176,018,500
- ----------------------------------------------------------------------------------------------
Total U.S. Treasury Securities 993,477,970
- ----------------------------------------------------------------------------------------------
TOTAL INVESTMENTS-99.77% 10,011,396,800
- ----------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-0.23% 23,218,753
- ----------------------------------------------------------------------------------------------
NET ASSETS-100.00% $ 10,034,615,553
==============================================================================================
</TABLE>
ABBREVIATIONS:
ADR-American Depository 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 April 30,
1996.
(c) Collateral on repurchase agreements, include the Fund's pro-rata interest in
joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value as being 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(d) Joint repurchase agreement entered into 04/30/96 with a maturing value of
$767,124,680. Collaterized by $737,151,000 U.S. Treasury obligations, 0% to
11.25% due 05/15/96 to 02/15/21.
(e) Joint repurchase agreement entered into 04/30/96 with a maturing value of
$200,029,833. Collaterized by $208,941,000 U.S. Treasury obligations, 0% due
10/10/96 to 10/17/96.
(f) Joint repurchase agreement entered into 04/30/96 with a maturing value of
$500,075,000. Collaterized by $537,039,193 U.S. Government agency
obligations, 6.50% to 7.659% due 03/01/23 to 04/01/26.
(g) 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.
(h) A portion of the principal balance was pledged as collateral to cover margin
requirements for open future contracts. See Note 7.
See Notes to Financial Statements.
16
<PAGE> 19
Financials
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1996
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $7,362,460,498) $10,011,396,800
- -----------------------------------------------------------------------------------------
Foreign currencies, at market value (cost $74,855) 74,766
- -----------------------------------------------------------------------------------------
Receivables for:
- -----------------------------------------------------------------------------------------
Investments sold 40,202,240
- -----------------------------------------------------------------------------------------
Capital stock sold 62,819,986
- -----------------------------------------------------------------------------------------
Dividends and interest 2,856,807
- -----------------------------------------------------------------------------------------
Investment for deferred compensation plan 43,985
- -----------------------------------------------------------------------------------------
Other assets 55,703
- -----------------------------------------------------------------------------------------
Total assets 10,117,450,287
- -----------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 57,904,054
- -----------------------------------------------------------------------------------------
Capital stock reacquired 15,080,612
- -----------------------------------------------------------------------------------------
Variation margin 456,750
- -----------------------------------------------------------------------------------------
Deferred compensation 43,985
- -----------------------------------------------------------------------------------------
Accrued advisory fees 4,740,808
- -----------------------------------------------------------------------------------------
Accrued administrative services fees 16,041
- -----------------------------------------------------------------------------------------
Accrued directors' fees 14,681
- -----------------------------------------------------------------------------------------
Accrued distribution fees 3,277,425
- -----------------------------------------------------------------------------------------
Accrued transfer agent fees 590,240
- -----------------------------------------------------------------------------------------
Accrued operating expenses 710,138
- -----------------------------------------------------------------------------------------
Total liabilities 82,834,734
- -----------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $10,034,615,553
=========================================================================================
NET ASSETS:
Class A $ 9,816,351,243
=========================================================================================
Institutional Class $ 218,264,310
=========================================================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
Class A:
Authorized 750,000,000
- -----------------------------------------------------------------------------------------
Outstanding 388,858,785
=========================================================================================
Institutional Class:
Authorized 200,000,000
- -----------------------------------------------------------------------------------------
Outstanding 8,490,920
=========================================================================================
CLASS A:
Net asset value and redemption price per share $25.24
=========================================================================================
Offering price per share:
(Net assets value of $25.24 divided by 94.50%) $26.71
=========================================================================================
INSTITUTIONAL CLASS:
Net asset value, offering and redemption price per share $25.71
=========================================================================================
</TABLE>
See Notes to Financial Statements.
17
<PAGE> 20
Financials
STATEMENT OF OPERATIONS
For the six months ended April 30, 1996
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $84,942 foreign withholding tax) $ 7,343,121
- ----------------------------------------------------------------------------------------
Interest 32,574,900
- ----------------------------------------------------------------------------------------
Total investment income 39,918,021
- ----------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 25,576,228
- ----------------------------------------------------------------------------------------
Administrative service fees 96,748
- ----------------------------------------------------------------------------------------
Custodian fees 175,290
- ----------------------------------------------------------------------------------------
Directors' fees 24,628
- ----------------------------------------------------------------------------------------
Distribution fees-Class A 11,966,225
- ----------------------------------------------------------------------------------------
Transfer agent fees-Class A 6,334,609
- ----------------------------------------------------------------------------------------
Transfer agent fees-Institutional Class 1,145
- ----------------------------------------------------------------------------------------
Other 1,910,674
- ----------------------------------------------------------------------------------------
Total expenses 46,085,547
- ----------------------------------------------------------------------------------------
Less fees waived by advisor (769,896)
- ----------------------------------------------------------------------------------------
Net expenses 45,315,651
- ----------------------------------------------------------------------------------------
Net investment income (loss) (5,397,630)
- ----------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES, FOREIGN
CURRENCIES AND FUTURES CONTRACTS:
Net realized gain (loss) on sales of:
Investment securities 336,170,461
- ----------------------------------------------------------------------------------------
Foreign currencies (487,611)
- ----------------------------------------------------------------------------------------
Futures contracts 27,360,346
- ----------------------------------------------------------------------------------------
363,043,196
- ----------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of:
Investment securities 568,984,469
- ----------------------------------------------------------------------------------------
Foreign currencies 90,991
- ----------------------------------------------------------------------------------------
Futures contracts (2,778,637)
- ----------------------------------------------------------------------------------------
566,296,823
- ----------------------------------------------------------------------------------------
Net gain on investment securities, foreign currencies and futures
contracts 929,340,019
- ----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $923,942,389
========================================================================================
</TABLE>
See Notes to Financial Statements.
18
<PAGE> 21
Financials
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 1996 and the year ended October 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
1996 1995
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (5,397,630) $ (16,016,980)
- ---------------------------------------------------------------------------------------------
Net realized gain on sales of investment securities,
foreign currencies and futures contracts 363,043,196 237,427,697
- ---------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities,
foreign currencies and futures contracts 566,296,823 1,307,034,097
- ---------------------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 923,942,389 1,528,444,814
- ---------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on
investment securities:
Class A (233,242,373) (107,823,749)
- ---------------------------------------------------------------------------------------------
Institutional Class (4,789,469) (1,218,145)
- ---------------------------------------------------------------------------------------------
Share transactions-net:
Class A 2,145,030,565 1,878,176,040
- ---------------------------------------------------------------------------------------------
Institutional Class 64,406,384 75,813,810
- ---------------------------------------------------------------------------------------------
Net increase in net assets 2,895,347,496 3,373,392,770
- ---------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 7,139,268,057 3,765,875,287
- ---------------------------------------------------------------------------------------------
End of period $10,034,615,553 $7,139,268,057
- ---------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $ 7,038,208,392 $4,828,771,443
- ---------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (5,451,640) (54,010)
- ---------------------------------------------------------------------------------------------
Undistributed net realized gain on sales of investment
securities, foreign currencies and futures contracts 356,648,509 231,637,155
- ---------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities,
foreign currencies and futures contracts 2,645,210,292 2,078,913,469
- ---------------------------------------------------------------------------------------------
$10,034,615,553 $7,139,268,057
=============================================================================================
</TABLE>
See Notes to Financial Statements.
19
<PAGE> 22
Financials
NOTES TO FINANCIAL STATEMENTS
April 30, 1996
(Unaudited)
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 operating 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 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 Fund's investment objective is to seek capital
appreciation.
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Security Valuations--A security listed or traded on an exchange is valued at
its last sales price on the exchange where the security is principally
traded, or lacking any sales on a particular day, the security is valued at
the mean between the closing bid and asked prices on that day. Each security
traded in the over-the-counter market (but not including securities reported
on the NASDAQ National Market System) is valued at the mean between the last
bid and asked prices based upon quotes furnished by market makers for such
securities. If a mean is not available, as is the case in some foreign
markets, the closing bid will be used absent a last sales price. Each
security reported on the NASDAQ National Market System is valued at the last
sales price on the valuation date or absent a last sales price, at the mean
of the closing bid and asked prices. 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 or are
questionable are valued at fair value as determined in good faith by or under
the supervision of the Company's officers in a manner specifically authorized
by the Board of Directors of the Company. Short-term obligations having 60
days or less to maturity are valued at amortized cost which approximates
market value. Generally, trading in foreign securities is 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 would 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 market 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 the securities
sold. Interest income is recorded as earned from settlement date and is
recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend rate.
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.
20
<PAGE> 23
Financials
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES-continued
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 Translation--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 "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 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 voluntary 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 six months ended April 30, 1996, AIM waived
fees of $769,896. The waiver is entirely voluntary but approval is required by
the Board of Directors for 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 or
any state in which the Fund's shares are qualified for sale.
The Fund, pursuant to a master administrative services agreement with A I M,
has agreed to reimburse AIM for certain administrative costs incurred in
providing accounting services to the Fund. During the six months ended April 30,
1996, AIM was reimbursed $96,748 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 six months ended April 30, 1996, AFS
was paid $4,446,767 for such services. During the six months ended April 30,
1996, the Fund paid A I M Institutional Fund Services, Inc. ("AIFS") with
respect to the Institutional Class $1,145 for shareholder and transfer agency
services.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
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-l under the 1940 Act (the "Plan"), with
respect to the Class A shares, whereby the Fund
21
<PAGE> 24
Financials
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES-Continued
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 six months ended April 30, 1996, the Class A shares paid AIM
Distributors $11,966,225 as compensation under the Plan.
AIM Distributors received commissions of $10,806,371 from Class A capital
stock transactions during the six months ended April 30, 1996. Such commissions
are not an expense of the Fund. They are deducted from, and are not included in,
the proceeds from sales of 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 six months ended April 30, 1996 the Fund paid legal fees of $12,679
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-DIRECTOR'S 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.
NOTE 4-BANK BORROWINGS
The fund has a $83,000,000 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 six months ended April 30, 1996, the Fund did not borrow under
the line of credit agreement. The Fund is charged a commitment fee, payable
quarterly, at the rate of 1/10 of 1% per annum on the unused balance of the
Fund's 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 six months ended
April 30, 1996, is as follows:
<TABLE>
<CAPTION>
SHARE SHARE MARKET
BALANCE BALANCE VALUE
OCTOBER 31, PURCHASES REALIZED DIVIDEND APRIL 30, APRIL 30,
NAME OF ISSUER: 1995 COST SALES COST GAIN INCOME 1996 1996
<S> <C> <C> <C> <C> <C> <C> <C>
Network General Corp. 642,900 $18,728,405 $690,159 $1,144,784 $ -- 1,092,500 $48,206,562
- ---------------------------------------------------------------------------------------------------------------------------
Orchard Supply Hardware Stores
Corp. -- $14,787,404 -- -- -- 625,000 $16,640,625
- ---------------------------------------------------------------------------------------------------------------------------
Petco Animal Supplies, Inc. 150,000 $12,683,687 -- -- -- 675,000 $19,406,250
- ---------------------------------------------------------------------------------------------------------------------------
SYNC Research, Inc. -- $21,917,125 -- -- -- 571,200 $11,281,200
===========================================================================================================================
</TABLE>
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the six months ended April 30, 1996 was
$3,752,338,362 and $2,389,523,911, respectively. The amount of unrealized
appreciation (depreciation) of investment securities as of April 30, 1996, on a
tax basis, is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $2,718,223,827
- ------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (71,223,730)
- ------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities $2,647,000,097
====================================================================================
</TABLE>
Cost of investments for tax purposes is $7,364,396,703.
22
<PAGE> 25
Financials
NOTE 7-FUTURES CONTRACT
On April 30, 1996, $42,294,000 U.S. Treasury obligations were pledged as
collateral to cover margin requirements for futures contracts.
Futures contracts outstanding at April 30, 1996:
(Contracts--$500 times index/delivery month/commitment)
<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION
(DEPRECIATION)
<S> <C>
S&P 500 Index 3,045 contracts/Jun96/Buy $ (3,671,762)
=================================================================================================
</TABLE>
NOTE 8-CAPITAL STOCK
Changes in the capital stock outstanding for the six months ended April 30, 1996
and the year ended October 31, 1995 were as follows:
<TABLE>
<CAPTION>
APRIL 30, 1996 OCTOBER 31, 1995
------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
------------ --------------- ------------ ---------------
<S> <C> <C> <C> <C>
Sold:
Class A 160,988,140 $ 3,721,271,144 214,014,863 $ 4,411,919,689
- -------------------------------------------------------------------------------------------------
Institutional Class 3,658,846 86,706,301 5,036,915 105,368,663
- -------------------------------------------------------------------------------------------------
Issued as reinvestment of
dividends:
Class A 10,007,600 228,673,022 6,006,043 99,940,399
- -------------------------------------------------------------------------------------------------
Institutional Class 200,095 4,444,113 60,580 1,019,563
- -------------------------------------------------------------------------------------------------
Reacquired:
Class A (77,620,903) (1,804,913,601) (128,002,913) (2,633,684,048)
- -------------------------------------------------------------------------------------------------
Institutional Class (1,143,824) (26,744,030) (1,476,157) (30,574,416)
- -------------------------------------------------------------------------------------------------
96,089,954 $ 2,209,436,949 95,639,331 $ 1,953,989,850
=================================================================================================
</TABLE>
23
<PAGE> 26
Financials
NOTE 9-FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share of Class A
capital stock outstanding during the six months ended April 30, 1996, each of
the years in the seven-year period ended October 31, 1996, the ten months ended
October 31, 1988, and year ended December 31, 1987.(a)
<TABLE>
<CAPTION>
OCTOBER 31,
APRIL 30, ------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 23.69 $ 18.31 $ 17.04 $ 13.25 $ 11.72 $ 6.59 $ 9.40 $ 7.34
- ------------------------- ---------- ---------- ---------- ---------- -------- -------- ------- -------
Income from investment
operations:
Net investment income
(loss) (0.01) (0.05) (0.02) (0.04) (0.04) (0.03) (0.03) 0.01
- ------------------------- ---------- ---------- ---------- ---------- -------- -------- ------- -------
Net gains (losses) on
securities (both
realized and
unrealized) 2.31 5.95 1.29 3.83 1.76 5.16 (1.23) 2.46
- ------------------------- ---------- ---------- ---------- ---------- -------- -------- ------- -------
Total from
investment
operations 2.30 5.90 1.27 3.79 1.72 5.13 (1.26) 2.47
- ------------------------- ---------- ---------- ---------- ---------- -------- -------- ------- -------
Less distributions:
Dividends from net
investment income -- -- -- -- -- -- (0.01) --
- ------------------------- ---------- ---------- ---------- ---------- -------- -------- ------- -------
Distributions from
capital gains (0.75) (0.52) -- -- (0.19) -- (1.54) (0.41)
- ------------------------- ---------- ---------- ---------- ---------- -------- -------- ------- -------
Total
distributions (0.75) (0.52) -- -- (0.19) -- (1.55) (0.41)
- ------------------------- ---------- ---------- ---------- ---------- -------- -------- ------- -------
Net asset value, end of
period $ 25.24 $ 23.69 $ 18.31 $ 17.04 $ 13.25 $ 11.72 $ 6.59 $ 9.40
========================= ========== ========== ========== ========== ======== ======== ======= =======
Total return(c) 10.21% 33.43% 7.45% 28.60% 14.82% 77.85% (16.17)% 35.50%
========================= ========== ========== ========== ========== ======== ======== ======= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s omitted) $9,816,351 $7,000,350 $3,726,029 $2,756,497 $966,472 $342,835 $83,304 $74,731
========================= ========== ========== ========== ========== ======== ======== ======= =======
Ratio of expenses to
average net assets 1.1%(d) 1.2% 1.2% 1.2% 1.2% 1.4% 1.4% 1.4%
========================= ========== ========== ========== ========== ======== ======== ======= =======
Ratio of net investment
income (loss) to
average net assets (0.1)(d) (0.3)% (0.2)% (0.3)% (0.4)% (0.4)% (0.4)% 0.1%
========================= ========== ========== ========== ========== ======== ======== ======= =======
Portfolio turnover rate 30% 45% 79% 70% 62% 109% 192% 149%
========================= ========== ========== ========== ========== ======== ======== ======= =======
Borrowings for the
period:
Amount of debt
outstanding at end of
period (000s omitted) -- -- -- -- -- -- -- $ 9,610
========================= ========== ========== ========== ========== ======== ======== ======= =======
Average amount of debt
outstanding during the
period (000s
omitted)(f) 344,664 -- -- -- -- -- $ 2,344 $ 2,609
========================= ========== ========== ========== ========== ======== ======== ======= =======
Average amount of debt
outstanding during the
period (000s
omitted)(f) -- 244,731 182,897 124,101 55,902 21,205 11,397 10,050
========================= ========== ========== ========== ========== ======== ======== ======= =======
Average amount of debt
per share during the
period -- -- -- -- -- -- $ 0.21 $ 0.26
========================= ========== ========== ========== ========== ======== ======== ======= =======
<CAPTION>
DECEMBER 31,
1988(b) 1987
---------- ----------
<S> <C> <C>
Net asset value,
beginning of period $ 6.35 $ 10.58
- ------------------------- ---------- ----------
Income from investment
operations:
Net investment income
(loss) (0.03) (0.05)
- ------------------------- ---------- ----------
Net gains (losses) on
securities (both
realized and
unrealized) 1.02 0.36
- ------------------------- ---------- ----------
Total from
investment
operations 0.99 0.31
- ------------------------- ---------- ----------
Less distributions:
Dividends from net
investment income -- --
- ------------------------- ---------- ----------
Distributions from
capital gains -- (4.54)
- ------------------------- ---------- ----------
Total
distributions -- (4.54)
- ------------------------- ---------- ----------
Net asset value, end of
period $ 7.34 $ 6.35
========================= ========== ==========
Total return(c) 15.59% 2.85%
========================= ========== ==========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s omitted) $ 78,272 $ 71,418
========================= ========== ==========
Ratio of expenses to
average net assets 1.3%(e) 1.1%
========================= ========== ==========
Ratio of net investment
income (loss) to
average net assets (0.6)%(e) (0.4)%
========================= ========== ==========
Portfolio turnover rate 131% 135%
========================= ========== ==========
Borrowings for the
period:
Amount of debt
outstanding at end of
period (000s omitted) $ 5,266 $ 109
========================= ========== ==========
Average amount of debt
outstanding during the
period (000s
omitted)(f) $ 2,148 $ 2,366
========================= ========== ==========
Average amount of debt
outstanding during the
period (000s
omitted)(f) 10,845 9,668
========================= ========== ==========
Average amount of debt
per share during the
period $ 0.20 $ 0.24
========================= ========== ==========
</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.
(c) Does not deduct sales charges and for periods less than one year, total
returns are not annualized.
(d) Ratios are annualized and based on average net assets of $8,043,594,774.
(e) Annualized.
(f) Averages computed on a daily basis.
24
<PAGE> 27
Directors & Officers
<TABLE>
<CAPTION>
<S> <C> <C>
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
Scott G. Lucas Houston, TX 77210-4739
Carl Frischling Senior Vice President
Partner CUSTODIAN
Kramer, Levin, Naftalis, Nessen, Carol F. Relihan State Street Bank & Trust
Kamin & Frankel Senior Vice President 225 Franklin Street
and Secretary Boston, MA 02110
Robert H. Graham <PAGE>
President and Chief Operating Officer Jonathan C. Schoolar COUNSEL TO THE FUND
A I M Management Group Inc. Senior Vice President Ballard Spahr
Andrews & Ingersoll
John F. Kroeger Melville B. Cox 1735 Market Street
Formerly, Consultant Vice President Philadelphia, PA 19103
Wendell & Stockel Associates, Inc.
Dana R. Sutton COUNSEL TO THE DIRECTORS
Lewis F. Pennock Vice President and Assistant Treasurer Kramer, Levin, Naftalis,
Attorney Nessen, Kamin & Frankel
P. Michelle Grace 919 Third Avenue
Ian W. Robinson Assistant Secretary New York, NY 10022
Consultant; Formerly Executive
Vice President and David L. Kite DISTRIBUTOR
Chief Financial Officer Assistant Secretary A I M Distributors, Inc.
Bell Atlantic Management 11 Greenway Plaza
Services, Inc. Nancy L. Martin Suite 1919
Assistant Secretary Houston, TX 77046
Louis S. Sklar
Executive Vice President Ofelia M. Mayo
Hines Interests Assistant Secretary
Limited Partnership
Kathleen J. Pflueger
Assistant Secretary
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
Mary J. Benson
Assistant Treasure
</TABLE>
<PAGE> 28
<TABLE>
<S> <C>
[PHOTO OF 11 GREENWAY PLAZA THE AIM FAMILY OF FUNDS(R)
APPEARS HERE]
AGGRESSIVE GROWTH
AIM Aggressive Growth Fund*
AIM Capital Development Fund
AIM Constellation Fund
AIM Global Aggressive Growth Fund
GROWTH
AIM Blue Chip Fund
AIM Global Growth Fund
AIM Growth Fund
AIM International Equity Fund
AIM Value Fund
AIM Weingarten Fund
GROWTH AND INCOME
AIM Balanced Fund
AIM Charter Fund
INCOME AND GROWTH
AIM Global Utilities Fund
HIGH CURRENT INCOME
AIM High Yield Fund
CURRENT INCOME
AIM Global Income Fund
AIM Income Fund
CURRENT TAX-FREE INCOME
AIM Management Group has provided leadership in the AIM Municipal Bond Fund
mutual fund industry since 1976 and currently manages AIM Tax-Exempt Bond Fund of CT
approximately $54 billion in assets for more than AIM Tax-Free Intermediate Shares
2.3 million shareholders, including individual investors,
corporate clients, and financial institutions. The AIM CURRENT INCOME AND HIGH DEGREE
Family of Funds(R) is distributed nationwide, and AIM OF SAFETY
today ranks among the nation's top 15 mutual fund AIM Intermediate Government Fund**
companies in assets under management, according to
Lipper Analytical Services, Inc. HIGH DEGREE OF SAFETY AND
CURRENT INCOME
AIM Limited Maturity Treasury Shares
[AIM LOGO APPEARS HERE] STABILITY, LIQUIDITY, AND
CURRENT INCOME
A I M Distributors, Inc. AIM Money Market Fund
11 Greenway Plaza, Suite 1919
Houston, TX 77046 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 September 25, 1995, AIM Government
Securities Fund became AIM Intermediate
Government Fund. For more complete
information about any AIM Fund(s), including
sales charges and expenses, ask your
financial consultant or securities dealer
for a free prospectus(es). Please read the
prospectus(es) carefully before you
invest or send money.
---------------
BULK RATE
U.S. POSTAGE
PAID
HOUSTON, TX
Permit No. 1919
---------------
</TABLE>
