<PAGE> 1
[PHOTO APPEARS HERE]
AIM EQUITY FUNDS, INC.
INSTITUTIONAL CLASSES
[LOGO APPEARS HERE] SEMIANNUAL REPORT
APRIL 30, 1996
Fund Management Company AIM CHARTER FUND
AIM CONSTELLATION FUND
AIM WEINGARTEN FUND
<PAGE> 2
A Message from
the Chairman
- --------------------
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.
- --------------------
Dear Shareholder:
"Past performance cannot guarantee comparable future
[PHOTO OF results."
Charles T. Bauer,
Chairman of As a mutual fund investor, you've seen this disclaimer on
the Board of every piece of mail you've ever received about your fund.
the Fund. You've seen it so often that you probably don't even think
APPEARS HERE] about it or question what it means. But you should.
That sentence about past performance is true now more
than ever. These days it bluntly means: "Don't expect the
25% to 35% returns you received last year." Don't automatically expect the 15%
to 20% returns of the past decade, either. History shows that the average
annual return is about 9% to 10%. If you're investing in mutual funds with
expectations of double-digit 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.
<PAGE> 3
A Message from
the Chairman
The industry also polices itself. At AIM we have an exhaustive code of
ethics that governs each of our 1,150 employees.
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
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
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
AIM Charter Fund 2-23
AIM Constellation Fund 24-46
AIM Weingarten Fund 47-69
- --------------------------------------------------------------------------------
This report may be distributed only to current shareholders
or to persons who have received a current prospectus of the Fund.
<PAGE> 4
AIM CHARTER FUND
For shareholders who seek growth and income by investing primarily in stocks of
large-cap, well-run companies with a history of stable and improving earnings
and generally increasing dividend payouts.
ABOUT FUND PERFORMANCE DATA THROUGHOUT THIS REPORT:
o AIM Charter Fund's Institutional Class performance figures are historical
and reflect reinvestment of all distributions and changes in net asset
value.
o The Fund's investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
o Past performance cannot guarantee comparable future results.
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.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The Dow Jones Industrial Average (DJIA) is an unmanaged composite of the
performance of 30 large-company stocks.
o An investment cannot be made in the index listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect
sales charges.
C H A R T E R
2
<PAGE> 5
Management's
Discussion & Analysis
CHARTER FUND'S ANSWER
TO MARKET VOLATILITY: DIVERSITY
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 concerns 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 Charter Fund's Institutional Class reported a 10.23% total return during
the six-month period ended April 30, 1996. The net assets of the Institutional
Class increased from $25.5 million to $27.1 million over the last six months.
AIM Charter Fund responded to volatile markets by further diversifying its
mix of securities and increasing its number of holdings over the past six
months. The Fund also cut its emphasis in technology stocks in half from 30% to
15% and spread its assets among a variety of industries.
About 50% of the Fund's assets were invested in defensive stocks, which tend
to be less sensitive to changes in the business cycle, and therefore less
volatile. But AIM Charter Fund managers selected these stocks for more than
their relative price stability--these companies performed well because they
capitalized on growth and success in their industries.
As always, the Fund focused on earnings growth. Over the past six months,
that growth came from stocks of major U.S. corporations--AIM Charter Fund's
core investments.
The Fund's top stock holdings as of April 30, 1996, included
multi-billion-dollar medical companies, insurance companies, oil and gas firms,
and telecommunications companies.
MEDICAL: Health-care stocks, particularly of large hospital chains and
managed-care companies like United Healthcare, were buoyed over the past six
months by continuing cost-cutting efforts.
========================
Net Asset Composition
========================
As of 4/30/96
Common Stock 74%
Cash 2%
U.S. Government 5%
Convertible Bonds 14%
Convertible
Preferred Stock 5%
========================
C H A R T E R
3
<PAGE> 6
Management's
Discussion & Analysis
The industry is going through major restructuring through consolidations,
networking and increased reliance on managed care.
Pharmaceutical companies like Pfizer Inc. and French conglomerate
Rhone-Poulenc Rorer, Inc. also benefited from cost cutting, price increases,
and the introduction of new drugs.
The burgeoning health insurance industry propelled earnings for major
insurers like CIGNA Corp. and Aetna Life & Casualty Co., which is buying U.S.
Healthcare Inc., another of the Fund's holdings.
ENERGY: Major oil companies like Mobil Corp. turned in robust earnings in
the first quarter of 1996 as a severe winter in the North and low inventory
spiked energy prices. Gasoline prices soared over the period, boosting profits.
Electric utilities saw increased consolidations through takeovers among
regional utilities held by the Fund. Another major development: Public
utilities received federal approval to sell telephone service under the new
telecommunications overhaul law enacted in February.
TELECOMMUNICATIONS: This telecommunications law opens the industry to
increased competition and less regulation. Major changes may benefit many of
the Fund's holdings, including AT&T, its new spin-off company Lucent
Technologies Inc., and "Baby Bells" SBC Communications Inc., Cincinnati Bell
Inc., and BellSouth Corp.
Strong earnings in this sector over the past six months came from increases
in residential and business calls and installations of second phone lines for
faxes and modems.
TECHNOLOGY: High-tech firms were by no means down for the count, but the
euphoria of 1995 subsided. AIM Charter Fund shifted out of some areas and
focused on industry leaders in software and networking. The Fund sold its
holdings in IBM and bought Intel, Microsoft and Motorola stocks, among others.
Fund managers selected stock in this sector based on a major technology
upgrade occurring within U.S. corporations. Chip maker Intel, software giant
Microsoft and cable modem developer Motorola may benefit as U.S. companies buy
more powerful computers, build PC networks, and log onto the Internet.
CONVERTIBLE BONDS: AIM Charter Fund increased its holdings in convertible
corporate bonds to 13.95% as of April 30, 1996, from 11.33% of the Fund's
portfolio as of October 31, 1995.
Many of the new holdings the Fund added over
================================================================================
PORTFOLIO HOLDINGS (AS OF APRIL 30, 1996)
================================================================================
TOP 10 SECURITIES TOP 10 INDUSTRIES
1. Aetna Life & Casualty Co. 1. Medical (Patient Services)
2. Philip Morris Companies, Inc. 2. Medical (Drugs)
3. PepsiCo., Inc. 3. Telecommunications
4. CIGNA Corp. 4. Oil & Gas (Services)
5. A T & T Corp. 5. Insurance (Multi-Line Property)
6. Pfizer Inc. 6. Computer Software/Services
7. Rhone-Poulenc Rorer, Inc. 7. Finance (Consumer Credit)
8. Intel Corp. 8. Electric Power
9. Motorola, Inc. 9. Telephone
10. SCI Financial LLC - Series E 10. Cosmetics and Toiletries
================================================================================
C H A R T E R
4
<PAGE> 7
Management's
Discussion & Analysis
the past six months have been in convertible bonds, with the heaviest
concentration in medical firms offering patient services, including Tenet
Healthcare Corp., Quintiles Transnational and Phycor.
Management believes health care will be a growth industry for the next five
years as managed care becomes a reality. Convertible bonds, with their stock
conversion feature, allow the Fund to capitalize on this potential for earnings
appreciation.
As of April 30, 1996, the Fund had 226 holdings. Of course, the Fund's
composition is subject to change and there is no guarantee it will continue to
hold any one particular security.
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--particularly health care and
telecommunications--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 Charter Fund Institutional Class 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's Institutional
Class will return 27.45% as it did in the fiscal year ending October 31, 1995.
Historically, the stock market has generated an average total return of about
10%, according to Ibbotson Associates.
AIM Charter 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's Institutional Class to an outstanding average
annual return as shown by the chart below.
================================================================================
GROWTH OF A $10,000 INVESTMENT
================================================================================
7/30/91-4/30/96
Past performance cannot guarantee comparable future results.
AIM Constellation Fund
(Institutional Class)
7/30/91 10,000
12/31/91 11,329
12/31/92 11,496
12/31/93 12,623
12/31/94 12,138
12/31/95 16,523
4/30/96 17,753
Source: Towers Data Systems HYPO(R)
================================================================================
For Fund performance calculations, please refer to page 2.
================================================================================
AVERAGE ANNUAL
TOTAL RETURNS
==================================
As of March 31, 1996
(the most recent calendar quarter)
SINCE INCEPTION
(7/30/91) 12.48%
3 YEARS 13.05
1 YEAR 30.52
==================================
C H A R T E R
5
<PAGE> 8
Financials
SCHEDULE OF INVESTMENTS
April 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
COMMON STOCKS-73.54%
ADVERTISING/BROADCASTING-0.74%
180,000 CKS Group, Inc.(a) $ 5,625,000
- ----------------------------------------------------------------------------------------
300,000 Eagle River Interactive, Inc.(a) 6,450,000
- ----------------------------------------------------------------------------------------
300,000 True North Communications, Inc. 7,912,500
- ----------------------------------------------------------------------------------------
19,987,500
- ----------------------------------------------------------------------------------------
AEROSPACE/DEFENSE-0.98%
100,000 Boeing Co. (The) 8,212,500
- ----------------------------------------------------------------------------------------
120,000 Rockwell International Corp. 7,020,000
- ----------------------------------------------------------------------------------------
100,000 United Technologies Corp. 11,050,000
- ----------------------------------------------------------------------------------------
26,282,500
- ----------------------------------------------------------------------------------------
AIRLINES-0.27%
80,000 AMR Corp.(a) 7,140,000
- ----------------------------------------------------------------------------------------
AUTOMOBILE (MANUFACTURERS)-1.77%
320,000 Chrysler Corp. 20,080,000
- ----------------------------------------------------------------------------------------
200,000 Ford Motor Co. 7,175,000
- ----------------------------------------------------------------------------------------
360,000 General Motors Corp. 20,295,000
- ----------------------------------------------------------------------------------------
47,550,000
- ----------------------------------------------------------------------------------------
BANKING-0.81%
400,000 Marshall & Ilsley Corp. 10,800,000
- ----------------------------------------------------------------------------------------
300,000 National City Corp. 11,062,500
- ----------------------------------------------------------------------------------------
21,862,500
- ----------------------------------------------------------------------------------------
BANKING (MONEY CENTER)-0.98%
200,000 Chase Manhattan Corp. 13,775,000
- ----------------------------------------------------------------------------------------
160,000 Citicorp 12,600,000
- ----------------------------------------------------------------------------------------
26,375,000
- ----------------------------------------------------------------------------------------
BEVERAGES-1.67%
140,000 Anheuser-Busch Companies, Inc. 9,397,500
- ----------------------------------------------------------------------------------------
560,000 PepsiCo., Inc. 35,560,000
- ----------------------------------------------------------------------------------------
44,957,500
- ----------------------------------------------------------------------------------------
BUILDING MATERIALS-0.35%
120,000 Georgia Pacific Corp. 9,330,000
- ----------------------------------------------------------------------------------------
BUSINESS SERVICES-1.88%
260,000 CUC International, Inc.(a) 8,547,500
- ----------------------------------------------------------------------------------------
300,000 Diebold, Inc. 11,550,000
- ----------------------------------------------------------------------------------------
200,000 Dun & Bradstreet Corp. 12,175,000
- ----------------------------------------------------------------------------------------
600,000 Equifax, Inc. 14,700,000
- ----------------------------------------------------------------------------------------
100,000 H & R Block, Inc. 3,512,500
- ----------------------------------------------------------------------------------------
50,485,000
- ----------------------------------------------------------------------------------------
</TABLE>
C H A R T E R
6
<PAGE> 9
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
CHEMICALS-0.66%
140,000 Eastman Chemical Co. $ 9,415,000
- ----------------------------------------------------------------------------------------
120,000 Great Lakes Chemical Corp. 8,190,000
- ----------------------------------------------------------------------------------------
17,605,000
- ----------------------------------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.40%
160,000 Ferro Corp. 4,440,000
- ----------------------------------------------------------------------------------------
160,000 Praxair, Inc. 6,180,000
- ----------------------------------------------------------------------------------------
10,620,000
- ----------------------------------------------------------------------------------------
COMPUTER MINI/PCS-1.19%
180,000 Digital Equipment Corp.(a) 10,755,000
- ----------------------------------------------------------------------------------------
140,000 Hewlett Packard Co. 14,822,500
- ----------------------------------------------------------------------------------------
120,000 Sun Microsystems, Inc.(a) 6,510,000
- ----------------------------------------------------------------------------------------
32,087,500
- ----------------------------------------------------------------------------------------
COMPUTER NETWORKING-0.62%
200,000 Cisco Systems, Inc.(a) 10,375,000
- ----------------------------------------------------------------------------------------
240,000 ECI Telecommunications Ltd. 6,270,000
- ----------------------------------------------------------------------------------------
16,645,000
- ----------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES-3.57%
100,000 Autodesk, Inc.(a) 4,075,000
- ----------------------------------------------------------------------------------------
200,000 Compuserve Corp.(a) 5,700,000
- ----------------------------------------------------------------------------------------
160,000 Computer Associates International, Inc. 11,740,000
- ----------------------------------------------------------------------------------------
240,000 Fiserv, Inc.(a) 7,320,000
- ----------------------------------------------------------------------------------------
100,000 HBO & Co. 11,875,000
- ----------------------------------------------------------------------------------------
120,000 Microsoft Corp.(a) 13,605,000
- ----------------------------------------------------------------------------------------
300,000 Oracle Corp.(a) 10,125,000
- ----------------------------------------------------------------------------------------
140,000 Shared Medical Systems Corp. 9,590,000
- ----------------------------------------------------------------------------------------
500,000 SoftKey International, Inc.(a) 14,000,000
- ----------------------------------------------------------------------------------------
100,000 Sterling Software, Inc.(a) 7,775,000
- ----------------------------------------------------------------------------------------
95,805,000
- ----------------------------------------------------------------------------------------
CONGLOMERATES-1.18%
240,000 Corning, Inc. 8,340,000
- ----------------------------------------------------------------------------------------
400,000 Dial Corp. 11,250,000
- ----------------------------------------------------------------------------------------
160,000 Loews Corp. 12,200,000
- ----------------------------------------------------------------------------------------
31,790,000
- ----------------------------------------------------------------------------------------
COSMETICS & TOILETRIES-2.94%
160,000 Colgate-Palmolive Co. 12,260,000
- ----------------------------------------------------------------------------------------
300,000 Gillette Co. (The) 16,200,000
- ----------------------------------------------------------------------------------------
300,000 Procter & Gamble Co. 25,350,000
- ----------------------------------------------------------------------------------------
200,000 Tambrands, Inc. 9,575,000
- ----------------------------------------------------------------------------------------
140,000 Warner-Lambert Co. 15,645,000
- ----------------------------------------------------------------------------------------
79,030,000
- ----------------------------------------------------------------------------------------
</TABLE>
C H A R T E R
7
<PAGE> 10
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
ELECTRIC POWER-3.92%
400,000 Allegheny Power System, Inc. $ 11,700,000
- ----------------------------------------------------------------------------------------
300,000 American Electric Power Co. 12,187,500
- ----------------------------------------------------------------------------------------
320,000 Carolina Power & Light Co. 11,520,000
- ----------------------------------------------------------------------------------------
300,000 Consolidated Edison Co. of New York, Inc. 8,812,500
- ----------------------------------------------------------------------------------------
240,000 DQE, Inc. 6,360,000
- ----------------------------------------------------------------------------------------
260,000 Duke Power Co. 12,220,000
- ----------------------------------------------------------------------------------------
240,000 General Public Utilities Corp. 7,620,000
- ----------------------------------------------------------------------------------------
280,000 Houston Industries, Inc. 5,985,000
- ----------------------------------------------------------------------------------------
120,000 Northern States Power Co. 5,610,000
- ----------------------------------------------------------------------------------------
500,000 Southern Co. 11,000,000
- ----------------------------------------------------------------------------------------
300,000 Texas Utilities Co. 12,075,000
- ----------------------------------------------------------------------------------------
105,090,000
- ----------------------------------------------------------------------------------------
ELECTRONIC COMPONENTS/MISCELLANEOUS-1.36%
140,000 Emerson Electric Co. 11,707,500
- ----------------------------------------------------------------------------------------
320,000 General Electric Co. 24,800,000
- ----------------------------------------------------------------------------------------
36,507,500
- ----------------------------------------------------------------------------------------
ELECTRONIC/PC DISTRIBUTORS-0.51%
260,000 Avnet, Inc. 13,715,000
- ----------------------------------------------------------------------------------------
ELECTRONIC/DEFENSE-0.49%
360,000 Sundstrand Corp. 13,230,000
- ----------------------------------------------------------------------------------------
FINANCE (ASSET MANAGEMENT)-1.47%
300,000 Edwards (A.G.), Inc. 7,050,000
- ----------------------------------------------------------------------------------------
200,000 Merrill Lynch & Co., Inc. 12,075,000
- ----------------------------------------------------------------------------------------
200,000 Morgan Stanley Group, Inc. 10,050,000
- ----------------------------------------------------------------------------------------
133,200 PaineWebber Group, Inc. 2,780,550
- ----------------------------------------------------------------------------------------
160,000 United Assets Management Corp. 7,480,000
- ----------------------------------------------------------------------------------------
39,435,550
- ----------------------------------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-3.06%
200,000 American Express Co. 9,700,000
- ----------------------------------------------------------------------------------------
240,000 Federal Home Loan Mortgage Association 20,010,000
- ----------------------------------------------------------------------------------------
840,000 Federal National Mortgage Association 25,725,000
- ----------------------------------------------------------------------------------------
200,000 Household International, Inc. 13,825,000
- ----------------------------------------------------------------------------------------
460,000 MBNA Corp. 13,052,500
- ----------------------------------------------------------------------------------------
82,312,500
- ----------------------------------------------------------------------------------------
FOOD/PROCESSING-1.28%
180,000 ConAgra, Inc. 6,952,500
- ----------------------------------------------------------------------------------------
100,000 CPC International, Inc. 6,912,500
- ----------------------------------------------------------------------------------------
200,000 Interstate Bakeries Corp. 4,750,000
- ----------------------------------------------------------------------------------------
200,000 Nabisco Holdings Corp. 6,125,000
- ----------------------------------------------------------------------------------------
280,000 Quaker Oats Co. 9,625,000
- ----------------------------------------------------------------------------------------
34,365,000
- ----------------------------------------------------------------------------------------
</TABLE>
C H A R T E R
8
<PAGE> 11
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
HOTELS/MOTELS-0.30%
600,000 Host Marriott Corp.(a) $ 8,025,000
- ----------------------------------------------------------------------------------------
INSURANCE (MULTI-LINE PROPERTY)-4.35%
600,000 Aetna Life & Casualty Co. 42,750,000
- ----------------------------------------------------------------------------------------
500,000 Allstate Financial Corp. 19,437,500
- ----------------------------------------------------------------------------------------
300,000 CIGNA Corp. 34,012,500
- ----------------------------------------------------------------------------------------
200,000 Travelers Group, Inc. 12,300,000
- ----------------------------------------------------------------------------------------
300,000 Travelers/Aetna Property Casualty Corp.(a) 8,287,500
- ----------------------------------------------------------------------------------------
116,787,500
- ----------------------------------------------------------------------------------------
LEISURE & RECREATION-0.75%
264,400 Eastman Kodak Co. 20,226,600
- ----------------------------------------------------------------------------------------
MACHINE TOOLS-0.33%
140,000 Stanley Works 8,785,000
- ----------------------------------------------------------------------------------------
MACHINERY (MISCELLANEOUS)-0.25%
160,000 Cooper Industries, Inc. 6,800,000
- ----------------------------------------------------------------------------------------
MEDICAL (DRUGS)-7.13%
200,000 American Home Products Corp. 21,100,000
- ----------------------------------------------------------------------------------------
200,000 Johnson & Johnson 18,500,000
- ----------------------------------------------------------------------------------------
360,000 Lilly (Eli) & Co. 21,240,000
- ----------------------------------------------------------------------------------------
120,000 Merck & Co., Inc. 7,260,000
- ----------------------------------------------------------------------------------------
400,000 Pfizer Inc. 27,550,000
- ----------------------------------------------------------------------------------------
500,000 Pharmacia & Upjohn, Inc. 19,125,000
- ----------------------------------------------------------------------------------------
440,000 Rhone-Poulenc Rorer, Inc. 27,280,000
- ----------------------------------------------------------------------------------------
360,000 Schering-Plough Corp. 20,655,000
- ----------------------------------------------------------------------------------------
400,000 SmithKline Beecham PLC-ADR 21,600,000
- ----------------------------------------------------------------------------------------
160,000 Teva Pharmaceuticals Industries Ltd.-ADR 7,180,000
- ----------------------------------------------------------------------------------------
191,490,000
- ----------------------------------------------------------------------------------------
MEDICAL (PATIENT SERVICES)-3.57%
500,000 Caremark International, Inc. 13,812,500
- ----------------------------------------------------------------------------------------
300,000 Columbia/HCA Healthcare Corp. 15,937,500
- ----------------------------------------------------------------------------------------
180,000 Living Centers of America, Inc.(a) 6,660,000
- ----------------------------------------------------------------------------------------
260,000 OrNda HealthCorp(a) 7,150,000
- ----------------------------------------------------------------------------------------
160,000 PacifiCare Health System, Inc.(a) 13,420,000
- ----------------------------------------------------------------------------------------
600,000 Tenet Healthcare Corp.(a) 12,300,000
- ----------------------------------------------------------------------------------------
240,000 U.S. Healthcare, Inc. 12,510,000
- ----------------------------------------------------------------------------------------
240,000 United Healthcare Corp. 14,040,000
- ----------------------------------------------------------------------------------------
95,830,000
- ----------------------------------------------------------------------------------------
MEDICAL INSTRUMENTS/PRODUCTS-1.75%
300,000 Baxter International, Inc. 13,275,000
- ----------------------------------------------------------------------------------------
80,000 Becton Dickinson & Co. 6,450,000
- ----------------------------------------------------------------------------------------
</TABLE>
C H A R T E R
9
<PAGE> 12
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
Medical Instruments/Products-(continued)
300,000 Boston Scientific Corp.(a) $ 12,937,500
- ----------------------------------------------------------------------------------------
240,000 Omnicare, Inc. 14,400,000
- ----------------------------------------------------------------------------------------
47,062,500
- ----------------------------------------------------------------------------------------
NATURAL GAS PIPELINE-1.40%
260,000 Panhandle Eastern Pipe Line Co. 8,482,500
- ----------------------------------------------------------------------------------------
200,000 Sonat, Inc. 8,725,000
- ----------------------------------------------------------------------------------------
400,000 Williams Companies, Inc. 20,450,000
- ----------------------------------------------------------------------------------------
37,657,500
- ----------------------------------------------------------------------------------------
OFFICE PRODUCTS-0.43%
200,000 Alco Standard Corp. 11,575,000
- ----------------------------------------------------------------------------------------
OIL & GAS (SERVICES)-3.90%
3,000,000 British Gas PLC (United Kingdom) 10,657,835
- ----------------------------------------------------------------------------------------
160,000 Exxon Corp. 13,600,000
- ----------------------------------------------------------------------------------------
120,000 MAPCO, Inc. 6,990,000
- ----------------------------------------------------------------------------------------
160,000 Mobil Corp. 18,400,000
- ----------------------------------------------------------------------------------------
121,800 National Fuel Gas Co. 4,278,225
- ----------------------------------------------------------------------------------------
654,200 NorAm Energy Corp. 7,196,200
- ----------------------------------------------------------------------------------------
400,000 Occidental Petroleum Corp. 10,300,000
- ----------------------------------------------------------------------------------------
100,000 Royal Dutch Petroleum Co. 14,325,000
- ----------------------------------------------------------------------------------------
320,000 Southwest Gas Corp. 5,320,000
- ----------------------------------------------------------------------------------------
160,000 Texaco, Inc. 13,680,000
- ----------------------------------------------------------------------------------------
104,747,260
- ----------------------------------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES-0.25%
160,000 Tidewater, Inc. 6,800,000
- ----------------------------------------------------------------------------------------
PUBLISHING-0.77%
100,000 Gannett Co., Inc. 6,837,500
- ----------------------------------------------------------------------------------------
200,000 Tribune Co. 13,950,000
- ----------------------------------------------------------------------------------------
20,787,500
- ----------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS-1.81%
320,000 FelCor Suite Hotels, Inc. 9,320,000
- ----------------------------------------------------------------------------------------
300,000 National Health Investors, Inc. 9,975,000
- ----------------------------------------------------------------------------------------
300,000 Patriot American Hospitality, Inc.(a) 8,362,500
- ----------------------------------------------------------------------------------------
300,000 Spieker Properties, Inc. 7,800,000
- ----------------------------------------------------------------------------------------
400,000 Starwood Lodging Trust 13,250,000
- ----------------------------------------------------------------------------------------
48,707,500
- ----------------------------------------------------------------------------------------
RETAIL (FOOD & DRUG)-0.75%
600,000 Safeway, Inc.(a) 20,250,000
- ----------------------------------------------------------------------------------------
RETAIL (STORES)-0.80%
200,000 Circuit City Stores, Inc. 6,350,000
- ----------------------------------------------------------------------------------------
300,000 Sears, Roebuck & Co. 14,962,500
- ----------------------------------------------------------------------------------------
21,312,500
- ----------------------------------------------------------------------------------------
</TABLE>
C H A R T E R
10
<PAGE> 13
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
SCIENTIFIC INSTRUMENTS-0.56%
260,000 Varian Associates, Inc. $ 14,852,500
- ----------------------------------------------------------------------------------------
SEMICONDUCTORS-2.02%
400,000 Intel Corp. 27,100,000
- ----------------------------------------------------------------------------------------
440,000 Motorola, Inc. 26,950,000
- ----------------------------------------------------------------------------------------
54,050,000
- ----------------------------------------------------------------------------------------
TELECOMMUNICATIONS-4.89%
240,000 ADC Telecommunications(a) 10,080,000
- ----------------------------------------------------------------------------------------
500,000 A T & T Corp. 30,625,000
- ----------------------------------------------------------------------------------------
240,000 Airtouch Communications, Inc.(a) 7,500,000
- ----------------------------------------------------------------------------------------
500,000 American Portable Telecom, Inc.(a) 7,500,000
- ----------------------------------------------------------------------------------------
240,000 Andrew Corp.(a) 11,520,000
- ----------------------------------------------------------------------------------------
640,000 Frontier Corp. 20,240,000
- ----------------------------------------------------------------------------------------
160,000 Lucent Technologies, Inc.(a) 5,620,000
- ----------------------------------------------------------------------------------------
140,000 NYNEX Corp. 6,877,500
- ----------------------------------------------------------------------------------------
380,000 Pacific Telesis Group 13,015,000
- ----------------------------------------------------------------------------------------
160,000 Tellabs, Inc.(a) 8,840,000
- ----------------------------------------------------------------------------------------
240,000 Vodafone Group PLC-ADR 9,630,000
- ----------------------------------------------------------------------------------------
131,447,500
- ----------------------------------------------------------------------------------------
TELEPHONE-3.61%
280,000 Ameritech Corp. 16,345,000
- ----------------------------------------------------------------------------------------
600,000 BellSouth Corp. 24,000,000
- ----------------------------------------------------------------------------------------
400,000 Cincinnati Bell, Inc. 19,700,000
- ----------------------------------------------------------------------------------------
400,000 GTE Corp. 17,350,000
- ----------------------------------------------------------------------------------------
260,000 SBC Communications, Inc. 13,000,000
- ----------------------------------------------------------------------------------------
200,000 US West Communications Group 6,550,000
- ----------------------------------------------------------------------------------------
96,945,000
- ----------------------------------------------------------------------------------------
TEXTILES-0.27%
200,000 Liz Claiborne, Inc. 7,275,000
- ----------------------------------------------------------------------------------------
TOBACCO-1.55%
460,000 Philip Morris Companies, Inc. 41,457,500
- ----------------------------------------------------------------------------------------
Total Common Stocks 1,975,079,410
- ----------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
CONVERTIBLE CORPORATE BONDS-13.95%
AIRLINES-0.25%
$ 6,000,000 Continental Airlines, Inc., Conv. Deb., 6.75%,
04/15/06(b)
(acquired 02/27/96; cost $5,997,775) 6,660,000
- ----------------------------------------------------------------------------------------
BUILDING MATERIALS-0.19%
5,000,000 Medusa Corp., Conv. Sub. Notes, 6.00%, 11/15/03 5,156,250
- ----------------------------------------------------------------------------------------
BUSINESS SERVICES-0.64%
5,000,000 Career Horizons, Inc., Conv. Bonds, 7.00%, 11/01/02(b)
(acquired 10/16/95-11/27/95; cost $5,051,250) 10,575,000
- ----------------------------------------------------------------------------------------
5,000,000 Olsten Corp., Conv. Sub. Deb., 4.875%, 05/15/03 6,496,500
- ----------------------------------------------------------------------------------------
17,071,500
- ----------------------------------------------------------------------------------------
</TABLE>
C H A R T E R
11
<PAGE> 14
Financials
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
CHEMICALS-0.73%
$ 18,000,000 Sandoz Capital BVI Ltd., Sr. Conv. Deb., 2.00%,
10/06/02(b)
(acquired 01/09/96-03/12/96; cost $17,799,500) $ 19,507,500
- ----------------------------------------------------------------------------------------
COMPUTER MINI/PCS-0.21%
5,000,000 Unisys Corp., Conv. Sub. Notes, 8.25%, 03/15/06 5,537,500
- ----------------------------------------------------------------------------------------
COMPUTER NETWORKING-0.23%
4,000,000 3Com Corp., Conv. Sub. Notes, 10.25%, 11/01/01(b)
(acquired 11/07/95-11/20/95; cost $6,488,930) 6,220,000
- ----------------------------------------------------------------------------------------
COMPUTER PERIPHERALS-0.60%
8,000,000 EMC Corp., Conv. Sub. Notes, 4.25%, 01/01/01 9,280,000
- ----------------------------------------------------------------------------------------
5,000,000 Sanmina Corp., Conv. Sub. Notes, 5.50%, 08/15/02(b)
(acquired 08/10/95-09/22/95; cost $5,064,375) 6,887,500
- ----------------------------------------------------------------------------------------
16,167,500
- ----------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES-0.42%
12,000,000 Automatic Data Processing, Conv. Deb., 4.69%,
02/20/12(c) 6,165,000
- ----------------------------------------------------------------------------------------
5,000,000 Network Equipment Technologies, Inc., Conv. Deb.,
7.25%, 05/15/14 4,990,500
- ----------------------------------------------------------------------------------------
11,155,500
- ----------------------------------------------------------------------------------------
CONSUMER NON-DURABLES-0.23%
6,000,000 Metro Pacific Corp., Conv. Deb., 2.50%, 04/11/03(b)
(acquired 04/02/96; cost $6,000,000) 6,262,500
- ----------------------------------------------------------------------------------------
ELECTRONIC COMPONENTS/MISCELLANEOUS-1.12%
20,000,000 ADT Operations, Conv. Sub. Notes, 4.32%, 07/06/10(c) 10,250,000
- ----------------------------------------------------------------------------------------
4,000,000 Checkpoint Systems Inc., Conv. Sub. Deb., 5.25%,
11/01/05(b)
(acquired 10/17/95-11/15/95; cost $4,013,125) 6,880,000
- ----------------------------------------------------------------------------------------
6,000,000 Dovatron International, Inc., Conv. Sub. Notes, 6.00%,
10/15/02(b)
(acquired 10/06/95-04/18/96; cost $6,156,250) 6,667,500
- ----------------------------------------------------------------------------------------
6,000,000 Telxon Corp., Conv. Sub. Notes, 5.75%, 01/01/03(b)
(acquired 12/07/95; cost $6,012,000) 6,390,000
- ----------------------------------------------------------------------------------------
30,187,500
- ----------------------------------------------------------------------------------------
FINANCE (ASSET MANAGEMENT)-0.54%
8,000,000 First Financial Management, Sr. Conv. Deb., 5.00%,
12/15/99 14,440,000
- ----------------------------------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-0.41%
5,000,000 Aames Financial Corp., Conv. Sub. Deb., 5.50%,
03/15/06(b)
(acquired 02/16/96-04/23/96; cost $5,216,250) 5,925,000
- ----------------------------------------------------------------------------------------
5,000,000 Cityscape Financial Corp., Conv. Sub. Deb., 6.00%,
05/01/06(b)
(acquired 04/26/96; cost $5,013,750) 5,025,000
- ----------------------------------------------------------------------------------------
10,950,000
- ----------------------------------------------------------------------------------------
LEISURE & RECREATION-0.38%
10,000,000 IMAX Corp., Conv. Deb., 5.75%, 04/01/03(b)
(acquired 04/02/96; cost $10,000,000) 10,075,000
- ----------------------------------------------------------------------------------------
MACHINERY (MISCELLANEOUS)-0.82%
18,000,000 Thermo Electron Corp., Conv. Sub. Deb., 4.25%,
01/01/03(b)
(acquired 11/29/95-04/01/96; cost $19,928,075) 22,005,000
- ----------------------------------------------------------------------------------------
</TABLE>
C H A R T E R
12
<PAGE> 15
Financials
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
MEDICAL (DRUGS)-0.44%
$ 10,000,000 ICN Pharmaceuticals Inc., Conv. Sub. Notes, 8.50%,
11/15/99 $ 11,705,000
- ----------------------------------------------------------------------------------------
MEDICAL (PATIENT SERVICES)-3.94%
4,000,000 American Medical Response, Conv. Sub. Notes, 5.25%,
02/01/01(b)
(acquired 01/03/96; cost $4,001,250) 4,590,000
- ----------------------------------------------------------------------------------------
4,000,000 ARV Assisted Living, Inc, Conv. Sub. Notes, 6.75%,
04/01/06 4,300,000
- ----------------------------------------------------------------------------------------
4,000,000 Genesis Health Ventures, Sr. Conv. Sub. Deb., 6.00%,
11/30/03 8,001,800
- ----------------------------------------------------------------------------------------
12,000,000 Healthsource, Inc., Conv. Sub. Notes, 5.00%,
03/01/03(b)
(acquired 03/01/96; cost $12,000,000) 11,760,000
- ----------------------------------------------------------------------------------------
6,000,000 HEALTHSOUTH Rehabilitation Corp., Conv. Sub. Deb.,
5.00%, 04/01/01 11,994,000
- ----------------------------------------------------------------------------------------
6,000,000 Multicare Companies, Conv. Sub. Deb., 7.00%,
03/15/03(b)
(acquired 11/30/95; cost $6,210,000) 7,411,200
- ----------------------------------------------------------------------------------------
6,000,000 NABI, Inc., Conv. Sub. Notes, 6.50%, 02/01/03(b)
(acquired 02/02/96-04/24/96; cost $6,271,768) 6,570,000
- ----------------------------------------------------------------------------------------
12,000,000 Phycor, Inc., Conv. Sub. Deb., 4.50%, 02/15/03 12,540,000
- ----------------------------------------------------------------------------------------
5,000,000 Prime Hospitality Corp., Conv. Sub. Notes, 7.00%,
04/15/02 7,050,000
- ----------------------------------------------------------------------------------------
12,000,000 Quintiles Transnational, Conv. Sub. Notes, 4.25%,
05/31/00(b)
(acquired 04/23/96; cost $12,027,000) 13,080,000
- ----------------------------------------------------------------------------------------
12,000,000 Tenet Healthcare Corp., Conv. Sub. Notes, 6.00%,
12/01/05 12,960,000
- ----------------------------------------------------------------------------------------
5,400,000 Veterinary Centers of America, Conv. Sub. Deb., 5.25%,
05/01/06(b)
(acquired 04/03/96; cost $5,400,000) 5,535,000
- ----------------------------------------------------------------------------------------
105,792,000
- ----------------------------------------------------------------------------------------
OFFICE AUTOMATION-0.52%
8,000,000 Danka Business Systems, Conv. Sub. Deb., 6.75%,
04/01/02(b)
(acquired 03/06/95-11/30/95; cost $9,371,720) 13,970,000
- ----------------------------------------------------------------------------------------
OFFICE PRODUCTS-0.26%
5,000,000 U.S. Office Products Co., Conv. Sub. Notes, 5.50%,
02/01/01 6,875,000
- ----------------------------------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES-0.27%
5,000,000 Pride Petroleum Services, Inc., Conv. Sub. Deb., 6.25%,
02/15/06 7,450,000
- ----------------------------------------------------------------------------------------
POLLUTION CONTROL-0.52%
6,000,000 Sanifill, Inc., Conv. Sub. Deb., 5.00%, 03/01/06 6,540,000
- ----------------------------------------------------------------------------------------
6,000,000 U.S. Filter Corp., Conv. Sub. Notes, 6.00%, 09/15/05(b)
(acquired 02/01/96; cost $7,110,960) 7,605,000
- ----------------------------------------------------------------------------------------
14,145,000
- ----------------------------------------------------------------------------------------
RETAIL (STORES)-0.33%
8,000,000 Federated Department Stores, Conv. Notes., 5.00%,
10/01/03 9,080,000
- ----------------------------------------------------------------------------------------
TELECOMMUNICATIONS-0.90%
12,000,000 General Instrument Corp., Jr. Conv. Sub. Notes, 5.00%,
06/15/00 16,695,000
- ----------------------------------------------------------------------------------------
6,000,000 World Communication Corp., Conv. Sub. Notes, 5.00%,
08/15/03 7,590,000
- ----------------------------------------------------------------------------------------
24,285,000
- ----------------------------------------------------------------------------------------
Total Convertible Corporate Bonds 374,697,750
- ----------------------------------------------------------------------------------------
</TABLE>
C H A R T E R
13
<PAGE> 16
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
CONVERTIBLE PREFERRED STOCKS-5.47%
AIRLINES-0.50%
200,000 Continental Airlines-$4.39 Conv. Pfd.(b)
(acquired 11/21/95-11/22/95; cost $10,007,000) $ 13,450,000
- ----------------------------------------------------------------------------------------
BUILDING MATERIALS-0.16%
74,500 Greenfield Capital Trust-$3.00 Conv. Pfd.(b)
(acquired 04/18/96-04/19/96; cost $3,736,000) 4,283,750
- ----------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES-0.48%
120,000 Ceridian Corp.-$2.75 Conv. Pfd. 12,840,000
- ----------------------------------------------------------------------------------------
COMPUTER MINI/PCS-0.33%
160,000 Wang Laboratories Inc.-Series B, $3.25 Dep. Conv.
Pfd.(b)
(acquired 02/21/96-04/24/96; cost $8,270,386) 8,760,000
- ----------------------------------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-0.71%
100,000 Penncorp Financial Group-$3.37 Conv. Pfd. 7,450,000
- ----------------------------------------------------------------------------------------
160,000 SunAmerica Inc.-Series E, $3.10 Dep. Conv. Pfd. 11,640,000
- ----------------------------------------------------------------------------------------
19,090,000
- ----------------------------------------------------------------------------------------
FUNERAL SERVICES-0.99%
300,000 SCI Financial LLC-Series A, $3.125 Conv. Pfd. 26,550,000
- ----------------------------------------------------------------------------------------
INSURANCE (LIFE & HEALTH)-0.27%
100,000 Conseco, Inc.-$4.278 Conv. Pfd. PRIDES 7,187,500
- ----------------------------------------------------------------------------------------
INSURANCE (MULTI-LINE PROPERTY)-0.22%
160,000 PMI Group, Inc.-$2.30 Exch. Conv. Pfd. 6,160,000
- ----------------------------------------------------------------------------------------
MEDICAL (PATIENT SERVICES)-0.27%
260,000 FHP International Corp.-Series A, $1.25 Conv. Pfd. 7,117,500
- ----------------------------------------------------------------------------------------
OIL & GAS SERVICES-0.74%
340,000 Atlantic Richfield Co.-$2.228 Exch. Conv. Pfd. 9,605,000
- ----------------------------------------------------------------------------------------
400,000 Enron Corp.-$1.359 Conv. Pfd. ACES 10,250,000
- ----------------------------------------------------------------------------------------
19,855,000
- ----------------------------------------------------------------------------------------
RETAIL (STORES)-0.30%
160,000 Ann Taylor Finance Trust-$4.25 Conv. Pfd.(b)
(acquired 04/18/96; cost $8,000,000) 8,060,000
- ----------------------------------------------------------------------------------------
TELECOMMUNICATIONS-0.31%
120,000 LCI International, Inc.-$1.25 Exch. Conv. Pfd. 8,250,000
- ----------------------------------------------------------------------------------------
UTILITIES (MISCELLANEOUS)-0.19%
200,000 MCN Corp.-$2.013 Conv. Pfd. PRIDES(b)
(acquired 04/22/96-04/23/96; cost $4,753,564) 5,275,000
- ----------------------------------------------------------------------------------------
Total Convertible Preferred Stocks 146,878,750
- ----------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT
U. S. TREASURY NOTES-5.34%
$ 12,000,000 6.125%, 05/31/97 12,047,520
- ----------------------------------------------------------------------------------------
12,000,000 5.625%, 06/30/97 11,980,800
- ----------------------------------------------------------------------------------------
12,000,000 5.875%, 07/31/97 12,008,640
- ----------------------------------------------------------------------------------------
</TABLE>
C H A R T E R
14
<PAGE> 17
Financials
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET VALUE
<S> <C> <C>
U. S. TREASURY NOTES (continued)
$ 12,000,000 6.00%, 08/31/97 $ 12,019,680
- ----------------------------------------------------------------------------------------
12,000,000 5.75%, 09/30/97 11,979,240
- ----------------------------------------------------------------------------------------
12,000,000 5.625%, 10/31/97 11,953,080
- ----------------------------------------------------------------------------------------
12,000,000 5.375%, 11/30/97 11,896,320
- ----------------------------------------------------------------------------------------
12,000,000 5.25%, 12/31/97 11,867,400
- ----------------------------------------------------------------------------------------
12,000,000 5.00%, 01/31/98 11,802,000
- ----------------------------------------------------------------------------------------
12,000,000 5.125%, 02/28/98 11,815,920
- ----------------------------------------------------------------------------------------
12,000,000 6.125%, 03/31/98 12,023,040
- ----------------------------------------------------------------------------------------
12,000,000 5.875%, 04/30/98 11,968,200
- ----------------------------------------------------------------------------------------
Total U. S. Treasury Notes 143,361,840
- ----------------------------------------------------------------------------------------
REPURCHASE AGREEMENT-1.83%(d)
49,111,306 Daiwa Securities America Inc., 5.34%, 05/01/96(e) 49,111,306
- ----------------------------------------------------------------------------------------
Total Repurchase Agreement 49,111,306
- ----------------------------------------------------------------------------------------
TOTAL INVESTMENTS-100.13% 2,689,129,056
- ----------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-(0.13%) (3,488,512)
- ----------------------------------------------------------------------------------------
NET ASSETS-100.00% $2,685,640,544
========================================================================================
</TABLE>
Abbreviations:
ACES - Automatic Convertible Exchange Security
ADR - American Depository Receipt
Conv. - Convertible
Deb. - Debenture
Dep. - Depository
Exch. - Exchangeable
Jr. - Junior
Pfd. - Preferred
PRIDES - Preferred Redemption Increase Dividend Equity Security
Sr. - Senior
Sub. - Subordinated
Notes to Schedule of Investments:
(a) Non-Income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Directors. The
aggregate market value of these securities at April 30, 1996 was
$229,429,950, which represented 8.54% of the net assets.
(c) Zero coupon bond. The interest rate shown represents the rate of the
original issue discount.
(d) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value as being 102% of the sale price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(e) Joint repurchase agreement entered into 04/30/96 with a maturity value of
$767,124,680. Collateralized by $737,151,000 U.S. Treasury obligations, 0%
to 11.25% due 05/15/96 to 02/15/21.
See Notes to Financial Statements.
C H A R T E R
15
<PAGE> 18
Financials
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1996
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $2,367,680,650) $2,689,129,056
- ------------------------------------------------------------------------------------
Receivable for:
Investments sold 711,503
- ------------------------------------------------------------------------------------
Capital stock sold 11,807,670
- ------------------------------------------------------------------------------------
Dividends and interest 9,027,081
- ------------------------------------------------------------------------------------
Investment for deferred compensation plan 22,973
- ------------------------------------------------------------------------------------
Other assets 63,473
- ------------------------------------------------------------------------------------
Total assets 2,710,761,756
- ------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 17,811,700
- ------------------------------------------------------------------------------------
Capital stock reacquired 4,384,129
- ------------------------------------------------------------------------------------
Deferred compensation 22,973
- ------------------------------------------------------------------------------------
Accrued advisory fees 1,351,823
- ------------------------------------------------------------------------------------
Accrued administrative services fees 7,677
- ------------------------------------------------------------------------------------
Accrued distribution fees 993,388
- ------------------------------------------------------------------------------------
Accrued transfer agent fees 329,217
- ------------------------------------------------------------------------------------
Accrued operating expenses 220,305
- ------------------------------------------------------------------------------------
Total liabilities 25,121,212
- ------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $2,685,640,544
====================================================================================
NET ASSETS:
Class A $2,362,151,296
====================================================================================
Class B $ 296,376,958
====================================================================================
Institutional Class $ 27,112,290
====================================================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
Class A:
Authorized 750,000,000
- ------------------------------------------------------------------------------------
Outstanding 222,398,410
====================================================================================
Class B:
Authorized 750,000,000
- ------------------------------------------------------------------------------------
Outstanding 27,923,120
====================================================================================
Institutional Class:
Authorized 200,000,000
- ------------------------------------------------------------------------------------
Outstanding 2,543,865
====================================================================================
Class A:
Net asset value and redemption price per share $ 10.62
====================================================================================
Offering price per share:
(Net asset value of $10.62 divided by 94.50%) $ 11.24
====================================================================================
Class B:
Net asset value and offering price per share $ 10.61
====================================================================================
INSTITUTIONAL CLASS:
Net asset value, offering and redemption price per share $ 10.66
====================================================================================
</TABLE>
See Notes to Financial Statements.
C H A R T E R
16
<PAGE> 19
Financials
STATEMENT OF OPERATIONS
For the six months ended April 30, 1996
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends $ 23,748,378
- -----------------------------------------------------------------------------------
Interest 11,871,945
- -----------------------------------------------------------------------------------
Total investment income 35,620,323
- -----------------------------------------------------------------------------------
EXPENSES:
Advisory fees 7,411,372
- -----------------------------------------------------------------------------------
Administrative services fees 52,944
- -----------------------------------------------------------------------------------
Custodian fees 104,560
- -----------------------------------------------------------------------------------
Directors' fees 9,717
- -----------------------------------------------------------------------------------
Distribution fees-Class A 3,206,727
- -----------------------------------------------------------------------------------
Distribution fees-Class B 830,340
- -----------------------------------------------------------------------------------
Transfer agent fees-Class A 1,604,052
- -----------------------------------------------------------------------------------
Transfer agent fees-Class B 154,662
- -----------------------------------------------------------------------------------
Transfer agent fees-Institutional Class 2,811
- -----------------------------------------------------------------------------------
Other 315,926
- -----------------------------------------------------------------------------------
Total expenses 13,693,111
- -----------------------------------------------------------------------------------
Less fees waived by advisor (43,303)
- -----------------------------------------------------------------------------------
Net expenses 13,649,808
- -----------------------------------------------------------------------------------
Net investment income 21,970,515
- -----------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES,
FOREIGN CURRENCIES AND FUTURES CONTRACTS:
Net realized gain (loss) on sales of:
Investment securities 167,373,663
- -----------------------------------------------------------------------------------
Foreign currencies 51,978
- -----------------------------------------------------------------------------------
Futures contracts (153,728)
- -----------------------------------------------------------------------------------
167,271,913
- -----------------------------------------------------------------------------------
UNREALIZED APPRECIATION (DEPRECIATION) OF:
Investment securities 37,124,823
- -----------------------------------------------------------------------------------
Foreign currencies (8,759)
- -----------------------------------------------------------------------------------
37,116,064
- -----------------------------------------------------------------------------------
Net gain on investment securities, foreign currencies and futures
contracts 204,387,977
- -----------------------------------------------------------------------------------
Net increase in net assets resulting from operations $226,358,492
===================================================================================
</TABLE>
See Notes to Financial Statements.
C H A R T E R
17
<PAGE> 20
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 $ 21,970,515 $ 26,980,252
- ----------------------------------------------------------------------------------------
Net realized gain on sales of investment securities,
foreign currencies and futures contracts 167,271,913 179,125,169
- ----------------------------------------------------------------------------------------
Net unrealized appreciation of investment
securities, foreign currencies and futures
contracts 37,116,064 200,981,202
- ----------------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 226,358,492 407,086,623
- ----------------------------------------------------------------------------------------
Dividends to shareholders from net investment income:
Class A (16,319,515) (34,589,802)
- ----------------------------------------------------------------------------------------
Class B (680,020) (55,355)
- ----------------------------------------------------------------------------------------
Institutional Class (246,819) (536,096)
- ----------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains
on investments:
Class A (170,497,889) (57,274,888)
- ----------------------------------------------------------------------------------------
Class B (8,672,692) (12,593)
- ----------------------------------------------------------------------------------------
Institutional Class (2,168,635) (759,222)
- ----------------------------------------------------------------------------------------
Net equalization credits (charges):
Class A 223,280 (284,916)
- ----------------------------------------------------------------------------------------
Class B 58,770 24,584
- ----------------------------------------------------------------------------------------
Institutional Class (777) (13,270)
- ----------------------------------------------------------------------------------------
Share transactions-net:
Class A 367,314,869 86,486,354
- ----------------------------------------------------------------------------------------
Class B 221,331,639 66,768,426
- ----------------------------------------------------------------------------------------
Institutional Class 1,393,003 (206,795)
- ----------------------------------------------------------------------------------------
Net increase in net assets 618,093,706 466,633,050
- ----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 2,067,546,838 1,600,913,788
- ----------------------------------------------------------------------------------------
End of period $2,685,640,544 $2,067,546,838
========================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $2,196,697,851 $1,606,658,340
- ----------------------------------------------------------------------------------------
Undistributed net investment income 5,107,997 102,563
- ----------------------------------------------------------------------------------------
Undistributed net realized gain on sales of
investment securities, foreign currencies and
futures contracts 162,395,048 176,462,351
- ----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities and
futures contracts 321,439,648 284,323,584
- ----------------------------------------------------------------------------------------
$2,685,640,544 $2,067,546,838
========================================================================================
</TABLE>
See Notes to Financial Statements.
C H A R T E R
18
<PAGE> 21
Financials
NOTES TO FINANCIAL STATEMENTS
April 30, 1996
(Unaudited)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Charter 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: The Fund, AIM Weingarten Fund, AIM Constellation Fund and AIM
Aggressive Growth Fund. The Fund currently offers three different classes of
shares: Class A shares, Class B 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 provide growth of capital, with current income as a secondary objective.
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Security Valuations-Except as provided in the next sentence, 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. Exchange listed convertible bonds are valued at
the mean between the closing bid and asked prices obtained from a
broker-dealer. 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. 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
prices are not provided by any of the above methods are valued at the mean
between last bid and asked prices based upon quotes furnished by independent
sources. Securities for which market quotations are not readily available are
valued at fair value as determined in good faith by or under the supervision
of the Company's officers in a manner specifically authorized by the Board of
Directors of the Company. Short-term obligations having 60 days or less to
maturity are valued at amortized cost which approximates market value.
Generally, trading in foreign securities is substantially completed each day
at various times prior to the close of the New York Stock Exchange. The
values of such securities used in computing the net asset value of the Fund's
shares are determined as of such times. Foreign currency exchange rates are
also generally determined prior to the close of the New York Stock Exchange.
Occasionally, events affecting the values of such securities and such
exchange rates may occur between the times at which they are determined and
the close of the New York Stock Exchange which will not be reflected in the
computation of the Fund's net asset value. If events materially affecting the
value of such securities occur during such period, then these securities will
be valued at their fair value as determined in good faith by or under the
supervision of the Board of Directors.
B. Securities Transactions, Investment Income and Distributions-Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date
and is recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date.
C. Federal Income Taxes-The Fund intends to comply with the requirements of the
Internal Revenue Code necessary to qualify as a regulated investment company
and, as such, will not be subject to federal income taxes on otherwise
taxable income (including net realized capital gains) which is distributed to
shareholders. Therefore, no provision for federal income taxes is recorded in
the financial statements.
D. Expenses-Operating expenses directly attributable to a class of shares are
charged to that class' operations. Expenses which are applicable to all
classes, e.g. advisory fees, are allocated among them.
E. Equalization-The Fund follows the accounting practice known as equalization
by which a portion of the proceeds from sales and costs of repurchases of
Fund shares, equivalent on a per share basis to the
C H A R T E R
19
<PAGE> 22
Financials
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES-continued
amount of undistributed net investment income, is credited or charged to
undistributed net income when the transaction is recorded so that the
undistributed net investment income per share is unaffected by sales or
redemptions of Fund shares.
F. Foreign Currency Translations-Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollar
amounts at date of valuation. Purchases and sales of portfolio securities and
income items denominated in foreign currencies are translated into U.S.
dollar amounts on the respective dates of such transactions.
G. 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.
H. 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 advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 1.0% of
the first $30 million of the Fund's average daily net assets, plus 0.75% of the
Fund's average daily net assets in excess of $30 million to and including $150
million, plus 0.625% of the Fund's average daily net assets in excess of $150
million. AIM has agreed to voluntarily waive a portion of its advisory fees paid
by the Fund to AIM to the extent necessary to reduce the fees paid by the Fund
at net asset levels higher than those currently incorporated in the present
advisory fee schedule. AIM will receive a fee calculated at the annual rate of
1.0% of the first $30 million of the Fund's average daily net assets, plus 0.75%
of the Fund's average daily net assets in excess of $30 million to and including
$150 million, plus 0.625% of the Fund's average daily net assets in excess of
$150 million to and including $2 billion, plus 0.60% of the Fund's average daily
net assets in excess of $2 billion. The approval of Board of Directors would be
necessary before AIM can discontinue this waiver. During the six months ended
April 30, 1996, AIM waived fees of $43,303. Under the terms of a master
sub-advisory agreement between AIM and A I M Capital Management, Inc. ("AIM
Capital"), AIM pays AIM Capital 50% of the amount paid by the Fund to AIM. These
agreements require AIM to reduce its fees or, if necessary, make payments to the
Fund to the extent required to satisfy any expense limitations imposed by the
securities laws or regulations thereunder of any state in which the Fund's
shares are qualified for sale.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the six months ended April 30, 1996, AIM
was reimbursed $52,944 for such services.
The Fund, pursuant to a transfer agency and services agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") for certain costs incurred in providing
transfer agency services to the Class A and Class B shares. During the six
months ended April 30, 1996, AFS was paid $916,804 for such services. During the
six months ended April 30, 1996, the Fund paid A I M Institutional Fund
Services, Inc. ("AIFS") $2,811 for shareholder and transfer agency services with
respect to the Institutional Class.
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 and Class B shares and a master distribution
C H A R T E R
20
<PAGE> 23
Financials
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES-continued
agreement with Fund Management Company ("FMC") to serve as the distributor for
the Institutional Class. The Company has adopted Plans pursuant to Rule 12b-1
under the 1940 Act with respect to the Fund's Class A shares (the "Class A
Plan") and with respect to the Fund's Class B shares (the "Class B Plan")
(collectively, the "Plans"). The Fund, pursuant to the Class A Plan, pays AIM
Distributors compensation at the annual rate of 0.30% of the average daily net
assets attributable to the Class A shares. The Class A Plan is designed to
compensate AIM Distributors for certain promotional and other sales related
costs and provides periodic payments to selected dealers and financial
institutions who furnish continuing personal shareholder services to their
customers who purchase and own Class A shares of the Fund. The Fund, pursuant to
the Class B Plan, pays AIM Distributors compensation at an annual rate of 1.00%
of the average daily net assets attributable to the Class B shares. Of this
amount, the Fund may pay a service fee of 0.25% of the average daily net assets
of the Class B shares to selected dealers and financial institutions who furnish
continuing personal shareholder services to their customers who purchase and own
Class B shares of the Fund. Any amounts not paid as a service fee under such
Plans would constitute an asset-based sales charge. The Plans also impose a cap
on the total sales charges, including asset-based sales charges, that may be
paid by the respective classes. AIM Distributors may, from time to time, assign,
transfer or pledge to one or more designees, its rights to all or a designed
portion of (a) compensation received by AIM Distributors from the Fund pursuant
to the Class B Plan (but not AIM Distributors' duties and obligations pursuant
to the Class B Plan), and (b) any contingent deferred sales charges received by
AIM Distributors related to the Class B shares. During the six months ended
April 30, 1996, the Class A and Class B shares paid AIM Distributors $3,206,727
and $830,340, respectively, as compensation under the Plans.
AIM Distributors received commissions of $1,459,458 from sales of shares of
the Class A shares of the Fund 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 Class A shares. During the six months
ended April 30, 1996, AIM Distributors received commissions of $5,320 in
contingent deferred sales charges imposed on redemptions of Class A and Class B
shares. 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 $4,853
for services rendered by Kramer, Levin, Naftalis, Nessen, Kamin & Frankel as
counsel to the Company's directors. A member of that firm is a director of the
Company.
NOTE 3-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 4-BANK BORROWINGS
The Fund has a $28,500,000 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-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
$2,749,941,199 and $2,343,141,921, 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 $337,678,540
- ------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (16,670,134)
- ------------------------------------------------------------------------------
Net unrealized appreciation of investment securities $321,008,406
==============================================================================
Cost of investments for tax purposes is $2,368,120,650.
</TABLE>
C H A R T E R
21
<PAGE> 24
Financials
NOTE 6-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 40,954,152 $422,011,757 40,727,782 $396,439,839
- -------------------------------------------------------------------------------------------------------------------------
Class B* 21,494,419 221,190,414 6,409,868 67,237,422
- -------------------------------------------------------------------------------------------------------------------------
Institutional Class 179,225 1,865,273 335,121 3,269,772
- -------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
- -------------------------------------------------------------------------------------------------------------------------
Class A 17,944,669 175,875,357 10,283,705 77,653,310
- -------------------------------------------------------------------------------------------------------------------------
Class B* 904,899 8,867,000 5,996 64,162
- -------------------------------------------------------------------------------------------------------------------------
Institutional Class 229,412 2,256,048 134,103 1,130,381
- -------------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (22,304,016) (230,572,245) (42,561,203) (387,606,795)
- -------------------------------------------------------------------------------------------------------------------------
Class B* (841,810) (8,725,776) (50,252) (533,158)
- -------------------------------------------------------------------------------------------------------------------------
Institutional Class (261,115) (2,728,317) (519,822) (4,606,948)
- -------------------------------------------------------------------------------------------------------------------------
58,299,835 $590,039,511 14,765,298 $153,047,985
=========================================================================================================================
</TABLE>
* Class B shares commenced sales on June 26, 1995.
NOTE 7-FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share of the
Institutional Class capital stock outstanding during the six months ended April
30, 1996, each of the years in the four-year period ended October 31, 1995 and
the period July 30, 1991 (date operations commenced) through October 31, 1991.
<TABLE>
<CAPTION>
OCTOBER 31,
APRIL 30, ------------------------------------------------
1996 1995 1994 1993 1992 1991
--------- ------- ------- ------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.66 $ 8.93 $ 9.48 $ 8.38 $ 8.42 $7.92
- ---------------------------------------------------------------- ------- ------- ------- ------- ------ -----
Income from investment operations:
Net investment income 0.13 0.23 0.25 0.19 0.20 0.05
- ---------------------------------------------------------------- ------- ------- ------- ------- ------ -----
Net gains (losses) on securities (both realized and
unrealized) 0.87 2.07 (0.44) 1.23 0.16 0.45
- ---------------------------------------------------------------- ------- ------- ------- ------- ------ -----
Total from investment operations 1.00 2.30 (0.19) 1.42 0.36 0.50
- ---------------------------------------------------------------- ------- ------- ------- ------- ------ -----
Less distributions:
Dividends from net investment income (0.10) (0.24) (0.20) (0.32) (0.17) --
- ---------------------------------------------------------------- ------- ------- ------- ------- ------ -----
Distributions from capital gains (0.90) (0.33) (0.16) -- (0.23) --
- ---------------------------------------------------------------- ------- ------- ------- ------- ------ -----
Total distributions (1.00) (0.57) (0.36) (0.32) (0.40) --
- ---------------------------------------------------------------- ------- ------- ------- ------- ------ -----
Net asset value, end of period $ 10.66 $ 10.66 $ 8.93 $ 9.48 $ 8.38 $8.42
================================================================ ======= ======= ======= ======= ====== =====
Total return(a) 10.23% 27.45% (2.02)% 17.39% 4.53% 6.31%
================================================================ ======= ======= ======= ======= ====== =====
Net assets, end of period (000s omitted) $27,112 $25,538 $21,840 $24,196 $7,800 $ 775
================================================================ ======= ======= ======= ======= ====== =====
Ratio of expenses to average net assets 0.71%(b) 0.74% 0.73% 0.79% 0.87% 1.00%(c)
================================================================ ======= ======= ======= ======= ====== =====
Ratio of net investment income to average net assets 2.33%(b) 1.98% 2.76% 2.26% 2.44% 2.43%(c)
================================================================ ======= ======= ======= ======= ====== =====
Portfolio turnover rate 100% 161% 126% 144% 95% 144%
================================================================ ======= ======= ======= ======= ====== =====
</TABLE>
(a) For periods less than one year, total return is not annualized.
(b) Ratios are annualized and based on average daily net assets of $26,314,408.
(c) Annualized.
C H A R T E R
22
<PAGE> 25
Directors & Officers
<TABLE>
<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 Institutional Fund
Cortland Trust Inc. Services, Inc.
Scott G. Lucas 11 Greenway Plaza
Carl Frischling Senior Vice President Suite 1919
Partner Houston, TX 77046
Kramer, Levin, Naftalis, Nessen, Carol F. Relihan
Kamin & Frankel Senior Vice President and Secretary CUSTODIAN
State Street Bank and
Robert H. Graham Jonathan C. Schoolar Trust Company
President and Chief Operating Officer Senior Vice President 225 Franklin Street
A I M Management Group Inc. Boston, MA 02110
Melville B. Cox
John F. Kroeger Vice President COUNSEL TO THE FUND
Formerly, Consultant Ballard Spahr
Wendell & Stockel Associates, Inc. Dana R. Sutton Andrews & Ingersoll
Vice President and Assistant Treasurer 1735 Market Street
Lewis F. Pennock Philadelphia, PA 19103
Attorney P. Michelle Grace
Assistant Secretary COUNSEL TO THE DIRECTORS
Ian W. Robinson Kramer, Levin, Naftalis,
Consultant; Formerly Executive David L. Kite Nessen, Kamin & Frankel
Vice President and Assistant Secretary 919 Third Avenue
Chief Financial Officer New York, NY 10022
Bell Atlantic Management Nancy L. Martin
Services, Inc. Assistant Secretary DISTRIBUTOR
Fund Management Company
Louis S. Sklar Ofelia M. Mayo 11 Greenway Plaza
Executive Vice President Assistant Secretary Suite 1919
Hines Interests Houston, TX 77046
Limited Partnership Kathleen J. Pflueger
Assistant Secretary
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
Mary J. Benson
Assistant Treasurer
</TABLE>
C H A R T E R
23
<PAGE> 26
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 Institutional Class performance figures are
historical and reflect reinvestment of all distributions and changes in net
asset value.
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 The Dow Jones Industrial Average (DJIA) is an unmanaged composite of the
performance of 30 large-company stocks.
o An investment cannot be made in the index listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect
sales charges.
C O N S T E L L A T I O N
24
<PAGE> 27
Management's
Discussion & Analysis
- -----------------------
AIM Constellation
Fund's Institutional
Class total return
was 10.52%
during the
six-month period
ended
April 30, 1996.
- -----------------------
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. Green-span 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.
================================================================================
PORTFOLIO HOLDINGS (AS OF APRIL 30, 1996)
================================================================================
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)
================================================================================
C O N S T E L L A T I O N
25
<PAGE> 28
Management's
Discussion & Analysis
YOUR INVESTMENT PORTFOLIO
AIM Constellation Fund's Institutional Class total return was 10.52% during the
six-month period ended April 30, 1996. The net assets of the Institutional
Class grew from $138.9 million to $218.3 million during the last six months.
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.
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's Institutional Class will return
34.09% as it did in the fiscal year ending October 31, 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's Institutional Class to an
outstanding average annual return, as shown by the chart on the following page.
- ---------------------
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.
- ---------------------
C O N S T E L L A T I O N
26
<PAGE> 29
Long-Term
Performance
=======================================
AVERAGE ANNUAL
TOTAL RETURNS
=======================================
As of March 31, 1996
(the most recent calendar quarter)
SINCE INCEPTION
(4/8/92) 20.50%
3 YEARS 19.57
1 YEAR 32.91
========================================
================================================================================
Growth of a $10,000 Investment
================================================================================
4/8/92-4/30/96
Past performance cannot guarantee comparable future results.
AIM Constellation Fund
(Institutional Class)
4/8/92 10,000
12/31/92 12,173
12/31/93 14,321
12/31/94 14,579
12/31/95 19,850
4/30/96 22,296
Source: Towers Data Systems HYPO(R)
================================================================================
For Fund performance calculations, please refer to page 24.
C O N S T E L L A T I O N
27
<PAGE> 30
Financials
SCHEDULE OF INVESTMENTS
April 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <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>
C O N S T E L L A T I O N
28
<PAGE> 31
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <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>
C O N S T E L L A T I O N
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<PAGE> 32
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
- -----------------------------------------------------------------------------------------
3,000,000 MBNA Corp. 85,125,000
- -----------------------------------------------------------------------------------------
</TABLE>
C O N S T E L L A T I O N
30
<PAGE> 33
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
Finance (Consumer Credit)-continued
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
- -----------------------------------------------------------------------------------------
MACHINE TOOLS-0.15%
400,000 Kennametal, Inc. 15,150,000
- -----------------------------------------------------------------------------------------
</TABLE>
C O N S T E L L A T I O N
31
<PAGE> 34
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
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
- -----------------------------------------------------------------------------------------
1,350,000 Lincare Holdings, Inc.(a) 52,396,875
- -----------------------------------------------------------------------------------------
1,000,000 Living Centers of America, Inc.(a) 37,000,000
- -----------------------------------------------------------------------------------------
</TABLE>
C O N S T E L L A T I O N
32
<PAGE> 35
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
Medical (Patient Services)-continued
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>
C O N S T E L L A T I O N
33
<PAGE> 36
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <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>
C O N S T E L L A T I O N
34
<PAGE> 37
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <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>
C O N S T E L L A T I O N
35
<PAGE> 38
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <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>
C O N S T E L L A T I O N
36
<PAGE> 39
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
<C> <S> <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.
C O N S T E L L A T I O N
37
<PAGE> 40
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 asset 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.
C O N S T E L L A T I O N
38
<PAGE> 41
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.
C O N S T E L L A T I O N
39
<PAGE> 42
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.
C O N S T E L L A T I O N
40
<PAGE> 43
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
C O N S T E L L A T I O N
41
<PAGE> 44
Financials
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES-continued
income taxes on otherwise taxable income (including net realized capital
gains) which is distributed to shareholders. Therefore, no provision for
federal income taxes is recorded in the financial statements.
D. Expenses--Operating expenses directly attributable to a class of shares are
charged to that class' operations. Expenses which are applicable to both
classes, e.g. advisory fees, are allocated between them.
E. Foreign Currency 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
C O N S T E L L A T I O N
42
<PAGE> 45
Financials
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES-continued
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 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>
C O N S T E L L A T I O N
43
<PAGE> 46
Financials
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.
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>
C O N S T E L L A T I O N
44
<PAGE> 47
Financials
NOTE 9-FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share of the
Institutional Class capital stock outstanding during the six months ended April
30, 1996, each of the years in the three-year period ended October 31, 1995 and
the period April 8, 1992 (date operations commenced) through October 31, 1992.
<TABLE>
<CAPTION>
OCTOBER 31,
APRIL 30, --------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 24.05 $ 18.49 $ 17.13 $ 13.27 $ 12.29
- ---------------------------- ------ ------ ------ ------ ------
Income from investment
operations:
Net investment income
(loss) 0.03 0.02 0.03 -- (0.01)
- ---------------------------- ------ ------ ------ ------ ------
Net gains on securities
(both realized and
unrealized) 2.38 6.06 1.33 3.86 0.99
- ---------------------------- ------ ------ ------ ------ ------
Total from investment
operations 2.41 6.08 1.36 3.86 0.98
- ---------------------------- ------ ------ ------ ------ ------
Less distributions:
Distributions from capital
gains (0.75) (0.52) -- -- --
- ---------------------------- ------ ------ ------ ------ ------
Net asset value, end of
period $ 25.71 $ 24.05 $ 18.49 $ 17.13 $ 13.27
============================ ====== ====== ====== ====== ======
Total return(a) 10.52% 34.09% 7.94% 29.09% 7.97%
============================ ====== ====== ====== ====== ======
Net assets, end of period
(000s omitted) $218,264 $138,918 $39,847 $12,338 $ 3,087
============================ ====== ====== ====== ====== ======
Ratio of expenses to average
net assets 0.64%(b) 0.66% 0.69% 0.87% 0.91%(c)
============================ ====== ====== ====== ====== ======
Ratio of net investment
income (loss) to average
net assets 0.34%(b) 0.18% 0.36% 0.04% (0.12)%(c)
============================ ====== ====== ====== ====== ======
Portfolio turnover rate 30% 45% 79% 70% 62%
============================ ====== ====== ====== ====== ======
</TABLE>
(a) For periods less than one year, total return is not annualized.
(b) After waiver of advisory fees. Annualized ratios of expenses and net
investment income to average net assets prior to waiver of advisory fees
were 0.66% and 0.32%, respectively. Ratios are annualized and based on
average net assets of $169,100,309.
(c) After expense reimbursements. Annualized.
C O N S T E L L A T I O N
45
<PAGE> 48
Directors & Officers
<TABLE>
<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 Institutional Fund
Cortland Trust Inc. Services, Inc.
Scott G. Lucas 11 Greenway Plaza
Carl Frischling Senior Vice President Suite 1919
Partner Houston, TX 77046
Kramer, Levin, Naftalis, Nessen, Carol F. Relihan
Kamin & Frankel Senior Vice President CUSTODIAN
and Secretary State Street Bank & Trust
Robert H. Graham 225 Franklin Street
President and Chief Operating Officer Jonathan C. Schoolar Boston, MA 02110
A I M Management Group Inc. Senior Vice President
COUNSEL TO THE FUND
John F. Kroeger Melville B. Cox Ballard Spahr
Formerly, Consultant Vice President Andrews & Ingersoll
Wendell & Stockel Associates, Inc. 1735 Market Street
Dana R. Sutton Philadelphia, PA 19103
Lewis F. Pennock Vice President and Assistant Treasurer
Attorney COUNSEL TO THE DIRECTORS
P. Michelle Grace Kramer, Levin, Naftalis,
Ian W. Robinson Assistant Secretary Nessen, Kamin & Frankel
Consultant; Formerly Executive 919 Third Avenue
Vice President and David L. Kite New York, NY 10022
Chief Financial Officer Assistant Secretary
Bell Atlantic Management DISTRIBUTOR
Services, Inc. Nancy L. Martin Fund Management Company
Assistant Secretary 11 Greenway Plaza
Louis S. Sklar Suite 1919
Executive Vice President Ofelia M. Mayo Houston, TX 77046
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>
C O N S T E L L A T I O N
46
<PAGE> 49
AIM WEINGARTEN FUND
For shareholders who seek long-term growth of capital through investments
primarily in common stocks of leading U.S. companies considered by management
to have strong earnings momentum.
ABOUT FUND PERFORMANCE DATA THROUGHOUT THIS REPORT:
o AIM Weingarten Fund's Institutional Class performance figures are historical
and reflect reinvestments of all distributions and changes in net asset
value.
o The Fund's investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
o Past performance cannot guarantee comparable future results.
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.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The Dow Jones Industrial Average (DJIA) is an unmanaged composite of the
performance of 30 large-company stocks.
o An investment cannot be made in any index listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect
sales charges.
W E I N G A R T E N
47
<PAGE> 50
Management's
Discussion & Analysis
- ------------------------
AIM Weingarten
Fund's Institutional
Class total return
was 9.25% for
during the
six-month period
ended
April 30, 1996.
- ------------------------
AIM WEINGARTEN FUND
DIVERSIFIES, HEADS BACK TO BASICS
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 a feeble 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. Green-span 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 Weingarten Fund's Institutional Class total return was 9.25% during the
six-month period ended April 30, 1996. The net assets of the Institutional
Class grew from $54.3 million to $57.9 million during the last six months.
AIM Weingarten Fund responded to volatile markets by diversifying its mix of
securities. The Fund has taken a "barbell" approach to asset allocation: About
half of the portfolio is invested in "core" stocks of major companies and the
other half in "momentum" stocks such as those in the technology and consumer
cyclical sectors.
Managers consider the Fund to be sector neutral with no heavy weighting in
any one particular industry. The Fund decreased holdings in technology stocks
from about 35% to about 15%. Technology is a broad category including stocks of
software developers, hardware manufacturers, networking equipment providers,
electronics firms and telecommunications.
The Fund increased weightings in drug company and retail stocks over the
past six months. Emphasis on international stocks rose to 14.42% from 10.98%.
These included large holdings in European drug manufacturing companies.
MEDICAL (DRUGS): Drugmakers across the world are benefiting from cost
cutting, price increases, and the introduction of new drugs. This sector made
up the largest single industry concentration of the Fund, at 8.45%.
MEDICAL (PATIENT SERVICES): Stocks of large hospital chains and managed care
companies
W E I N G A R T E N
48
<PAGE> 51
Management's
Discussion & Analysis
================================================================================
PORTFOLIO HOLDINGS (AS OF APRIL 30, 1996)
================================================================================
TOP 10 SECURITIES TOP 10 INDUSTRIES
1. Philip Morris Companies, Inc. 1. Medical (Drugs)
2. Ciba-Geigy Ltd. 2. Retail (Stores)
3. Loews Corp. 3. Medical (Patient Services)
4. Sandoz Ltd. 4. Finance (Consumer Credit)
5. Tenet Healthcare Corp. 5. Telecommunications
6. Bass PLC 6. Computer Software/Services
7. Atmel Corp. 7. Medical (Instruments/Products)
8. Baxter International Inc. 8. Insurance (Multi-Line Property)
9. Vencor, Inc. 9. Chemicals
10. Varian Associates, Inc. 10. Banking
================================================================================
were buoyed over the past six months by continuing cost-cutting efforts. The
industry is going through major restructuring through consolidations,
networking and increased reliance on managed care. The Fund invested 5.55% of
its assets in this sector, and major holdings included Tenet Healthcare Corp.
and Vencor, Inc.
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.
Retail stores made up 5.74% of the Fund's holdings. These included discount
chain Price/Costco Inc., and "category killers" Office Depot, Inc., Pep
Boys--Manny, Moe, and Jack, and Home Depot, Inc.
As of April 30, 1996, the Fund had 252 holdings. Of course, the Fund's
composition is subject to change and there is no guarantee it will continue to
hold any one particular security.
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 Weingarten 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's Institutional Class will
return 28.69% as it did in the fiscal year ending October 31, 1995.
Historically, the stock market has generated an average total return of about
10%, according to Ibbotson Associates.
AIM Weingarten 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's Institutional Class to an outstanding average
annual return, as shown by the chart on the next page.
========================
Net Asset Composition
========================
As of 4/30/96
Common Stock 94%
Other assets 1%
Cash/
Cash Equivalent 3%
Convertible Bonds 2%
========================
W E I N G A R T E N
49
<PAGE> 52
Long-Term
Performance
===================================
AVERAGE ANNUAL
TOTAL RETURNS
===================================
As of March 31, 1996
(the most recent calendar quarter)
SINCE INCEPTION
(10/8/91) 12.48%
3 YEARS 14.49
1 YEAR 31.45
===================================
==============================================================
GROWTH OF A $10,000 INVESTMENT
==============================================================
10/8/91-4/30/96
Past performance cannot guarantee comparable future results.
AIM Weingarten Fund
(Institutional Class)
10/8/91 10,000
12/91 11,735
12/92 11,609
12/93 11,831
12/94 11,846
12/95 16,042
4/96 17,369
Source: Towers Data Systems HYPO(R)
==============================================================
For Fund performance calculations, please refer to page 47.
W E I N G A R T E N
50
<PAGE> 53
Financials
SCHEDULE OF INVESTMENTS
April 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-79.49%
ADVERTISING/BROADCASTING-0.06%
83,900 Belo (A.H.) Corp. $ 3,125,275
- ----------------------------------------------------------------------------------------
AEROSPACE/DEFENSE-0.88%
225,100 Boeing Co. 18,486,338
- ----------------------------------------------------------------------------------------
414,600 General Dynamics Corp. 26,171,625
- ----------------------------------------------------------------------------------------
44,657,963
- ----------------------------------------------------------------------------------------
AIRLINES-0.29%
500,000 Southwest Airlines Co. 14,875,000
- ----------------------------------------------------------------------------------------
APPLIANCES-0.28%
500,000 Newell Co. 14,250,000
- ----------------------------------------------------------------------------------------
AUTOMOBILE (MANUFACTURERS)-0.77%
225,000 Chrysler Corp. 14,118,750
- ----------------------------------------------------------------------------------------
700,000 Ford Motor Co. 25,112,500
- ----------------------------------------------------------------------------------------
39,231,250
- ----------------------------------------------------------------------------------------
BANKING-2.03%
520,000 Chase Manhattan Corp. 35,815,000
- ----------------------------------------------------------------------------------------
300,000 Fleet Financial Group, Inc. 12,900,000
- ----------------------------------------------------------------------------------------
55,600 NationsBank Corp. 4,434,100
- ----------------------------------------------------------------------------------------
350,000 Norwest Bank Corp. 12,643,750
- ----------------------------------------------------------------------------------------
425,000 PNC Bank Corp. 12,856,250
- ----------------------------------------------------------------------------------------
100,000 Wells Fargo & Co. 24,262,500
- ----------------------------------------------------------------------------------------
102,911,600
- ----------------------------------------------------------------------------------------
BEVERAGES-0.80%
200,000 Anheuser-Busch Companies, Inc. 13,425,000
- ----------------------------------------------------------------------------------------
425,000 PepsiCo. Inc. 26,987,500
- ----------------------------------------------------------------------------------------
40,412,500
- ----------------------------------------------------------------------------------------
BIOTECHNOLOGY-0.81%
250,000 AMGEN Inc.(a) 14,375,000
- ----------------------------------------------------------------------------------------
475,000 Guidant Corp. 26,659,375
- ----------------------------------------------------------------------------------------
41,034,375
- ----------------------------------------------------------------------------------------
BUILDING MATERIALS-0.54%
350,000 Georgia-Pacific Corp. 27,212,500
- ----------------------------------------------------------------------------------------
BUSINESS SERVICES-1.83%
500,000 CUC International Inc.(a) 16,437,500
- ----------------------------------------------------------------------------------------
129,250 Diebold, Inc. 4,976,125
- ----------------------------------------------------------------------------------------
180,000 Dun & Bradstreet Corp. (The) 10,957,500
- ----------------------------------------------------------------------------------------
625,000 Equifax Inc. 15,312,500
- ----------------------------------------------------------------------------------------
300,000 Healthcare COMPARE Corp.(a) 14,137,500
- ----------------------------------------------------------------------------------------
</TABLE>
W E I N G A R T E N
51
<PAGE> 54
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
Business Services-continued
619,800 Olsten Corp. $ 18,826,425
- ----------------------------------------------------------------------------------------
381,200 ServiceMaster L.P. 12,103,100
- ----------------------------------------------------------------------------------------
92,750,650
- ----------------------------------------------------------------------------------------
CHEMICALS-0.47%
171,700 Great Lakes Chemical Corp. 11,718,525
- ----------------------------------------------------------------------------------------
200,000 Hercules Inc. 12,100,000
- ----------------------------------------------------------------------------------------
23,818,525
- ----------------------------------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.04%
82,800 Cabot Corp. 2,214,900
- ----------------------------------------------------------------------------------------
COMPUTER MINI/PCS-2.33%
300,000 COMPAQ Computer Corp.(a) 13,987,500
- ----------------------------------------------------------------------------------------
325,000 Dell Computer Corp. 14,909,375
- ----------------------------------------------------------------------------------------
240,200 Digital Equipment Corp.(a) 14,351,950
- ----------------------------------------------------------------------------------------
500,000 Gateway 2000 Inc.(a) 17,437,500
- ----------------------------------------------------------------------------------------
250,000 Hewlett-Packard Co. 26,468,750
- ----------------------------------------------------------------------------------------
40,800 Stratus Computer, Inc.(a) 1,147,500
- ----------------------------------------------------------------------------------------
550,000 Sun Microsystems Inc.(a) 29,837,500
- ----------------------------------------------------------------------------------------
118,140,075
- ----------------------------------------------------------------------------------------
COMPUTER NETWORKING-1.57%
525,000 Cabletron Systems, Inc.(a) 39,571,875
- ----------------------------------------------------------------------------------------
525,000 Cisco Systems, Inc.(a) 27,234,375
- ----------------------------------------------------------------------------------------
275,000 3Com Corp.(a) 12,684,375
- ----------------------------------------------------------------------------------------
79,490,625
- ----------------------------------------------------------------------------------------
COMPUTER PERIPHERALS-1.60%
225,000 Adaptec Inc.(a) 12,937,500
- ----------------------------------------------------------------------------------------
621,700 Cognex Corp.(a) 16,630,475
- ----------------------------------------------------------------------------------------
225,000 Seagate Technology Inc.(a) 13,050,000
- ----------------------------------------------------------------------------------------
800,000 Storage Technology Corp.(a) 24,600,000
- ----------------------------------------------------------------------------------------
90,000 U.S. Robotics Corp.(a) 14,085,000
- ----------------------------------------------------------------------------------------
81,302,975
- ----------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES-4.47%
200,000 BMC Software, Inc.(a) 12,175,000
- ----------------------------------------------------------------------------------------
570,000 Cadence Design Systems, Inc.(a) 29,782,500
- ----------------------------------------------------------------------------------------
471,200 Ceridian Corp.(a) 22,499,800
- ----------------------------------------------------------------------------------------
350,000 Computer Associates International, Inc. 25,681,250
- ----------------------------------------------------------------------------------------
926,600 Computervision Corp.(a) 11,235,025
- ----------------------------------------------------------------------------------------
250,000 First Data Corp. 19,000,000
- ----------------------------------------------------------------------------------------
608,100 Fiserv, Inc.(a) 18,547,050
- ----------------------------------------------------------------------------------------
265,000 Microsoft Corp.(a) 30,044,375
- ----------------------------------------------------------------------------------------
25,400 National Data Corp. 895,350
- ----------------------------------------------------------------------------------------
450,000 Oracle Systems Corp.(a) 15,187,500
- ----------------------------------------------------------------------------------------
</TABLE>
W E I N G A R T E N
52
<PAGE> 55
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
Computer Software/Services-continued
697,500 Synopsys, Inc.(a) $ 28,771,875
- ----------------------------------------------------------------------------------------
225,000 Wallace Computer Services, Inc. 13,303,125
- ----------------------------------------------------------------------------------------
227,122,850
- ----------------------------------------------------------------------------------------
CONGLOMERATES-2.03%
500,000 Dial Corp. (The) 14,062,500
- ----------------------------------------------------------------------------------------
700,000 Loews Corp. 53,375,000
- ----------------------------------------------------------------------------------------
150,000 Textron Inc. 12,862,500
- ----------------------------------------------------------------------------------------
325,000 Tyco International Ltd. 12,553,125
- ----------------------------------------------------------------------------------------
478,100 U.S. Industries Inc. 10,040,100
- ----------------------------------------------------------------------------------------
102,893,225
- ----------------------------------------------------------------------------------------
CONTAINERS-0.76%
882,300 First Brands Corp. 23,380,950
- ----------------------------------------------------------------------------------------
425,000 Sealed Air Corp.(a) 15,034,375
- ----------------------------------------------------------------------------------------
38,415,325
- ----------------------------------------------------------------------------------------
COSMETICS & TOILETRIES-1.30%
175,000 Colgate-Palmolive Co. 13,409,375
- ----------------------------------------------------------------------------------------
1,400,000 General Nutrition Co.(a) 27,300,000
- ----------------------------------------------------------------------------------------
237,100 Gillette Co. (The) 12,803,400
- ----------------------------------------------------------------------------------------
150,000 Procter & Gamble Co. 12,675,000
- ----------------------------------------------------------------------------------------
66,187,775
- ----------------------------------------------------------------------------------------
ELECTRONIC COMPONENTS/MISCELLANEOUS-0.97%
1,150,000 Amphenol Corp.(a) 30,331,250
- ----------------------------------------------------------------------------------------
231,100 Anixter International Inc.(a) 4,044,250
- ----------------------------------------------------------------------------------------
450,000 Thermo Instrument Systems, Inc.(a) 14,850,000
- ----------------------------------------------------------------------------------------
49,225,500
- ----------------------------------------------------------------------------------------
ELECTRONIC/DEFENSE-0.22%
300,000 Sundstrand Corp. 11,025,000
- ----------------------------------------------------------------------------------------
ELECTRONIC/PC DISTRIBUTORS-0.79%
250,000 Arrow Electronics, Inc.(a) 12,531,250
- ----------------------------------------------------------------------------------------
525,000 Avnet, Inc. 27,693,750
- ----------------------------------------------------------------------------------------
40,225,000
- ----------------------------------------------------------------------------------------
FINANCE (ASSET MANAGEMENT)-2.33%
1,200,000 Bear Stearns Companies Inc. 30,150,000
- ----------------------------------------------------------------------------------------
225,000 Finova Group, Inc. 12,487,500
- ----------------------------------------------------------------------------------------
275,000 Franklin Resources, Inc. 15,743,750
- ----------------------------------------------------------------------------------------
300,000 Morgan Stanley Group Inc. 15,075,000
- ----------------------------------------------------------------------------------------
850,000 PaineWebber Group Inc. 17,743,750
- ----------------------------------------------------------------------------------------
249,600 Price (T. Rowe) Associates 13,915,200
- ----------------------------------------------------------------------------------------
325,000 Salomon Inc. 13,203,125
- ----------------------------------------------------------------------------------------
118,318,325
- ----------------------------------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-4.57%
250,000 Beneficial Corp. 13,812,500
- ----------------------------------------------------------------------------------------
550,000 Countrywide Credit Industries, Inc. 11,893,750
- ----------------------------------------------------------------------------------------
</TABLE>
W E I N G A R T E N
53
<PAGE> 56
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
Finance (Consumer Credit)-continued
300,000 Federal Home Loan Mortgage Corp. $ 25,012,500
- ----------------------------------------------------------------------------------------
400,000 Federal National Mortgage Association 12,250,000
- ----------------------------------------------------------------------------------------
431,100 First USA, Inc. 24,249,375
- ----------------------------------------------------------------------------------------
209,100 Firstar Corp. 9,723,150
- ----------------------------------------------------------------------------------------
750,000 Green Tree Acceptance, Inc. 25,312,500
- ----------------------------------------------------------------------------------------
375,000 Household International, Inc. 25,921,875
- ----------------------------------------------------------------------------------------
875,000 MBNA Corp. 24,828,125
- ----------------------------------------------------------------------------------------
350,000 Student Loan Marketing Association 25,637,500
- ----------------------------------------------------------------------------------------
250,000 SunAmerica, Inc. 13,625,000
- ----------------------------------------------------------------------------------------
610,500 United Companies Financial Corp. 19,536,000
- ----------------------------------------------------------------------------------------
231,802,275
- ----------------------------------------------------------------------------------------
FINANCE (SAVINGS & LOAN)-0.25%
450,000 Washington Mutual Inc. 12,487,500
- ----------------------------------------------------------------------------------------
FOOD PROCESSING-0.84%
600,000 ConAgra, Inc. 23,175,000
- ----------------------------------------------------------------------------------------
160,100 Dole Food Co., Inc. 6,404,000
- ----------------------------------------------------------------------------------------
394,233 Lancaster Colony Corp. 13,305,364
- ----------------------------------------------------------------------------------------
42,884,364
- ----------------------------------------------------------------------------------------
FUNERAL SERVICES-0.31%
300,000 Service Corp. International 15,937,500
- ----------------------------------------------------------------------------------------
FURNITURE-0.14%
231,200 Miller (Herman) Inc. 7,080,500
- ----------------------------------------------------------------------------------------
GAMING-0.31%
450,000 Harrah's Entertainment, Inc.(a) 15,525,000
- ----------------------------------------------------------------------------------------
HOME BUILDING-0.11%
207,000 Centex Corp. 5,589,000
- ----------------------------------------------------------------------------------------
HOTELS/MOTELS-0.26%
1,000,000 Host Marriott Corp.(a) 13,375,000
- ----------------------------------------------------------------------------------------
INSURANCE (LIFE & HEALTH)-0.54%
750,000 Conseco, Inc. 27,375,000
- ----------------------------------------------------------------------------------------
INSURANCE (MULTI-LINE PROPERTY)-3.42%
246,000 ACE, Ltd. 10,824,000
- ----------------------------------------------------------------------------------------
350,000 Aetna Life & Casualty Co. 24,937,500
- ----------------------------------------------------------------------------------------
300,000 CIGNA Corp. 34,012,500
- ----------------------------------------------------------------------------------------
800,000 Horace Mann Educators Corp. 26,300,000
- ----------------------------------------------------------------------------------------
475,000 MGIC Investment Corp. 25,768,750
- ----------------------------------------------------------------------------------------
73,000 Mid Ocean Limited 2,609,750
- ----------------------------------------------------------------------------------------
300,000 PMI Group, Inc. (The) 12,750,000
- ----------------------------------------------------------------------------------------
800,000 TIG Holdings, Inc. 24,300,000
- ----------------------------------------------------------------------------------------
200,000 Travelers Group, Inc. 12,300,000
- ----------------------------------------------------------------------------------------
173,802,500
- ----------------------------------------------------------------------------------------
</TABLE>
W E I N G A R T E N
54
<PAGE> 57
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
LEISURE & RECREATION-1.27%
520,300 Brunswick Corp. $ 11,446,600
- ----------------------------------------------------------------------------------------
850,000 Carnival Cruise Lines, Inc. 24,650,000
- ----------------------------------------------------------------------------------------
350,000 Coleman Co., Inc. (The)(a) 16,056,250
- ----------------------------------------------------------------------------------------
159,600 Eastman Kodak Co. 12,209,400
- ----------------------------------------------------------------------------------------
64,362,250
- ----------------------------------------------------------------------------------------
MACHINERY (HEAVY)-0.86%
300,000 Dover Corp. 15,450,000
- ----------------------------------------------------------------------------------------
300,000 Foster Wheeler Corp. 13,875,000
- ----------------------------------------------------------------------------------------
350,000 Harnischfeger Industries, Inc. 14,175,000
- ----------------------------------------------------------------------------------------
43,500,000
- ----------------------------------------------------------------------------------------
MACHINERY (MISCELLANEOUS)-0.07%
126,200 American Standard Companies(a) 3,565,150
- ----------------------------------------------------------------------------------------
MEDICAL (DRUGS)-5.37%
750,000 Abbott Laboratories 30,468,750
- ----------------------------------------------------------------------------------------
375,000 American Home Products Corp. 39,562,500
- ----------------------------------------------------------------------------------------
380,000 AmeriSource Health Corp.(a) 13,680,000
- ----------------------------------------------------------------------------------------
425,000 Cardinal Health, Inc. 26,668,750
- ----------------------------------------------------------------------------------------
66,300 Express Scripts, Inc.(a) 3,281,850
- ----------------------------------------------------------------------------------------
600,000 ICN Pharmaceuticals, Inc. 13,500,000
- ----------------------------------------------------------------------------------------
450,000 Ivax Corp. 13,106,250
- ----------------------------------------------------------------------------------------
200,000 Merck & Co., Inc. 12,100,000
- ----------------------------------------------------------------------------------------
200,000 Pfizer Inc. 13,775,000
- ----------------------------------------------------------------------------------------
650,000 Pharmacia & Upjohn, Inc. 24,862,500
- ----------------------------------------------------------------------------------------
400,000 Rhone-Poulenc Rorer Inc. 24,800,000
- ----------------------------------------------------------------------------------------
473,200 Schering-Plough Corp. 27,149,850
- ----------------------------------------------------------------------------------------
625,000 Watson Pharmaceuticals, Inc.(a) 29,687,500
- ----------------------------------------------------------------------------------------
272,642,950
- ----------------------------------------------------------------------------------------
MEDICAL (INSTRUMENTS/PRODUCTS)-3.50%
917,500 Baxter International Inc. 40,599,375
- ----------------------------------------------------------------------------------------
300,000 Becton, Dickinson & Co. 24,187,500
- ----------------------------------------------------------------------------------------
1,000,000 Biomet, Inc.(a) 14,750,000
- ----------------------------------------------------------------------------------------
650,077 Boston Scientific Corp.(a) 28,034,571
- ----------------------------------------------------------------------------------------
425,000 Medtronic, Inc. 22,578,125
- ----------------------------------------------------------------------------------------
379,400 Nellcor Puritan-Bennett, Inc.(a) 18,590,600
- ----------------------------------------------------------------------------------------
300,050 St. Jude Medical, Inc. 10,951,825
- ----------------------------------------------------------------------------------------
478,500 U.S. Surgical Corp. 17,704,500
- ----------------------------------------------------------------------------------------
177,396,496
- ----------------------------------------------------------------------------------------
MEDICAL (PATIENT SERVICES)-5.29%
1,000,000 Caremark International, Inc. 27,625,000
- ----------------------------------------------------------------------------------------
250,000 Columbia/HCA Healthcare Corp. 13,281,250
- ----------------------------------------------------------------------------------------
475,000 Community Health Systems, Inc.(a) 20,603,125
- ----------------------------------------------------------------------------------------
400,000 Health Management Associates, Inc.(a) 12,800,000
- ----------------------------------------------------------------------------------------
700,000 HEALTHSOUTH Corp.(a) 25,987,500
- ----------------------------------------------------------------------------------------
</TABLE>
W E I N G A R T E N
55
<PAGE> 58
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
Medical (Patient Services)-continued
500,000 Living Centers of America, Inc.(a) $ 18,500,000
- ----------------------------------------------------------------------------------------
500,000 MedPartners/Mullikin, Inc.(a) 14,437,500
- ----------------------------------------------------------------------------------------
793,000 Sybron International Corp.(a) 20,023,250
- ----------------------------------------------------------------------------------------
2,500,000 Tenet Healthcare Corp.(a) 51,250,000
- ----------------------------------------------------------------------------------------
400,000 United Healthcare Corp. 23,400,000
- ----------------------------------------------------------------------------------------
1,200,000 Vencor, Inc.(a) 40,500,000
- ----------------------------------------------------------------------------------------
268,407,625
- ----------------------------------------------------------------------------------------
NATURAL GAS PIPELINE-0.50%
500,000 Williams Cos., Inc (The) 25,562,500
- ----------------------------------------------------------------------------------------
OFFICE AUTOMATION-0.29%
100,000 Xerox Corp. 14,650,000
- ----------------------------------------------------------------------------------------
OFFICE PRODUCTS-0.86%
250,000 Alco Standard Corp. 14,468,750
- ----------------------------------------------------------------------------------------
225,000 Avery Dennison Corp. 12,825,000
- ----------------------------------------------------------------------------------------
350,000 Reynolds & Reynolds Co.-Class A 16,187,500
- ----------------------------------------------------------------------------------------
43,481,250
- ----------------------------------------------------------------------------------------
OIL & GAS (SERVICES)-1.66%
374,900 Louisiana Land & Exploration Co. 20,291,462
- ----------------------------------------------------------------------------------------
100,000 Mobil Corp. 11,500,000
- ----------------------------------------------------------------------------------------
1,131,100 NorAm Energy Corp. 12,442,100
- ----------------------------------------------------------------------------------------
500,000 Reading & Bates Corp.(a) 12,250,000
- ----------------------------------------------------------------------------------------
505,800 Sonat Offshore Drilling Inc. 27,755,775
- ----------------------------------------------------------------------------------------
84,239,337
- ----------------------------------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES-1.47%
450,000 Baker Hughes Inc. 14,287,500
- ----------------------------------------------------------------------------------------
350,000 Coastal Corp. 13,868,750
- ----------------------------------------------------------------------------------------
95,300 Cooper Cameron Corp.(a) 4,300,413
- ----------------------------------------------------------------------------------------
450,000 Dresser Industries, Inc. 14,343,750
- ----------------------------------------------------------------------------------------
320,000 Halliburton Co. 18,360,000
- ----------------------------------------------------------------------------------------
106,600 Schlumberger Ltd. 9,407,450
- ----------------------------------------------------------------------------------------
74,567,863
- ----------------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS-1.55%
650,000 International Paper Co. 25,918,750
- ----------------------------------------------------------------------------------------
350,000 Kimberly-Clark Corp. 25,418,750
- ----------------------------------------------------------------------------------------
500,000 Union Camp Corp. 27,187,500
- ----------------------------------------------------------------------------------------
78,525,000
- ----------------------------------------------------------------------------------------
PUBLISHING-0.54%
336,400 New York Times Co. 10,933,000
- ----------------------------------------------------------------------------------------
122,400 Times Mirror Co. (The) 5,217,300
- ----------------------------------------------------------------------------------------
160,500 Tribune Co. 11,194,875
- ----------------------------------------------------------------------------------------
27,345,175
- ----------------------------------------------------------------------------------------
</TABLE>
W E I N G A R T E N
56
<PAGE> 59
Financials
<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
RESTAURANTS-1.38%
550,000 Applebee's International, Inc. $ 14,575,000
- ----------------------------------------------------------------------------------------
2,000,000 Darden Restaurants, Inc. 27,500,000
- ----------------------------------------------------------------------------------------
250,000 McDonald's Corp. 11,968,750
- ----------------------------------------------------------------------------------------
400,000 Outback Steakhouse Inc.(a) 16,050,000
- ----------------------------------------------------------------------------------------
70,093,750
- ----------------------------------------------------------------------------------------
RETAIL (FOOD & DRUG)-1.60%
650,000 Albertson's, Inc. 25,025,000
- ----------------------------------------------------------------------------------------
178,400 Hannaford Bros. Co. 4,995,200
- ----------------------------------------------------------------------------------------
425,000 Rite Aid Corp. 12,590,625
- ----------------------------------------------------------------------------------------
1,141,000 Safeway Inc.(a) 38,508,750
- ----------------------------------------------------------------------------------------
81,119,575
- ----------------------------------------------------------------------------------------
RETAIL (STORES)-5.51%
400,000 Circuit City Stores, Inc. 12,700,000
- ----------------------------------------------------------------------------------------
742,600 Consolidated Stores Corp.(a) 26,733,600
- ----------------------------------------------------------------------------------------
300,000 Dayton-Hudson Corp. 28,650,000
- ----------------------------------------------------------------------------------------
500,000 Gap Inc. (The) 15,062,500
- ----------------------------------------------------------------------------------------
550,000 Home Depot, Inc. 26,056,250
- ----------------------------------------------------------------------------------------
121,700 Mercantile Stores Co., Inc. 7,591,038
- ----------------------------------------------------------------------------------------
650,000 Micro Warehouse, Inc.(a) 27,950,000
- ----------------------------------------------------------------------------------------
1,050,800 Office Depot, Inc.(a) 23,511,650
- ----------------------------------------------------------------------------------------
750,000 Pep Boys-Manny, Moe & Jack 25,031,250
- ----------------------------------------------------------------------------------------
1,500,000 Price/Costco Inc.(a) 28,500,000
- ----------------------------------------------------------------------------------------
320,000 Sears, Roebuck & Co. 15,960,000
- ----------------------------------------------------------------------------------------
590,625 Staples, Inc.(a) 11,221,875
- ----------------------------------------------------------------------------------------
230,000 Viking Office Products Inc.(a) 13,656,250
- ----------------------------------------------------------------------------------------
700,000 Waban Inc.(a) 17,150,000
- ----------------------------------------------------------------------------------------
279,774,413
- ----------------------------------------------------------------------------------------
SCIENTIFIC INSTRUMENTS-1.03%
294,900 Millipore Corp. 12,348,938
- ----------------------------------------------------------------------------------------
700,000 Varian Associates, Inc. 39,987,500
- ----------------------------------------------------------------------------------------
52,336,438
- ----------------------------------------------------------------------------------------
SEMICONDUCTORS-2.07%
500,000 Analog Devices, Inc.(a) 12,875,000
- ----------------------------------------------------------------------------------------
1,015,700 Atmel Corp.(a) 40,628,000
- ----------------------------------------------------------------------------------------
400,000 Intel Corp. 27,100,000
- ----------------------------------------------------------------------------------------
850,000 KLA Instruments Corp.(a) 24,543,750
- ----------------------------------------------------------------------------------------
105,146,750
- ----------------------------------------------------------------------------------------
SHOES & RELATED APPAREL-0.33%
190,300 NIKE, Inc.-Class B 16,651,250
- ----------------------------------------------------------------------------------------
TELECOMMUNICATIONS-2.87%
941,000 ADC Telecommunications, Inc.(a) 39,522,000
- ----------------------------------------------------------------------------------------
177,600 Andrew Corp.(a) 8,524,800
- ----------------------------------------------------------------------------------------
400,000 A T & T Corp. 24,500,000
- ----------------------------------------------------------------------------------------
</TABLE>
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<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
Telecommunications-continued
550,000 Glenayre Technologies, Inc.(a) $ 25,575,000
- ----------------------------------------------------------------------------------------
500,000 MCI Communications Corp. 14,718,750
- ----------------------------------------------------------------------------------------
500,000 Tellabs, Inc.(a) 27,625,000
- ----------------------------------------------------------------------------------------
213,333 360 Communications Co.(a) 5,013,333
- ----------------------------------------------------------------------------------------
145,478,883
- ----------------------------------------------------------------------------------------
TELEPHONE-0.73%
750,000 Cincinnati Bell, Inc. 36,937,500
- ----------------------------------------------------------------------------------------
TEXTILES-0.29%
400,000 Liz Claiborne, Inc. 14,550,000
- ----------------------------------------------------------------------------------------
TOBACCO-2.27%
1,100,000 Philip Morris Companies, Inc. 99,137,500
- ----------------------------------------------------------------------------------------
500,000 UST, Inc. 16,000,000
- ----------------------------------------------------------------------------------------
115,137,500
- ----------------------------------------------------------------------------------------
TRANSPORTATION (MISCELLANEOUS)-0.26%
650,000 Stolt-Nielsen S.A. 13,355,469
- ----------------------------------------------------------------------------------------
Total Domestic Common Stocks 4,033,526,976
- ----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<C> <S> <C>
CONVERTIBLE CORPORATE BONDS-1.66%
MACHINERY (MISCELLANEOUS)-0.73%
$ 30,500,000 Thermo Electron Corp., Conv. Sub. Deb., 4.25%, 01/01/03 37,286,250
- ----------------------------------------------------------------------------------------
MEDICAL (PATIENT SERVICES)-0.26%
13,400,000 Healthsource Inc., Conv. Sub. Notes, 5.00%, 03/01/03(b)
(acquired 03/18/96-03/22/96; cost $13,855,989) 13,132,000
- ----------------------------------------------------------------------------------------
OFFICE AUTOMATION-0.67%
19,500,000 Danka Business Systems PLC, Conv. Yankee Sub. Notes,
6.75%, 04/01/02 34,051,875
- ----------------------------------------------------------------------------------------
Total Convertible Corporate Bonds 84,470,125
- ----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
<C> <S> <C>
FOREIGN STOCKS & OTHER EQUITY INTERESTS-14.42%
BRAZIL-0.32%
300,000 Telecomunicacoes Brasileiras S/A Telebras-ADR
(Telecommunications) 16,237,500
- ----------------------------------------------------------------------------------------
CANADA-1.05%
275,000 Newbridge Networks Corp.(a) (Computer Networking) 17,703,125
- ----------------------------------------------------------------------------------------
694,900 Northern Telecom Ltd. (Telecommunications) 35,787,350
- ----------------------------------------------------------------------------------------
53,490,475
- ----------------------------------------------------------------------------------------
DENMARK-0.28%
290,000 Danisco A/S (Food Processing) 14,151,135
- ----------------------------------------------------------------------------------------
FRANCE-0.94%
102,000 Roussel-Uclaf (Medical-Drugs) 24,041,800
- ----------------------------------------------------------------------------------------
500,000 SGS-Thomson Microelectronics N.V.-N.Y. Shares(a)
(Semiconductors) 23,500,000
- ----------------------------------------------------------------------------------------
47,541,800
- ----------------------------------------------------------------------------------------
</TABLE>
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<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
GERMANY-0.40%
160,900 Adidas A.G.(a) (Shoes & Related Apparel) $ 12,244,333
- ----------------------------------------------------------------------------------------
158,000 Veba A.G. (Electric Services) 7,854,073
- ----------------------------------------------------------------------------------------
20,098,406
- ----------------------------------------------------------------------------------------
HONG KONG-0.71%
820,000 HSBC Holdings PLC (Banking) 12,243,552
- ----------------------------------------------------------------------------------------
2,505,000 Sun Hung Kai Properties Ltd. (Real Estate) 23,882,587
- ----------------------------------------------------------------------------------------
36,126,139
- ----------------------------------------------------------------------------------------
IRELAND-0.53%
405,500 Elan Corporation PLC-ADR(a) (Medical-Drugs) 26,813,688
- ----------------------------------------------------------------------------------------
ISRAEL-1.17%
1,200,000 ECI Telecommunications (Computer Networking) 31,350,000
- ----------------------------------------------------------------------------------------
625,000 Teva Pharmaceutical Industries Ltd.-ADR (Medical-Drugs) 28,046,875
- ----------------------------------------------------------------------------------------
59,396,875
- ----------------------------------------------------------------------------------------
ITALY-0.73%
167,000 Fila Holding S.p.A.-ADR (Retail Stores) 11,397,750
- ----------------------------------------------------------------------------------------
6,000,000 Telecom Italia Mobile S.p.A.(a) (Telecommunications) 13,160,051
- ----------------------------------------------------------------------------------------
6,000,000 Telecom Italia S.p.A.(Telecommunications) 12,199,744
- ----------------------------------------------------------------------------------------
36,757,545
- ----------------------------------------------------------------------------------------
JAPAN-0.27%
608,000 Honda Motor Co. (Automobile-Manufacturers) 13,891,497
- ----------------------------------------------------------------------------------------
MALAYSIA-0.63%
2,149,000 Malayan Banking Berhad (Banking) 20,944,411
- ----------------------------------------------------------------------------------------
1,600,000 United Engineers (Building Materials) 10,973,409
- ----------------------------------------------------------------------------------------
31,917,820
- ----------------------------------------------------------------------------------------
NETHERLANDS-0.37%
197,300 Madge Networks N.V.(a) (Computer Networking) 5,820,350
- ----------------------------------------------------------------------------------------
120,000 Wolters Kluwer N.V. (Publishing) 13,117,011
- ----------------------------------------------------------------------------------------
18,937,361
- ----------------------------------------------------------------------------------------
NORWAY-0.23%
250,000 Norsk Hydro A.S.-ADR (Chemicals) 11,500,000
- ----------------------------------------------------------------------------------------
SINGAPORE-0.26%
1,513,000 City Developments Ltd. (Real Estate) 13,237,942
- ----------------------------------------------------------------------------------------
SWEDEN-1.41%
899,000 ASTRA AB-A Shares (Medical-Drugs) 39,968,222
- ----------------------------------------------------------------------------------------
490,000 Skandia Forsakrings AB (Insurance-Multi-Line Property) 11,199,421
- ----------------------------------------------------------------------------------------
1,000,000 Telefonaktiebolaget L.M. Ericsson-ADR
(Telecommunications) 20,375,000
- ----------------------------------------------------------------------------------------
71,542,643
- ----------------------------------------------------------------------------------------
</TABLE>
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<TABLE>
<CAPTION>
SHARES MARKET VALUE
<S> <C> <C>
SWITZERLAND-2.62%
58,700 Ciba-Geigy Ltd. (Chemicals) 68,127,175
- ----------------------------------------------------------------------------------------
1,700 Roche Holdings A.G. (Medical-Drugs) 13,370,248
- ----------------------------------------------------------------------------------------
47,200 Sandoz A.G. (Chemicals) 51,548,969
- ----------------------------------------------------------------------------------------
133,046,392
- ----------------------------------------------------------------------------------------
UNITED KINGDOM-2.50%
3,876,450 Bass PLC (Beverages-Alcoholic) 45,720,286
- ----------------------------------------------------------------------------------------
5,408,200 British Gas PLC (Oil & Gas-Exploration & Production) 19,213,235
- ----------------------------------------------------------------------------------------
190,300 Danka Business Systems PLC-ADR (Office Automation) 9,134,400
- ----------------------------------------------------------------------------------------
1,975,000 Glaxo Wellcome PLC (Medical-Drugs) 23,962,818
- ----------------------------------------------------------------------------------------
1,000,000 Granada Group PLC (Leisure & Recreation) 12,396,508
- ----------------------------------------------------------------------------------------
350,000 Stolt-Nielsen S.A.-ADR (Transportation-Miscellaneous) 7,262,500
- ----------------------------------------------------------------------------------------
337,250 Thorn EMI PLC (Leisure & Recreation) 9,353,953
- ----------------------------------------------------------------------------------------
127,043,700
- ----------------------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests 731,730,918
- ----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<C> <S> <C>
REPURCHASE AGREEMENT-2.56%(c)
$129,901,038 Daiwa Securities America Inc., 5.34%, 05/01/95(d) 129,901,038
- ----------------------------------------------------------------------------------------
TOTAL INVESTMENTS-98.13% 4,979,629,057
- ----------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-1.87% 94,781,165
- ----------------------------------------------------------------------------------------
TOTAL NET ASSETS-100.00% $5,074,410,222
========================================================================================
</TABLE>
Abbreviations:
ADR - American Depository Receipt
Conv. - Convertible
Deb. - Debentures
Sub. - Subordinated
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of this security has been determined in
accordance with procedures established by the Board of Directors. The market
value of this security at April 30, 1996 was $13,132,000 which represented
0.26% of net assets.
(c) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value as being 102% 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 on 04/30/96 with maturing value of
$767,124,680. Collateralized by $737,151,000 U.S. Treasury obligations,
0.00% to 11.25% due 05/15/96 to 02/15/21.
See Notes to Financial Statements.
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STATEMENT OF ASSETS AND LIABILITIES
April 30, 1996
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $4,090,864,009) $4,979,629,057
- ------------------------------------------------------------------------------------
Foreign currencies, at market value (cost $3,501,586) 3,475,235
- ------------------------------------------------------------------------------------
Receivables for:
Investments sold 111,744,188
- ------------------------------------------------------------------------------------
Capital stock sold 10,649,465
- ------------------------------------------------------------------------------------
Dividends and interest 4,947,034
- ------------------------------------------------------------------------------------
Investment for deferred compensation plan 47,860
- ------------------------------------------------------------------------------------
Other assets 114,584
- ------------------------------------------------------------------------------------
Total assets 5,110,607,423
- ------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 21,829,175
- ------------------------------------------------------------------------------------
Capital stock reacquired 8,581,928
- ------------------------------------------------------------------------------------
Deferred compensation 47,860
- ------------------------------------------------------------------------------------
Accrued advisory fees 2,479,971
- ------------------------------------------------------------------------------------
Accrued administrative service fees 12,617
- ------------------------------------------------------------------------------------
Accrued distribution fees 1,901,956
- ------------------------------------------------------------------------------------
Accrued transfer agent fees 579,675
- ------------------------------------------------------------------------------------
Accrued operating expenses 764,019
- ------------------------------------------------------------------------------------
Total liabilities 36,197,201
- ------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $5,074,410,222
- ------------------------------------------------------------------------------------
NET ASSETS:
Class A $4,859,206,284
- ------------------------------------------------------------------------------------
Class B $ 157,314,881
- ------------------------------------------------------------------------------------
Institutional Class $ 57,889,057
- ------------------------------------------------------------------------------------
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
Class A:
Authorized 750,000,000
- ------------------------------------------------------------------------------------
Outstanding 253,481,547
====================================================================================
Class B:
Authorized 750,000,000
- ------------------------------------------------------------------------------------
Outstanding 8,259,513
====================================================================================
Institutional Class:
Authorized 200,000,000
- ------------------------------------------------------------------------------------
Outstanding 2,986,393
====================================================================================
CLASS A:
Net asset value and redemption price per share $ 19.17
- ------------------------------------------------------------------------------------
Offering price per share:
(Net asset value of $19.17 divided by 94.50%) $ 20.29
====================================================================================
CLASS B:
Net asset value and offering price per share $ 19.05
====================================================================================
INSTITUTIONAL CLASS:
Net asset value, offering and redemption price per share $ 19.38
====================================================================================
</TABLE>
See Notes to Financial Statements.
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STATEMENT OF OPERATIONS
For the six months ended April 30, 1996
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $749,284 foreign withholding tax) $ 28,373,892
- -----------------------------------------------------------------------------------
Interest 8,254,048
- -----------------------------------------------------------------------------------
Total investment income 36,627,940
- -----------------------------------------------------------------------------------
EXPENSES:
Advisory fees 15,084,498
- -----------------------------------------------------------------------------------
Administrative service fees 55,446
- -----------------------------------------------------------------------------------
Custodian fees 70,325
- -----------------------------------------------------------------------------------
Directors' fees 7,856
- -----------------------------------------------------------------------------------
Distribution fees-Class A 6,941,306
- -----------------------------------------------------------------------------------
Distribution fees-Class B 451,959
- -----------------------------------------------------------------------------------
Transfer agent fees-Class A 4,181,974
- -----------------------------------------------------------------------------------
Transfer agent fees-Class B 123,506
- -----------------------------------------------------------------------------------
Transfer agent fees-Institutional Class 1,925
- -----------------------------------------------------------------------------------
Other 577,028
- -----------------------------------------------------------------------------------
Total expenses 27,495,823
- -----------------------------------------------------------------------------------
Less fees waived by advisor (663,890)
- -----------------------------------------------------------------------------------
Net expenses 26,831,933
- -----------------------------------------------------------------------------------
Net investment income 9,796,007
- -----------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES,
FOREIGN CURRENCIES AND FUTURES CONTRACTS:
Net realized gain (loss) on sales of:
Investment securities 479,497,460
- -----------------------------------------------------------------------------------
Foreign currencies (125,026)
- -----------------------------------------------------------------------------------
Futures contracts (7,874,291)
- -----------------------------------------------------------------------------------
471,498,143
- -----------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of:
Investment securities (63,496,144)
- -----------------------------------------------------------------------------------
Foreign currencies 143,872
- -----------------------------------------------------------------------------------
(63,352,272)
- -----------------------------------------------------------------------------------
Net gain on investment securities, foreign currencies and futures
contracts 408,145,871
- -----------------------------------------------------------------------------------
Net increase in net assets resulting from operations $417,941,878
===================================================================================
</TABLE>
See Notes to Financial Statements.
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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) $ 9,796,007 $ (1,259,456)
- -----------------------------------------------------------------------------------------
Net realized gain on sales of investment
securities, foreign currencies, futures and
options contracts 471,498,143 620,641,509
- -----------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of
investment securities and foreign currencies (63,352,272) 411,202,260
- -----------------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 417,941,878 1,030,584,313
- -----------------------------------------------------------------------------------------
Dividends to shareholders from net investment
income:
Class A -- (14,842,521)
- -----------------------------------------------------------------------------------------
Class B -- --
- -----------------------------------------------------------------------------------------
Institutional Class -- (290,923)
- -----------------------------------------------------------------------------------------
Distributions to shareholders from net realized
gains on investment securities:
Class A (606,615,135) (387,332,253)
- -----------------------------------------------------------------------------------------
Class B (7,813,688) --
- -----------------------------------------------------------------------------------------
Institutional Class (7,333,818) (4,072,920)
- -----------------------------------------------------------------------------------------
Net equalization credits (charges):
Class A 3,473,548 204,025
- -----------------------------------------------------------------------------------------
Class B 550,475 297,921
- -----------------------------------------------------------------------------------------
Institutional Class 69,990 71,195
- -----------------------------------------------------------------------------------------
Share transactions-net:
Class A 493,722,778 (17,628,236)
- -----------------------------------------------------------------------------------------
Class B 113,038,327 41,458,876
- -----------------------------------------------------------------------------------------
Institutional Class 6,077,118 6,504,480
- -----------------------------------------------------------------------------------------
Net increase in net assets 413,111,473 654,953,957
- -----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 4,661,298,749 4,006,344,792
- -----------------------------------------------------------------------------------------
End of period $5,074,410,222 $4,661,298,749
=========================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $3,683,390,922 $3,070,552,699
- -----------------------------------------------------------------------------------------
Undistributed net investment income 38,918,893 25,028,873
- -----------------------------------------------------------------------------------------
Undistributed net realized gain on sales of
investment securities, foreign currencies,
futures and options contracts 463,568,542 613,833,040
- -----------------------------------------------------------------------------------------
Unrealized appreciation of investment securities,
foreign currencies, and futures contracts 888,531,865 951,884,137
- -----------------------------------------------------------------------------------------
$5,074,410,222 $4,661,298,749
=========================================================================================
</TABLE>
See Notes to Financial Statements.
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NOTES TO FINANCIAL STATEMENTS
April 30, 1996
(Unaudited)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Weingarten Fund (the "Fund") is a series 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 Weingarten Fund, AIM Charter Fund, AIM Constellation Fund and
AIM Aggressive Growth Fund. The Fund currently offers three different classes of
shares: the Class A shares, Class B shares and the Institutional Class. Matters
affecting each portfolio or class will be voted on exclusively by such
shareholders. The assets, liabilities and operations of each portfolio are
accounted for separately. The Fund's investment objective is to seek growth of
capital principally through investment in common stocks of seasoned and better
capitalized companies. Information presented in these financial statements
pertains only to the Fund.
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements. 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 -- Except as provided in the next sentence, 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. Exchange listed convertible bonds are valued
at the mean between the closing bid and asked prices obtained from a
broker-dealer. 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. 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. 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 will not be reflected in the computation of the Fund's net
asset value. If events materially affecting the value of such securities
occur during such period, then these securities will be valued at their fair
value as determined in good faith by or under the supervision of the Board
of Directors.
B. Foreign Currency Translations -- Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are translated
into U.S. dollar amounts on the respective dates of such transactions.
C. Foreign Currency Contracts -- A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a currency contract for the purchase or sale
of a security denominated in a foreign currency in order to "lock in" the
U.S. dollar price of that security. The Fund could be exposed to risk if
counterparties to the contracts are unable to meet the terms of their
contracts.
D. Stock Index Futures Contracts -- The Fund may purchase or sell stock index
futures contracts as a hedge against changes in market conditions. Initial
margin deposits required upon entering into futures
W E I N G A R T E N
64
<PAGE> 67
Financials
contracts are satisfied by the segregation of specific securities or cash,
and/or by securing a standby letter of credit from a major commercial bank,
as collateral, for the account of the broker (the Fund's agent in acquiring
the futures position). During the period the futures contract is open,
changes in the value of the contract are recognized as unrealized gains or
losses by "marking to market" on a daily basis to reflect the market value
of the contract 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 contract is closed, the Fund records a realized gain or
loss equal to the difference between the proceeds from (or cost of) the
closing transaction and the Fund's basis in the contract. Risks include the
possibility of an illiquid market and that a change in the value of the
contract may not correlate with changes in the securities being hedged.
E. Covered Call Options -- The Fund may write call options, but only on a
covered basis; that is, the Fund will own the underlying security. Options
written by the Fund normally will have expiration dates between three and
nine months from the date written. The exercise price of a call option may
be below, equal to, or above the current market value of the underlying
security at the time the option is written. When the Fund writes a covered
call option, an amount equal to the premium received by the Fund is recorded
as an asset and an equivalent liability. The amount of the liability is
subsequently "marked-to-market" to reflect the current market value of the
option written. The current market value of a written option is the last
sale price, or in the absence of a sale, the mean between the last bid and
asked prices on that day. If a written call option expires on the stipulated
expiration date, or if the Fund enters into a closing purchase transaction,
the Fund realizes a gain (or a loss if the closing purchase transaction
exceeds the premium received when the option was written) without regard to
any unrealized gain or loss on the underlying security, and the liability
related to such option is extinguished. If a written option is exercised,
the Fund realizes a gain or a loss from the sale of the underlying security
and the proceeds of the sale are increased by the premium originally
received.
A call option gives the purchaser of such option the right to buy, and
the writer (the Fund) the obligation to sell, the underlying security at
the stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the
call option at any time during the option period. During the option period,
in return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has
retained the risk of loss should the price of the underlying security
decline. During the option period, the Fund may be required at any time to
deliver the underlying security against payment of the exercise price. This
obligation is terminated upon the expiration of the option period or at
such earlier time at which the Fund effects a closing purchase transaction
by purchasing (at a price which may be higher than that received when the
call option was written) a call option identical to the one originally
written. The Fund will not write a covered call option if, immediately
thereafter, the aggregate value of the securities underlying all such
options, determined as of the dates such options were written, would exceed
25% of the net assets of the Fund.
F. Securities Transactions, Investment Income and Distributions -- Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the specific identification of securities
sold. Interest income is recorded as earned from settlement date and is
recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date.
G. 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.
H. Expenses -- Operating expenses directly attributable to a class of shares
are charged to that class' operations. Expenses which are applicable to all
classes, eg. advisory fees, are allocated among them.
I. Equalization -- The Fund follows the accounting practice known as
equalization by which a portion of the proceeds from sales and the costs of
repurchases of Fund shares, equivalent on a per share basis to the amount of
undistributed net investment income, is credited or charged to undistributed
net income when the transaction is recorded so that undistributed net
investment income per share is unaffected by sales or redemptions of Fund
shares.
W E I N G A R T E N
65
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Financials
NOTE 2 -- ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). The terms of the master investment advisory agreement
provide that the Fund shall pay an advisory fee to AIM at an 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
$350 million, plus 0.625% of the Fund's average daily net assets in excess of
$350 million. AIM is currently voluntarily waiving a portion of its advisory
fees payable 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 $350 million, plus 0.625% of the Fund's average daily net assets
in excess of $350 million to and including $2 billion, plus 0.60% of the Fund's
average daily net assets in excess of $2 billion to and including $3 billion,
plus 0.575% of the Fund's average daily net assets in excess of $3 billion to
and including $4 billion, plus 0.55% of the Fund's average daily net assets in
excess of $4 billion. The waiver of fees is entirely voluntary but approval is
required by the Board of Directors of the Company for any decision by AIM to
discontinue the waiver. During the six months ended April 30, 1996, AIM waived
fees of $663,890. 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 of any state in which the Fund's shares are qualified for sale.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the six months ended April 30, 1996, AIM
was reimbursed $55,446 for such services.
The Fund, pursuant to a transfer agency and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") for certain costs incurred in providing
transfer agency services to the Class A shares and Class B shares. During the
six months ended April 30, 1996, AFS was reimbursed $2,210,305 for such
services.
During the six months ended April 30, 1996, the Fund, pursuant to a transfer
agency and service agreement, paid A I M Institutional Fund Services, Inc.
("AIFS") $1,925 for shareholder and transfer agency services with respect to the
Institutional Class.
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 and Class B shares and a master distribution agreement with Fund
Management Company ("FMC") to serve as the distributor for the Institutional
Class. The Company has adopted Plans pursuant to Rule 12b-1 under the 1940 Act
with respect to the Fund's Class A shares (the "Class A Plan") and with respect
to the Fund's Class B shares (the "Class B Plan") (collectively, the "Plans").
The Fund, pursuant to the Class A Plan, pays AIM Distributors compensation at
the annual rate of 0.30% of the average daily net assets attributable to the
Class A shares. The Class A Plan is designed to compensate AIM Distributors for
certain promotional and other sales related costs, and to implement a program
which provides periodic payments to selected dealers and financial institutions
who furnish continuing personal shareholder services to their customers who
purchase and own Class A shares of the Fund. The Fund, pursuant to the Class B
Plan, pays AIM Distributors compensation at an annual rate of 1.00% of the
average daily net assets attributable to the Class B shares. Of this amount, the
Fund may pay a service fee of 0.25% of the average daily net assets of the Class
B shares to selected dealers and financial institutions who furnish continuing
personal shareholder services to their customers who purchase and own Class B
shares of the Fund. Any amounts not paid as a service fee under such Plans would
constitute an asset-based sales charge. The Plans also impose a cap on the total
sales charges, including asset-based sales charges, that may be paid by the
respective classes. AIM Distributors may, from time to time, assign, transfer or
pledge to one or more designees, its rights to all or a designated portion of
(a) compensation received by AIM Distributors from the Fund pursuant to the
Class B Plan (but not AIM Distributors duties and obligations pursuant to the
Class B Plan) and (b) any contingent deferred sales charges received by AIM
Distributors related to the Class B shares. During the six months ended April
30, 1996, the Class A shares and the Class B shares paid AIM Distributors
$6,941,306 and $451,959, respectively, as compensation under the Plans.
W E I N G A R T E N
66
<PAGE> 69
Financials
AIM Distributors received commissions of $1,320,988 from sales of shares of
the Class A shares of the Fund 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 Class A shares. During the six months
ended April 30, 1996, AIM Distributors received commissions of $1,470 in
contingent deferred sales charges imposed on redemptions of Class B shares.
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 $8,537
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-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold during the six months ended April 30, 1996 was $4,340,367,975
and $4,345,873,752, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of April 30, 1996 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $919,552,773
- -----------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (30,848,302)
- -----------------------------------------------------------------------------------
Net unrealized appreciation of investment securities 888,704,471
===================================================================================
</TABLE>
Cost of investments for tax purposes is $4,090,924,586.
NOTE 4-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company invests directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 5-BANK BORROWINGS
The Fund has a $68,400,000 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. 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 6-CAPITAL STOCK
Changes in the capital stock outstanding during the six months ended April 30,
1996 and 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 20,405,015 $377,609,502 32,034,901 $559,325,258
- ----------------------------------------------------------------------------------------
Class B* 6,234,266 114,620,558 2,180,033 43,415,613
- ----------------------------------------------------------------------------------------
Institutional Class 257,868 4,879,423 559,557 10,092,219
- ----------------------------------------------------------------------------------------
Issued as a reinvestment of
dividends:
Class A 32,395,132 557,844,149 24,460,017 361,036,594
- ----------------------------------------------------------------------------------------
Class B* 425,933 7,326,049 -- --
- ----------------------------------------------------------------------------------------
Institutional Class 338,803 5,871,449 199,304 2,950,819
- ----------------------------------------------------------------------------------------
Reacquired:
Class A (23,882,725) (441,730,873) (54,445,065) (937,990,088)
- ----------------------------------------------------------------------------------------
Class B* (483,195) (8,908,280) (97,524) (1,956,737)
- ----------------------------------------------------------------------------------------
Institutional Class (262,910) (4,673,754) (363,327) (6,538,558)
- ----------------------------------------------------------------------------------------
35,428,187 $612,838,223 4,527,896 $ 30,335,120
========================================================================================
</TABLE>
* Class B shares commenced sales on June 26, 1995.
W E I N G A R T E N
67
<PAGE> 70
Financials
NOTE 7-FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share of the
Institutional Class capital stock outstanding during the six months ended April
30, 1996, each of the years in the four-year period ended October 31, 1995 and
the period October 8, 1991 (date operations commenced) through October 31, 1991.
<TABLE>
<CAPTION>
OCTOBER 31,
APRIL 30, --------------------------------------------------
1996 1995 1994 1993 1992 1991
------- ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 20.48 $ 17.94 $ 17.69 $ 16.73 $ 15.77 $15.15
- -------------------------------------------------------------- ------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income 0.09 0.10 0.17 0.16 0.14 0.01
- -------------------------------------------------------------- ------ ------ ------ ------ ------ ------
Net gains (losses) on securities (both realized and
unrealized) 1.52 4.35 0.58 0.93 0.99 0.61
- -------------------------------------------------------------- ------ ------ ------ ------ ------ ------
Total from investment operations 1.61 4.45 0.75 1.09 1.13 0.62
- -------------------------------------------------------------- ------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income -- (0.13) (0.17) (0.13) (0.08) --
- -------------------------------------------------------------- ------ ------ ------ ------ ------ ------
Distributions from net realized capital gains (2.71) (1.78) (0.33) -- (0.09) --
- -------------------------------------------------------------- ------ ------ ------ ------ ------ ------
Total distributions (2.71) (1.91) (0.50) (0.13) (0.17) --
- -------------------------------------------------------------- ------ ------ ------ ------ ------ ------
Net asset value, end of period $ 19.38 $ 20.48 $ 17.94 $ 17.69 $ 16.73 $15.77
============================================================== ====== ====== ====== ====== ====== ======
Total return(a) 9.25% 28.69% 4.37% 6.53% 7.16% 4.09%
============================================================== ====== ====== ====== ====== ====== ======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $57,889 $54,332 $40,486 $39,821 $16,519 $3,926
============================================================== ====== ====== ====== ====== ====== ======
Ratio of expense to average net assets 0.66%(b)(c) 0.70% 0.65% 0.78% 0.82% 0.90%(c)
============================================================== ====== ====== ====== ====== ====== ======
Ratio of net investment income to average net assets 0.90%(b)(c) 0.45% 1.00% 0.97% 0.91% 1.00%(c)
============================================================== ====== ====== ====== ====== ====== ======
Portfolio turnover rate 95% 139% 136% 109% 37% 46%
============================================================== ====== ====== ====== ====== ====== ======
Borrowings for the period:
Amount of debt outstanding at end of period (000s omitted) -- -- -- -- -- --
============================================================== ====== ====== ====== ====== ====== ======
Average amount of debt outstanding during the period (000s
omitted)(d) -- $ 6 -- -- -- --
============================================================== ====== ====== ====== ====== ====== ======
Average number of shares outstanding during the period (000s
omitted)(d) 2,883 2,526 2,256 1,826 707 249
============================================================== ====== ====== ====== ====== ====== ======
Average amount of debt per share during the period -- $0.0024 -- -- -- --
============================================================== ====== ====== ====== ====== ====== ======
</TABLE>
(a) For periods less than one year, total return is not annualized.
(b) After waiver of advisory fees. Ratios of expenses and net investment income
to average net assets prior to waiver of advisory fees were 0.70% and 0.86%,
respectively. Ratios are based on average net assets of $54,705,444.
(c) Annualized.
(d) Averages computed on a daily basis.
W E I N G A R T E N
68
<PAGE> 71
Directors & Officers
<TABLE>
<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 Institutional Fund
Cortland Trust Inc. Services, Inc.
Scott G. Lucas 11 Greenway Plaza
Carl Frischling Senior Vice President Suite 1919
Partner Houston, TX 77046
Kramer, Levin, Naftalis, Nessen, Carol F. Relihan
Kamin & Frankel Senior Vice President and Secretary CUSTODIAN
State Street Bank and
Robert H. Graham Jonathan C. Schoolar Trust Company
President and Chief Operating Officer Senior Vice President 225 Franklin Street
A I M Management Group Inc. Boston, MA 02110
Melville B. Cox
John F. Kroeger Vice President COUNSEL TO THE FUND
Formerly, Consultant Ballard Spahr
Wendell & Stockel Associates, Inc. Dana R. Sutton Andrews & Ingersoll
Vice President and Assistant Treasurer 1735 Market Street
Lewis F. Pennock Philadelphia, PA 19103
Attorney P. Michelle Grace
Assistant Secretary COUNSEL TO THE DIRECTORS
Ian W. Robinson Kramer, Levin, Naftalis,
Consultant; Formerly Executive David L. Kite Nessen, Kamin & Frankel
Vice President and Assistant Secretary 919 Third Avenue
Chief Financial Officer New York, NY 10022
Bell Atlantic Management Nancy L. Martin
Services, Inc. Assistant Secretary DISTRIBUTOR
Fund Management Company
Louis S. Sklar Ofelia M. Mayo 11 Greenway Plaza
Executive Vice President Assistant Secretary Suite 1919
Hines Interests Houston, TX 77046
Limited Partnership Kathleen J. Pflueger
Assistant Secretary
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
Mary J. Benson
Assistant Treasurer
</TABLE>
W E I N G A R T E N
69
<PAGE> 72
[LOGO APPEARS HERE]
FUND MANAGEMENT COMPANY
11 GREENWAY PLAZA, SUITE 1919
HOUSTON, TEXAS 77046-1188
