<PAGE> 1
[Photo appears here]
AIM WEINGARTEN FUND
[AIM LOGO APPEARS HERE] ANNUAL REPORT OCTOBER 31, 1996
<PAGE> 2
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ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGOUT THIS REPORT:
o The Fund's average annual total returns, including sales charges, for
periods ended 9/30/96 (the most recent calendar quarter-end) are as
follows. For A shares, one year, 5.37% (11.50% excluding sales charges);
five years, 10.58%; 10 years, 14.69%. For B shares, one year, 5.65%
(10.65% excluding sales charges); since inception on 6/15/95, 15.46%.
o AIM Weingarten Fund performance figures are historical and reflect
reinvestment of all distributions and changes in net asset value. Unless
otherwise indicated, Fund results were computed at net asset value without
reflecting sales charges.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 5.50% sales charge, and Class B share
performance reflects the applicable contingent deferred sales charge (CDSC)
for the period involved. The CDSC on Class B shares declines from 5%
beginning at the time of purchase to 0% at the beginning of the seventh year.
The performance of the Fund's Class B shares will differ from that of Class
A shares due to differences in sales charge structure and class expenses.
o One-year performance includes reinvested distributions of $2.706 per share
for Class A shares and $2.706 for Class B shares.
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 particular security.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o Lipper Analytical Services, Inc. is an independent mutual fund performance
monitor. The unmanaged Lipper Growth Fund Index represents an average of the
performance of the 30 largest growth mutual funds.
o Standard & Poor's Corporation (S&P) is a credit-rating agency. The unmanaged
Standard & Poor's Composite Index of 500 Stocks (S&P 500) is widely regarded
by investors as representative of the stock market in general.
o The Dow Jones Industrial Average (DJIA) is an unmanaged composite of the
performance of 30 large-company stocks.
o The Consumer Price Index (CPI) is a measure of change in consumer prices as
determined by the U.S. Bureau of Labor Statistics.
o An investment cannot be made in any index listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect
sales charges.
MUTUAL FUNDS, ANNUITIES, AND OTHER INVESTMENTS ARE NOT
INSURED BY THE FDIC OR ANY OTHER GOVERNMENT AGENCY;
ARE NOT DEPOSITS OR OTHER
OBLIGATIONS OF, OR GUARANTEED BY, ANY BANK OR ANY AFFILIATE;
AND ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS
OF PRINCIPAL AMOUNT INVESTED.
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.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the Fund.
<PAGE> 3
THE CHAIRMAN'S LETTER
Dear Shareholder:
As you may have heard in the financial news, A I M
[PHOTO OF Management Group Inc. recently announced a significant
Charles T. Bauer, event in our company's history--an agreement to merge
Chairman of with INVESCO PLC, one of the world's largest independent
the Board of investment management groups.
the Fund. AIM has long been known for its strategic planning and
APPEARS HERE] forward thinking. In seeking this merger, AIM had specific
goals in choosing a partner: to better AIM's position to
succeed in an increasingly competitive financial services
environment, both in the U.S. and globally; to ensure the continuation of AIM's
independent culture, investment philosophy, and dedication to our shareholders;
and to offer the broadest range of products and services to our shareholders.
A "MERGER OF EQUALS" THAT PRESERVES INDEPENDENCE
When the merger is completed, AIM and INVESCO will be combined under a new
holding company to be named AMVESCO, to reflect the strongly complementary
strengths of our two companies which together create a "merger of equals."
AMVESCO will have combined assets under management in excess of $150 billion.
Most importantly, the agreement enables AIM to preserve its independent
culture--which has been so essential to our company's success. The locations,
management, structure, and brand names of AIM and INVESCO will not change.
With INVESCO, AIM achieves a strategic combination with a partner that
offers complementary rather than overlapping strengths. AIM has delivered
impressive performance over the years as a domestic retail fund manager.
INVESCO brings to AIM its primary strengths as an institutional money manager,
and as a successful international investment manager with significant
operations in North America, Europe, and the Pacific region.
NO CHANGES IN YOUR AIM FUND OR ITS MANAGEMENT
While AIM certainly will be enriched through these added strengths, it will
retain those qualities that have produced two decades of successful
performance. The reputation of AIM funds has been built by its seasoned team of
portfolio managers who adhere to AIM's disciplined and successful investment
management process. AIM's central goal is to keep the current investment team
in place and our time-tested investment philosophy intact. Also, the names of
AIM funds will not change.
Moreover, because the merger will not result in any changes in the way AIM
does business, this transaction will be seamless--without any disruption of
service to you.
YOUR VOTE IS IMPORTANT
The merger is expected to be completed on or about February 28. As a result of
the merger, it is necessary for shareholders of AIM funds to approve a new
investment advisory agreement.
Recently, we mailed an announcement for the shareholder meeting planned on
February 7, along with a proxy card that describes proposals that relate to the
management and policies of your Fund. We encourage you to review and return
your proxy as soon as possible. Your Fund's Board of Directors carefully
considered and unanimously approved the proposals and recommends that you vote
in favor of each one. Your vote is important to us. If you haven't yet mailed
your proxy card, please send it today.
The AIM/INVESCO merger marks a new and promising era for AIM, and we believe
it will yield exciting opportunities for AIM shareholders. We appreciate the
trust you have placed in us.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
--------------
With INVESCO, AIM
achieves a strategic
combination with a
partner that offers comple-
mentary rather than
overlapping strengths.
--------------
<PAGE> 4
THE MANAGERS' OVERVIEW
FUND RECORD OF SOLID
RESULTS CONTINUES
A roundtable discussion with the Fund management team for AIM Weingarten Fund
for the fiscal year ended October 31, 1996.
- -------------------------------------------------------------------------------
Q. HOW DID AIM WEINGARTEN FUND PERFORM DURING THE FISCAL YEAR?
A. The Fund's total return was 14.81% A shares and 13.95% for B shares, which
is consistent with the Fund's attractive historical returns. The Fund's average
annual total return from its inception in 1969 through October 31, 1996, was
14.83%.* By comparison, over the same period, average annual total return for
the Standard & Poor's Composite Index of 500 Stocks (S&P 500) was 11.70%.
During the fiscal year, AIM Weingarten Fund paid income distributions of $2.706
per share for A and B shares. Net assets of the Fund grew from $4.66 billion to
$5.31 billion during the year.
Q. HOW WOULD YOU DESCRIBE MARKET CONDITIONS DURING THE REPORTING PERIOD?
A. Financial markets produced very good returns but were quite volatile. For
example, the widely followed Dow Jones Industrial Average (DJIA) rose a dramatic
20% during the first 10 months of 1996, but it was hardly a smooth ride up.
Trading curbs were triggered often on the New York Stock Exchange because there
was so much intraday volatility in stock prices. And between July 1 and 15, the
DJIA lost 7% of its value when unexpectedly strong employment figures heightened
fears of inflation.
But toward the end of the fiscal year, data suggested what some have called
a "Goldilocks economy"--not too hot, not too cold. The DJIA recouped its losses
and by October 14 had passed the 6,000 level. However, market participants
became more cautious. There was a "flight to quality," with investors favoring
steady-growing blue-chip stocks over more volatile, less well-known
small-company stocks.
Q. DID ANY SIGNIFICANT INVESTMENT PATTERNS EMERGE IN THE PORTFOLIO DURING
THIS PERIOD?
A. Our stock selection process focuses on one security at a time. Nevertheless,
trends appear when you step back and look at the portfolio as a whole, with
health care, technology, and selected retailers as major components.
Q. WHAT KINDS OF HEALTH-CARE STOCKS HAVE YOU FOUND ATTRACTIVE?
A. Three groups of stocks--drug makers, patient care providers, and makers of
medical instruments and devices--together add up to almost 15% of net assets.
Drug makers account for 7.69% of the portfolio. One driving force here has
been increased use of prescription drugs by Medicare recipients enrolled in
managed care; such holdings as Bristol-Myers Squibb and SmithKline Beecham
reported increased earnings.
Hospitals and other patient care providers represent another 3.6% of the
portfolio. Large holdings here include Columbia/HCA Healthcare, a leader of the
consolidation wave sweeping this industry; and HealthSouth Corp., which
operates outpatient surgery and rehabilitation centers.
A number of compelling factors suggest further growth for the health-care
industry. An aging population is bound to produce continued demand. A new
federal entitlement initiative in the health-care area seems unlikely, which
means a steady, more certain environment in the industry. Additionally,
health-care companies have made enormous strides in cost control and increased
efficiency through consolidation in recent years.
Q. HOW HAVE YOU MANAGED THE TECHNOLOGY PORTION OF THE PORTFOLIO IN THE FACE OF
MARKET VOLATILITY?
A. Many technology stocks tend to be volatile, and many had
steep declines late in 1995 and during the July sell-off. Fund
GROWTH IN NET ASSETS
10/31/95 $4.66 billion
10/31/96 $5.31 billion
See important Fund & index disclosures inside front cover.
2
<PAGE> 5
<TABLE>
<CAPTION>
===============================================================================
PORTFOLIO HOLDINGS (AS OF 10/31/96)
===============================================================================
<S> <C>
Top 10 Industries Top 10 Common Stock Holdings
1. Computer Software/Services 1. Student Loan Marketing Association
2. Medical (Drugs) 2. Intel Corp.
3. Retail (Stores) 3. Pep Boys-Manny, Moe & Jack
4. Telecommunications 4. ADC Telecommunications, Inc.
5. Finance (Consumer Credit) 5. Loews Corp.
6. Computer Networking 6. Conseco, Inc.
7. Insurance (Multi-Line Property) 7. Cisco Systems, Inc.
8. Medical (Patient Services) 8. 3Com Corp.
9. Medical (Instruments/Products) 9. Philip Morris Companies, Inc.
10. Computers MINI/PCs 10. Federal National Mortgage Association
===============================================================================
</TABLE>
Please keep in mind that the Fund's portfolio is subject to change and there
is no assurance the Fund will continue to hold any particular security.
performance suffered, and our large positions in technology are the main reason
the Fund underperformed the S&P 500 for the reporting period. But a number of
these stocks already have started to rebound, and trends favor certain kinds of
technology companies over others.
For example, while commodity-type semiconductor producers are suffering from
overcapacity and an inability to raise prices, that helps personal computer
makers like Compaq and Dell, whose component costs decrease as a result.
Personal computer makers are anticipating a good Christmas season. PC makers
constitute approximately 3% of the Fund's portfolio. And companies that help
others network PCs into more sophisticated information systems are doing well.
Overall, we are optimistic about the technology sector. The cream of the
technology companies, like Intel and Microsoft, are still going strong. And new
products like Windows NT from Microsoft, the Pentium Pro chip from Intel, and
the next generation of modems should fuel another upgrade cycle for
corporations.
Q. WHAT MAKES THE RETAIL SECTOR ATTRACTIVE?
A. Many analysts are predicting a good Christmas season and New Year for
retailers. Consumer confidence is high, buoyed by low unemployment and the
absence of inflation.
Our investment focus, however, emphasizes individual companies instead of
sectors. One retailer we found attractive is Pep Boys--full name Pep Boys-Manny,
Moe & Jack--the auto parts chain. The company has been expanding beyond just
parts selling into performing maintenance for vehicle fleets and reconditioning
cars for auto rental firms. Another example is Toys R Us, which made a brilliant
move earlier this year when it took over Baby Superstore, Inc. Essentially, Toys
R Us eliminated its biggest and best competitor in baby gear by buying it.
Q. WHAT IS YOUR MARKET OUTLOOK FOR THE NEAR TERM?
A. The bull market for stocks marked its sixth year in October, making it the
longest in history. Analysts disagree on whether this will continue, and no one
can know for sure.
We have had an unusual four-to-five-year period now when earnings growth has
been above the historic average. We've been anticipating change and this fall,
we finally saw evidence that the rate of growth of corporate earnings has
slowed. Over the long haul, we believe this will be good for those steady
companies like Gillette or Procter & Gamble that don't get big bumps from
cyclical surges but over time outdo the market averages.
We also see a trend back toward large-capitalization stocks. Smaller-company
stocks have been favored by the market for most of the 1990s, but we no longer
see any great advantage to them. For the price you pay for them, we don't think
small-company stocks are producing a dramatic edge in earnings growth compared
to large-company stocks. We are not saying small-company stocks are a bad
investment, just that they may not continue to outdo large-company stocks in
the foreseeable future. That is why we think a diversified equity portfolio
ought to contain both types of stocks.
Some observers consider the stock market overpriced after the huge runup in
values the past two years. We certainly don't think the market is undervalued,
but many companies continue to report favorable earnings, even with a
slower rate of growth. Good earnings are the most important indicator of a
stock's future performance. By that criterion, the stock market remains a good
place to invest.
------------
Our stock selection
process focuses on one security
at a time. Nevertheless,
trends appear when you step back
and look at the portfolio
as a whole.
------------
See important Fund & index disclosures inside front cover.
3
<PAGE> 6
LONG-TERM PERFORMANCE
THE AIM WEINGARTEN FUND GROWTH STORY
Growth of a $10,000 Investment: June 17, 1969-October 31, 1996
AVERAGE ANNUAL TOTAL RETURNS
For periods ended 10/31/96. Including sales charges.
A SHARES B SHARES
Since Inception (6/17/69) 14.60% Since Inception (6/15/95) 14.82%
20 Years 19.86 1 Year 8.95**
10 Years 13.88
5 Years 10.36 **13.95% excluding sales charges
1 Year 8.49*
*14.81% excluding sales charges
AIM WEINGARTEN FUND CLASS A SHARES VS. BENCHMARK INDEXES
The chart compares your Fund's Class A shares to indexes. It is important to
understand differences between your fund and these indexes. An index measures
performance of a hypothetical portfolio. A market index, such as the Standard &
Poor's 500, is not managed, incurring no sales charges, expenses or fees. If
you could buy all the securities that make up an index, you would incur
expenses that would affect your investment's return. An index of funds, such as
the Lipper Growth Fund Index, includes a number of mutual funds grouped by
investment objective. Each of those funds interprets that objective
differently, and each employs a different management style and investment
strategy. Use of these indexes is intended to give you a general idea of how
your Fund performed compared to these benchmarks.
<TABLE>
<CAPTION>
AIM Weingarten Fund Lipper Growth Fund Index S&P 500 Cost of Living Index
<S> <C> <C> <C> <C>
6/17/69 9,444 10,000 10,000 10000
10/69 9,416 10,495 10,090 10,191
10/70 8,231 8,293 8,970 10,765
10/71 11,486 10,426 10,497 11,175
10/72 14,252 12,908 12,771 11,557
10/73 12,910 11,878 12,766 12,459
10/74 8,113 7,597 9,096 13,962
10/75 10,274 9,311 11,467 15,000
10/76 10,507 10,681 13,768 15,820
10/77 12,927 10,325 12,917 16,831
10/78 15,588 11,599 13,729 18,333
10/79 21,780 14,306 15,831 20,546
10/80 40,449 20,539 20,915 23,169
10/81 40,792 20,710 21,029 25,519
10/82 46,299 23,894 24,463 26,831
10/83 65,474 30,474 31,285 27,596
10/84 63,091 29,783 33,256 28,770
10/85 75,468 35,261 39,689 29,699
10/86 107,220 45,589 52,844 30,137
10/87 113,346 45,974 56,196 31,503
10/88 127,855 52,984 64,533 32,842
10/89 172,770 66,366 81,486 34,317
10/90 165,806 57,852 75,362 36,475
10/91 240,228 81,831 100,610 37,541
10/92 256,684 88,217 110,599 38,743
10/93 272,524 104,963 127,063 39,809
10/94 282,781 107,109 131,980 40,847
10/95 362,527 132,790 166,767 41,995
10/96 416,215 155,281 206,830 43,115
</TABLE>
Past performance is no guarantee of comparable future results.
<TABLE>
<CAPTION>
6/17/69 1970 1971 1972 1973 1974 1975 1976 1977 1978
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income Dividends Reinvested $ 0 38 58 0 0 0 0 54 0 98
Capital Gains Reinvested $ 0 57 0 0 1,344 0 0 0 0 0
Total Distributions Reinvested $ 0 95 58 0 1,344 0 0 54 0 98
Total Account Value $ 9,416 8,231 11,486 14,252 12,910 8,113 10,274 10,507 12,927 15,588
<CAPTION>
1979 1980 1981 1982 1983 1984 1985 1986 1987 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income Dividends Reinvested 208 166 237 102 0 205 461 789 958 127
Capital Gains Reinvested 0 3,483 5,381 5,204 0 14,466 0 4,778 24,445 9,741
Total Distributions Reinvested 208 3,649 5,618 5,306 0 14,671 461 5,567 25,403 9,868
Total Account Value 21,780 40,449 40,792 46,299 65,474 63,091 75,468 107,220 113,346 127,855
<CAPTION>
1989 1990 1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Income Dividends Reinvested 1558 898 1,338 1,029 1,347 1,701 1,079 0
Capital Gains Reinvested 0 8,919 3,123 1,334 0 5,081 28,215 48,254
Total Distributions Reinvested 1,558 9,817 4,461 2,363 1,347 6,782 29,294 48,254
Total Account Value 172,770 165,806 240,228 256,684 272,524 282,781 362,527 416,215
</TABLE>
Data shown are as of the Fund's fiscal year-end. Class A shares' total return
includes sales charges, expenses, and management fees. The performance of Class
B shares will differ from that of Class A shares due to differing fees and
expenses. For Fund performance calculations and descriptions of indexes cited
on this page, please refer to the inside front cover.
Source: Towers Data Systems HYPO--Registered Trademark--.
<PAGE> 7
FOR CONSIDERATION
INVESTMENT STRATEGIES FOR 1997 TO
KEEP YOU IN THE MARKET COME RAIN OR COME SHINE
DIVERSIFICATION: WEATHER-PROOFING YOUR PORTFOLIO
As another investment year comes to a close, it's a good time to return to the
basics of investing: risk and reward. Focus on what are you trying to
accomplish--your reward--and ask yourself how much risk you are willing to
take.
You've probably often heard that the higher the risk, the higher the reward,
but that maxim doesn't always hold true. There are different types of risks,
and different types of investments may help buffer those risks.
DIVERSIFICATION AS A STRATEGY
With a diversified investment strategy, return depends on the overall
performance of the portfolio, rather than of one particular investment. The
gains of one sector may offset the losses of another.
Let's look at a core diversification strategy. Investments are classified
into several categories: cash or cash equivalents, income and growth. These
categories are made up of different securities and each meets basic needs:
o MONEY MARKET SECURITIES: ready cash for emergencies or other immediate needs;
o BONDS: current income to cover ongoing expenses;
o STOCKS: funds for the future.
All of these investment categories belong in a balanced, diversified
portfolio. The blend depends on your age, time horizon, objectives and
tolerance for risk. Money market securities are the most conservative, bonds
range from conservative to aggressive, and stocks generally are the most
aggressive investment. Each category reacts differently to the economy and
other factors affecting the financial markets.
Mutual funds fit well within a diversification strategy. A mutual fund
usually has one or two objectives, such as growth or income or both. It spreads
its professionally managed assets among a variety of investments. When you
invest in more than one fund, you decrease your level of exposure to investment
risks.
HOW SAFE IS SAFE? STOCKS HEDGE INFLATION
One such risk is inflation: a rise in cost without a rise in value received, a
decrease in the value of money over time. Inflation means that your investment
may lose purchasing power as the cost of living rises.
Overly risk-averse investors who prefer to
INFLATION'S SHRINKING EFFECT
At 4% inflation, $1,000 would shrink to:
5 Years $822
10 Years $676
15 Years $555
20 Years $456
25 Years $375
STOCKS HISTORICALLY BEAT OTHER INVESTMENTS
Average Annual Total Returns, Year End: 1925-1996*
*1996 is through 9/30/96
LARGE-COMPANY STOCKS 10.7%
LONG-TERM GOVERNMENT BONDS 5.1%
U.S. TREASURY BILLS 3.8%
INFLATION 3.1%
Source: Ibbotson Associates, Inc. The Standard & Poor's Composite Index of 500
Stocks (S&P 500) is a group of unmanaged securities widely regarded by
investors to be representative of large-company stocks in general; results
shown assume the reinvestment of dividends. Inflation is determined by the
Consumer Price Index, a measure of change in consumer prices, as determined by
the U.S. Bureau of Labor Statistics.
Government securities, such as U.S. Treasury bills and long-term government
bonds, offer a high degree of safety and are guaranteed as to the timely
payment of principal and interest if held to maturity. U.S. Treasury bills are
short-term securities with maturities of one year or less. Long-term government
bonds used in this illustration have a maturity of approximately 20 years. Fund
shares are not insured and their value and yield will vary with market
conditions.
CONSIDER THE THREE Ds:
DIVERSIFICATION
DOLLAR-COST AVERAGING
DISCIPLINE
6
<PAGE> 8
keep their money in "safe" investments such as savings accounts may not have
enough growth in their portfolio to offset inflation. The charts on the
previous page show inflation's shrinking effect and how stocks historically
have outperformed all other asset categories.
BONDS AND MONEY MARKET SECURITIES OFFER BALLAST
Despite their long-term performance, stocks are subject to dramatic swings.
Investing in bonds and conservative money market securities may help offset
stocks' volatility. High-quality bonds usually are considered lower-risk
investments compared to stocks. They pay higher income than short-term
investments such as certificates of deposit, money market funds or savings
accounts. Bank certificates of deposit, which are insured by the FDIC for up to
$100,000, are short-term investments that pay fixed principal and interest, but
are subject to fluctuating rollover rates and early withdrawal penalties. Fund
shares are not insured and their value and yield will vary with market
conditions.
The "money market" is the marketplace for all debt securities of less than
one-year maturity. These securities are considered excellent short-term parking
places for cash that you may need quickly. Money market securities are among
the most conservative investments and, consequently, their level of return is
much lower than that of stocks or bonds.
Your financial consultant can help you create a diversification strategy to
meet your risk tolerance and long-term objectives.
AIM offers a free brochure on asset allocation which also can help you
evaluate your investments. To order, please call 800-347-4246.
DOLLAR-COST AVERAGING
The motto says buy low and sell high, but it's easy for an investor to buy high
and sell low instead. When markets are rising, the temptation to get in on the
action can be irresistible. When markets are dropping, people naturally want to
cut their losses and get out while the getting is good.
Is there a way to enjoy the advantages of having investments without
second-guessing your own decisions?
DOLLAR-COST AVERAGING EMPLOYS DISCIPLINE, NOT EMOTION
With dollar-cost averaging, you invest a set amount of money at regular
intervals regardless of market swings or pundits' forecasts. You decide how
much and how often to invest. And you decide when to change the amount or the
schedule if doing so suits you.
This technique has emotional advantages:
o You will be less tempted to make investment decisions on the basis of
short-term phenomena and your feelings of the moment.
o Whichever way the market is moving, you will be part of it. Your fortunes as
an investor won't depend entirely on your making a right call about future
trends.
Dollar-cost averaging also has financial advantages:
o You automatically purchase more shares of a mutual fund when its cost per
share is low and fewer shares when its cost per share is high. As the
illustration below shows, dollar-cost averaging may lower your average cost
per share.
Of course, you don't have to dollar-cost average all the money you invest.
The technique is especially appropriate to investments where your goals are
long-term, since over time market volatility tends to even itself out.
Dollar-cost averaging involves investing continuously regardless of
fluctuating securities prices, so you need to be confident that you can keep
making purchases for an extended period.
No investment technique can assure a profit in a declining market. What
dollar-cost averaging will do is apply discipline to your investing behavior,
discipline that can be especially important when market watchers issue
conflicting forecasts.
DOLLAR-COST AVERAGING: $200 INVESTMENT PER MONTH*
MONTH NET ASSET VALUE # OF SHARES PURCHASED
January $24.00 8.333
February $20.00 10.000
March $14.00 14.286
April $18.00 11.111
May $22.00 9.090
June $24.00 8.333
Average Net Asset Value: $20.33
Total Shares Bought: 61.153
Average Purchase Price per Share: $19.62
*Results are hypothetical.
7
<PAGE> 9
SCHEDULE OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-87.88%
ADVERTISING/BROADCASTING-0.50%
Interpublic Group of Companies,
Inc. 550,000 $ 26,675,000
- ----------------------------------------------------------------
AEROSPACE/DEFENSE-1.24%
Boeing Co. (The) 275,000 26,228,125
- ----------------------------------------------------------------
Gulfstream Aerospace Corp.(a) 850,000 20,081,250
- ----------------------------------------------------------------
United Technologies Corp. 150,000 19,312,500
- ----------------------------------------------------------------
65,621,875
- ----------------------------------------------------------------
AUTOMOBILE (MANUFACTURERS)-0.28%
Chrysler Corp. 450,000 15,131,250
- ----------------------------------------------------------------
BANKING-0.79%
Chase Manhattan Corp. 200,000 17,150,000
- ----------------------------------------------------------------
Citicorp 250,000 24,750,000
- ----------------------------------------------------------------
41,900,000
- ----------------------------------------------------------------
BEVERAGES-0.42%
PepsiCo Inc. 750,000 22,218,750
- ----------------------------------------------------------------
BIOTECHNOLOGY-1.09%
AMGEN Inc.(a) 250,000 15,328,125
- ----------------------------------------------------------------
Guidant Corp. 920,600 42,462,675
- ----------------------------------------------------------------
57,790,800
- ----------------------------------------------------------------
BUILDING MATERIALS-0.49%
Georgia-Pacific Corp. 350,000 26,250,000
- ----------------------------------------------------------------
BUSINESS SERVICES-2.08%
AccuStaff, Inc.(a) 511,000 13,669,250
- ----------------------------------------------------------------
CUC International Inc.(a) 750,000 18,375,000
- ----------------------------------------------------------------
Diebold, Inc. 343,100 19,728,250
- ----------------------------------------------------------------
Equifax Inc. 700,000 20,825,000
- ----------------------------------------------------------------
Healthcare COMPARE Corp.(a) 525,000 23,100,000
- ----------------------------------------------------------------
Interim Services Inc.(a) 58,500 2,340,000
- ----------------------------------------------------------------
Olsten Corp. 619,800 12,396,000
- ----------------------------------------------------------------
110,433,500
- ----------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.33%
Morton International, Inc. 450,000 17,718,750
- ----------------------------------------------------------------
COMPUTER MINI/PCS-2.89%
COMPAQ Computer Corp.(a) 550,000 38,293,750
- ----------------------------------------------------------------
Dell Computer Corp.(a) 395,100 32,151,263
- ----------------------------------------------------------------
Gateway 2000 Inc.(a) 850,000 40,003,125
- ----------------------------------------------------------------
Sun Microsystems Inc.(a) 700,000 42,700,000
- ----------------------------------------------------------------
153,148,138
- ----------------------------------------------------------------
COMPUTER NETWORKING-4.44%
Ascend Communications, Inc.(a) 350,000 22,881,250
- ----------------------------------------------------------------
Cabletron Systems, Inc.(a) 650,000 40,543,750
- ----------------------------------------------------------------
Cascade Communications Corp.(a) 550,000 39,943,750
- ----------------------------------------------------------------
Cisco Systems, Inc.(a) 925,000 57,234,375
- ----------------------------------------------------------------
FORE Systems, Inc.(a) 525,000 20,868,750
- ----------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTER NETWORKING-(CONTINUED)
3Com Corp.(a) 800,000 $ 54,100,000
- ----------------------------------------------------------------
235,571,875
- ----------------------------------------------------------------
COMPUTER PERIPHERALS-0.88%
Storage Technology Corp.(a) 1,091,500 46,525,188
- ----------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES-8.86%
BMC Software, Inc.(a) 500,000 41,500,000
- ----------------------------------------------------------------
Cadence Design Systems, Inc.(a) 829,000 30,258,500
- ----------------------------------------------------------------
Ceridian Corp.(a) 400,000 19,850,000
- ----------------------------------------------------------------
Computer Associates
International, Inc. 675,000 39,909,375
- ----------------------------------------------------------------
Computer Sciences Corp.(a) 214,400 15,919,200
- ----------------------------------------------------------------
Compuware Corp.(a) 700,000 36,925,000
- ----------------------------------------------------------------
Electronic Data Systems Corp. 1,000,000 45,000,000
- ----------------------------------------------------------------
Electronics For Imaging, Inc.(a) 31,800 2,289,600
- ----------------------------------------------------------------
First Data Corp. 250,000 19,937,500
- ----------------------------------------------------------------
Fiserv, Inc.(a) 850,000 32,618,750
- ----------------------------------------------------------------
HBO & Co. 600,000 36,075,000
- ----------------------------------------------------------------
Microsoft Corp.(a) 200,000 27,450,000
- ----------------------------------------------------------------
Oracle Corp.(a) 450,000 19,040,625
- ----------------------------------------------------------------
Parametric Technology Co.(a) 554,800 27,115,850
- ----------------------------------------------------------------
Sterling Commerce, Inc.(a) 750,000 21,093,750
- ----------------------------------------------------------------
Synopsys, Inc.(a) 342,700 15,421,500
- ----------------------------------------------------------------
Wallace Computer Services, Inc. 1,350,000 39,656,250
- ----------------------------------------------------------------
470,060,900
- ----------------------------------------------------------------
CONGLOMERATES-2.88%
AlliedSignal Inc. 300,000 19,650,000
- ----------------------------------------------------------------
Loews Corp. 750,000 61,968,750
- ----------------------------------------------------------------
Textron Inc. 160,000 14,200,000
- ----------------------------------------------------------------
Tyco International Ltd. 875,000 43,421,875
- ----------------------------------------------------------------
U.S. Industries Inc.(a) 500,000 13,500,000
- ----------------------------------------------------------------
152,740,625
- ----------------------------------------------------------------
CONTAINERS-0.31%
Sealed Air Corp.(a) 425,000 16,521,875
- ----------------------------------------------------------------
COSMETICS & TOILETRIES-1.00%
Avon Products, Inc. 375,000 20,343,750
- ----------------------------------------------------------------
Gillette Co. (The) 237,100 17,723,225
- ----------------------------------------------------------------
Procter & Gamble Co. 150,000 14,850,000
- ----------------------------------------------------------------
52,916,975
- ----------------------------------------------------------------
ELECTRONIC COMPONENTS/MISCELLANEOUS-1.21%
Amphenol Corp.(a) 95,000 1,888,125
- ----------------------------------------------------------------
Checkpoint Systems, Inc.(a) 1,500,000 33,562,500
- ----------------------------------------------------------------
Thermo Instrument Systems,
Inc.(a) 450,000 13,612,500
- ----------------------------------------------------------------
Waters Corp.(a) 487,300 15,106,300
- ----------------------------------------------------------------
64,169,425
- ----------------------------------------------------------------
FINANCE (ASSET MANAGEMENT)-1.59%
Bear Stearns Companies Inc. 535,720 12,656,385
- ----------------------------------------------------------------
Charles Schwab Corp. 342,100 8,552,500
- ----------------------------------------------------------------
</TABLE>
8
<PAGE> 10
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FINANCE (ASSET MANAGEMENT)-(CONTINUED)
Franklin Resources, Inc. 271,000 $ 19,105,500
- ----------------------------------------------------------------
PaineWebber Group Inc. 850,000 19,975,000
- ----------------------------------------------------------------
Price (T. Rowe) Associates 248,800 8,490,300
- ----------------------------------------------------------------
Salomon Inc. 350,000 15,793,750
- ----------------------------------------------------------------
84,573,435
- ----------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-5.20%
Beneficial Corp. 250,000 14,625,000
- ----------------------------------------------------------------
Federal Home Loan Mortgage Corp. 508,200 51,328,200
- ----------------------------------------------------------------
Federal National Mortgage
Association 1,358,600 53,155,225
- ----------------------------------------------------------------
Finova Group, Inc. 250,000 15,437,500
- ----------------------------------------------------------------
Green Tree Financial Corp. 608,900 24,127,663
- ----------------------------------------------------------------
Household International, Inc. 175,000 15,487,500
- ----------------------------------------------------------------
Student Loan Marketing
Association 1,000,000 82,750,000
- ----------------------------------------------------------------
SunAmerica, Inc. 500,000 18,750,000
- ----------------------------------------------------------------
275,661,088
- ----------------------------------------------------------------
FOOD/PROCESSING-1.60%
ConAgra, Inc. 407,700 20,334,038
- ----------------------------------------------------------------
Dean Foods Co. 725,000 21,025,000
- ----------------------------------------------------------------
Lancaster Colony Corp. 394,233 14,783,738
- ----------------------------------------------------------------
Sysco Corp. 850,000 28,900,000
- ----------------------------------------------------------------
85,042,776
- ----------------------------------------------------------------
FUNERAL SERVICES-0.32%
Service Corp. International 600,000 17,100,000
- ----------------------------------------------------------------
GAMING-0.34%
International Game Technology 850,000 17,956,250
- ----------------------------------------------------------------
HOTELS/MOTELS-1.17%
Hilton Hotels Corp. 660,000 20,047,500
- ----------------------------------------------------------------
Host Marriott Corp.(a) 1,800,000 27,675,000
- ----------------------------------------------------------------
Marriott International, Inc. 250,000 14,218,750
- ----------------------------------------------------------------
61,941,250
- ----------------------------------------------------------------
INSURANCE (LIFE & HEALTH)-1.66%
Conseco, Inc. 1,100,000 58,850,000
- ----------------------------------------------------------------
Equitable Companies, Inc. 700,000 16,450,000
- ----------------------------------------------------------------
Provident Companies, Inc. 350,000 12,993,750
- ----------------------------------------------------------------
88,293,750
- ----------------------------------------------------------------
INSURANCE (MULTI-LINE
PROPERTY)-4.90%
Allstate Corp. 451,300 25,329,213
- ----------------------------------------------------------------
American International Group,
Inc. 225,000 24,440,625
- ----------------------------------------------------------------
CIGNA Corp. 325,000 42,412,500
- ----------------------------------------------------------------
Everest Re Holdings, Inc. 912,000 23,256,000
- ----------------------------------------------------------------
ITT Hartford Group, Inc. 325,000 20,475,000
- ----------------------------------------------------------------
MGIC Investment Corp. 310,700 21,321,788
- ----------------------------------------------------------------
Old Republic International Corp. 383,700 9,496,575
- ----------------------------------------------------------------
PMI Group, Inc. (The) 706,100 40,335,963
- ----------------------------------------------------------------
TIG Holdings, Inc. 332,000 9,586,500
- ----------------------------------------------------------------
Travelers Group, Inc. 800,000 43,400,000
- ----------------------------------------------------------------
260,054,164
- ----------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
LEISURE & RECREATION-1.16%
Carnival Corporation-Class A 850,000 $ 25,606,250
- ----------------------------------------------------------------
Coleman Co., Inc. (The)(a) 405,300 5,370,225
- ----------------------------------------------------------------
Eastman Kodak Co. 130,300 10,391,425
- ----------------------------------------------------------------
Harley-Davidson, Inc. 450,000 20,306,250
- ----------------------------------------------------------------
61,674,150
- ----------------------------------------------------------------
MACHINERY (MISCELLANEOUS)-0.64%
Thermo Electron Corp.(a) 930,000 33,945,000
- ----------------------------------------------------------------
MEDICAL (DRUGS)-5.62%
Abbott Laboratories 525,000 26,578,125
- ----------------------------------------------------------------
American Home Products Corp. 400,000 24,500,000
- ----------------------------------------------------------------
AmeriSource Health Corp.(a) 380,000 16,102,500
- ----------------------------------------------------------------
Bristol-Myers Squibb Co. 325,000 34,368,750
- ----------------------------------------------------------------
Cardinal Health, Inc. 175,000 13,737,500
- ----------------------------------------------------------------
Express Scripts, Inc.-Class A(a) 300,000 8,737,500
- ----------------------------------------------------------------
ICN Pharmaceuticals, Inc. 1,150,000 21,850,000
- ----------------------------------------------------------------
Merck & Co., Inc. 600,000 44,475,000
- ----------------------------------------------------------------
Pharmacia & Upjohn, Inc. 450,000 16,200,000
- ----------------------------------------------------------------
Rhone-Poulenc Rorer, Inc. 554,900 37,247,663
- ----------------------------------------------------------------
Schering-Plough Corp. 608,100 38,918,400
- ----------------------------------------------------------------
Watson Pharmaceuticals, Inc.(a) 461,200 15,392,550
- ----------------------------------------------------------------
298,107,988
- ----------------------------------------------------------------
MEDICAL (PATIENT SERVICES)-3.60%
Columbia/HCA Healthcare Corp. 1,050,000 37,537,500
- ----------------------------------------------------------------
Health Care and Retirement
Corp.(a) 222,350 5,475,369
- ----------------------------------------------------------------
HEALTHSOUTH Corp.(a) 1,100,000 41,250,000
- ----------------------------------------------------------------
Living Centers of America,
Inc.(a) 256,000 5,984,000
- ----------------------------------------------------------------
MedPartners, Inc.(a) 2,110,000 44,573,750
- ----------------------------------------------------------------
Oxford Health Plans, Inc.(a) 300,000 13,650,000
- ----------------------------------------------------------------
Quorum Health Group, Inc.(a) 750,000 20,250,000
- ----------------------------------------------------------------
Tenet Healthcare Corp.(a) 1,072,900 22,396,788
- ----------------------------------------------------------------
191,117,407
- ----------------------------------------------------------------
MEDICAL
INSTRUMENTS/PRODUCTS-3.53%
Baxter International Inc. 550,000 22,893,750
- ----------------------------------------------------------------
Becton, Dickinson & Co. 650,000 28,275,000
- ----------------------------------------------------------------
Boston Scientific Corp.(a) 250,077 13,597,937
- ----------------------------------------------------------------
Medtronic, Inc. 500,000 32,187,500
- ----------------------------------------------------------------
St. Jude Medical, Inc. 446,700 17,644,650
- ----------------------------------------------------------------
Stryker Corp 750,000 22,312,500
- ----------------------------------------------------------------
Sybron International Corp.(a) 1,050,000 30,581,250
- ----------------------------------------------------------------
U.S. Surgical Corp. 478,500 20,037,188
- ----------------------------------------------------------------
187,529,775
- ----------------------------------------------------------------
NATURAL GAS PIPELINE-0.66%
Columbia Gas System, Inc. 362,000 21,991,500
- ----------------------------------------------------------------
Williams Cos., Inc (The) 250,000 13,062,500
- ----------------------------------------------------------------
35,054,000
- ----------------------------------------------------------------
OFFICE AUTOMATION-0.04%
Xerox Corp. 49,100 2,277,013
- ----------------------------------------------------------------
OFFICE PRODUCTS-0.78%
Avery Dennison Corp. 225,000 14,821,875
- ----------------------------------------------------------------
</TABLE>
9
<PAGE> 11
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
OFFICE PRODUCTS-(CONTINUED)
Reynolds & Reynolds Co.-Class A 1,000,000 $ 26,375,000
- ----------------------------------------------------------------
41,196,875
- ----------------------------------------------------------------
OIL & GAS (SERVICES)-2.00%
Louisiana Land & Exploration Co. 374,900 21,322,438
- ----------------------------------------------------------------
NorAm Energy Corp. 2,000,000 30,750,000
- ----------------------------------------------------------------
Reading & Bates Corp.(a) 775,000 22,281,250
- ----------------------------------------------------------------
Transocean Offshore Inc. 505,800 31,991,850
- ----------------------------------------------------------------
106,345,538
- ----------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES-2.58%
Baker Hughes Inc. 600,000 21,375,000
- ----------------------------------------------------------------
Coastal Corp. 295,000 12,685,000
- ----------------------------------------------------------------
Cooper Cameron Corp.(a) 95,300 6,087,288
- ----------------------------------------------------------------
Dresser Industries, Inc. 450,000 14,793,750
- ----------------------------------------------------------------
Halliburton Co. 400,000 22,650,000
- ----------------------------------------------------------------
Rowan Companies, Inc.(a) 1,200,000 26,850,000
- ----------------------------------------------------------------
Schlumberger Ltd. 150,000 14,868,750
- ----------------------------------------------------------------
Tidewater Inc. 400,000 17,500,000
- ----------------------------------------------------------------
136,809,788
- ----------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.62%
Kimberly-Clark Corp. 350,000 32,637,500
- ----------------------------------------------------------------
PUBLISHING-0.38%
New York Times Co. 400,000 14,450,000
- ----------------------------------------------------------------
Times Mirror Co. (The) 122,400 5,661,000
- ----------------------------------------------------------------
20,111,000
- ----------------------------------------------------------------
RESTAURANTS-0.38%
Applebee's International, Inc. 828,000 20,182,500
- ----------------------------------------------------------------
RETAIL (FOOD & DRUG)-1.59%
American Stores Co. 925,000 38,271,875
- ----------------------------------------------------------------
Kroger Co.(The)(a) 244,400 10,906,350
- ----------------------------------------------------------------
Safeway Inc.(a) 817,800 35,063,175
- ----------------------------------------------------------------
84,241,400
- ----------------------------------------------------------------
RETAIL (STORES)-6.84%
AutoZone, Inc.(a) 450,000 11,531,250
- ----------------------------------------------------------------
Consolidated Stores Corp.(a) 742,600 28,682,925
- ----------------------------------------------------------------
Dayton-Hudson Corp. 1,033,100 35,771,088
- ----------------------------------------------------------------
Federated Department Stores,
Inc.(a) 500,000 16,500,000
- ----------------------------------------------------------------
Gap Inc. (The) 750,000 21,750,000
- ----------------------------------------------------------------
Home Depot, Inc. 550,000 30,112,500
- ----------------------------------------------------------------
Lowe's Companies, Inc. 1,117,200 45,106,950
- ----------------------------------------------------------------
Micro Warehouse, Inc.(a) 97,600 2,244,800
- ----------------------------------------------------------------
Pep Boys-Manny, Moe & Jack 2,200,000 77,000,000
- ----------------------------------------------------------------
Price/Costco Inc.(a) 538,700 10,706,663
- ----------------------------------------------------------------
Staples, Inc.(a) 2,000,025 37,250,466
- ----------------------------------------------------------------
Toys "R" Us, Inc.(a) 1,300,000 44,037,500
- ----------------------------------------------------------------
Viking Office Products Inc.(a) 58,600 1,706,725
- ----------------------------------------------------------------
362,400,867
- ----------------------------------------------------------------
SEMICONDUCTORS-2.32%
Altera Corp.(a) 400,000 24,800,000
- ----------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SEMICONDUCTORS-(CONTINUED)
Intel Corp. 750,000 $ 82,406,250
- ----------------------------------------------------------------
Texas Instruments, Inc. 325,000 15,640,625
- ----------------------------------------------------------------
122,846,875
- ----------------------------------------------------------------
SHOES & RELATED APPAREL-0.55%
NIKE, Inc.-Class B 500,000 29,437,500
- ----------------------------------------------------------------
TELECOMMUNICATIONS-4.66%
ADC Telecommunications, Inc.(a) 941,000 64,340,875
- ----------------------------------------------------------------
Andrew Corp.(a) 400,000 19,500,000
- ----------------------------------------------------------------
Frontier Corp. 469,300 13,609,700
- ----------------------------------------------------------------
Lucent Technologies, Inc. 1,000,000 47,000,000
- ----------------------------------------------------------------
MFS Communications Company,
Inc.(a) 781,600 39,177,700
- ----------------------------------------------------------------
PairGain Technologies, Inc.(a) 275,000 18,940,625
- ----------------------------------------------------------------
Tellabs, Inc.(a) 400,000 34,050,000
- ----------------------------------------------------------------
360 Communications Co.(a) 463,333 10,482,909
- ----------------------------------------------------------------
247,101,809
- ----------------------------------------------------------------
TELEPHONE-0.72%
Cincinnati Bell, Inc. 775,000 38,265,625
- ----------------------------------------------------------------
TEXTILES-0.54%
Fruit of the Loom, Inc.(a) 319,500 11,621,813
- ----------------------------------------------------------------
Liz Claiborne, Inc. 400,000 16,900,000
- ----------------------------------------------------------------
28,521,813
- ----------------------------------------------------------------
TOBACCO-2.20%
Philip Morris Companies, Inc. 575,000 53,259,375
- ----------------------------------------------------------------
RJR Nabisco Holdings Corp. 856,200 24,722,775
- ----------------------------------------------------------------
Universal Corp. 146,700 3,997,575
- ----------------------------------------------------------------
UST, Inc. 1,200,000 34,650,000
- ----------------------------------------------------------------
116,629,725
- ----------------------------------------------------------------
Total Domestic Common
Stocks 4,662,451,787
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
CONVERTIBLE CORPORATE BONDS & NOTES-0.56%
RESTAURANTS-0.56%
Boston Chicken, Inc.,
Conv. Notes,
8.00%(b), 06/01/15 $ 78,540,000 25,427,325
- ----------------------------------------------------------------
Boston Chicken, Inc.,
Conv. Sub. Deb.,
4.50%, 02/01/04 3,245,000 4,259,063
- ----------------------------------------------------------------
Total Convertible
Corporate Bonds &
Notes 29,686,388
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
<S> <C> <C>
FOREIGN STOCKS & OTHER EQUITY INTERESTS-10.88%
BRAZIL-0.42%
Telecomunicacoes Brasileiras
S/A-ADR (Telecommunications) 300,000 22,350,000
- ----------------------------------------------------------------
CANADA-1.33%
Canadian Pacific, Ltd.
(Transportation-Miscellaneous) 650,000 16,412,500
- ----------------------------------------------------------------
Newbridge Networks Corp.(a)
(Computer Networking) 1,200,000 37,950,000
- ----------------------------------------------------------------
</TABLE>
10
<PAGE> 12
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
CANADA-(CONTINUED)
Northern Telecom Ltd.
(Telecommunications) 250,000 $ 16,281,250
- ----------------------------------------------------------------
70,643,750
- ----------------------------------------------------------------
FRANCE-0.25%
Roussel-Uclaf (Medical-Drugs) 50,000 13,232,273
- ----------------------------------------------------------------
GERMANY-0.42%
Adidas A.G.(Shoes & Related
Apparel) 160,900 13,790,821
- ----------------------------------------------------------------
Veba A.G. (Electric Services) 158,000 8,426,875
- ----------------------------------------------------------------
22,217,696
- ----------------------------------------------------------------
HONG KONG-0.85%
HSBC Holdings PLC(a)
(Banking) 820,000 16,702,878
- ----------------------------------------------------------------
Sun Hung Kai Properties Ltd.
(Real Estate) 2,505,000 28,509,350
- ----------------------------------------------------------------
45,212,228
- ----------------------------------------------------------------
IRELAND-0.30%
Elan Corp. PLC-ADR(a)
(Medical-Drugs) 580,000 16,095,000
- ----------------------------------------------------------------
ISRAEL-0.71%
ECI Telecommunications Ltd.
Designs
(Computer Networking) 824,700 16,494,000
- ----------------------------------------------------------------
Teva Pharmaceutical Industries
Ltd.-ADR
(Medical-Drugs) 500,000 20,937,500
- ----------------------------------------------------------------
37,431,500
- ----------------------------------------------------------------
ITALY-1.17%
Fila Holding S.p.A.-ADR
(Retail-Stores) 504,100 36,295,200
- ----------------------------------------------------------------
Telecom Italia Mobile S.p.A.
(Telecommunications) 6,000,000 12,371,786
- ----------------------------------------------------------------
Telecom Italia S.p.A.
(Telecommunications) 6,000,000 13,415,952
- ----------------------------------------------------------------
62,082,938
- ----------------------------------------------------------------
JAPAN-1.41%
Canon, Inc.
(Office Automation) 1,045,000 20,008,783
- ----------------------------------------------------------------
Honda Motor Co.
(Automobile-Manufacturers) 608,000 14,525,141
- ----------------------------------------------------------------
Sony Corp.
(Electronic
Components/Miscellaneous) 321,900 19,310,324
- ----------------------------------------------------------------
TDK Corp.
(Electronic
Components/Miscellaneous) 356,000 20,886,917
- ----------------------------------------------------------------
74,731,165
- ----------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MALAYSIA-0.20%
Malayan Banking Berhad
(Banking) 1,074,000 $ 10,627,350
- ----------------------------------------------------------------
NETHERLANDS-0.33%
Gucci Group NV-New York Shares
(Textiles) 250,000 17,250,000
- ----------------------------------------------------------------
SWEDEN-1.18%
ASTRA AB-A Shares
(Medical-Drugs) 340,000 15,615,067
- ----------------------------------------------------------------
Telefonaktiebolaget L.M.
Ericsson-ADR
(Telecommunications) 1,700,000 46,962,500
- ----------------------------------------------------------------
62,577,567
- ----------------------------------------------------------------
SWITZERLAND-0.90%
Ciba-Geigy AG
(Chemicals) 20,000 24,636,075
- ----------------------------------------------------------------
Sandoz AG
(Chemicals) 20,000 23,117,088
- ----------------------------------------------------------------
47,753,163
- ----------------------------------------------------------------
UNITED KINGDOM-1.41%
Danka Business Systems PLC-ADR
(Office Automation) 376,600 14,922,775
- ----------------------------------------------------------------
Granada Group PLC
(Leisure & Recreation) 1,000,000 14,379,882
- ----------------------------------------------------------------
Smithkline Beecham PLC-ADR
(Medical-Drugs) 700,000 43,837,500
- ----------------------------------------------------------------
Stolt-Nielsen S.A.
(Transportation-Miscellaneous) 121,500 1,898,437
- ----------------------------------------------------------------
75,038,594
- ----------------------------------------------------------------
Total Foreign Stocks & Other
Equity Interests 577,243,224
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
REPURCHASE AGREEMENTS-2.44%(C)
Daiwa Securities America Inc.,
5.53%, 11/01/96(d) $ 326,080 326,080
- ----------------------------------------------------------------
SBC Capital Markets, Inc.
5.55%, 11/01/96(e) 129,000,000 129,000,000
- ----------------------------------------------------------------
Total Repurchase Agreements 129,326,080
- ----------------------------------------------------------------
TOTAL INVESTMENTS-101.76% 5,398,707,479
- ----------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-(1.76)% (93,272,392)
- ----------------------------------------------------------------
TOTAL NET ASSETS-100.00% $5,305,435,087
================================================================
</TABLE>
Abbreviations:
ADR-American Depository Receipt
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Zero coupon bond. The interest rate shown represents the rate of the
original issue discount.
(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 10/31/96 with maturing value of
$750,115,208 Collateralized by $733,115,000 U.S. Treasury obligations, 0% to
10.375% due 11/15/96 to 08/15/23.
(e) Joint repurchase agreement entered into on 10/31/96 with maturing value of
$700,107,917. Collateralized by $691,506,000 U.S. Treasury obligations, 0%
to 9.125% due 11/30/96 to 10/31/01.
See Notes to Financial Statements.
11
<PAGE> 13
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$4,364,479,746) $5,398,707,479
- ---------------------------------------------------------
Foreign currencies, at market value
(cost $253,890) 253,726
- ---------------------------------------------------------
Receivables for:
Investments sold 11,950,581
- ---------------------------------------------------------
Options written 1,337,955
- ---------------------------------------------------------
Capital stock sold 5,563,124
- ---------------------------------------------------------
Dividends and interest 3,124,499
- ---------------------------------------------------------
Investment for deferred compensation
plan 59,575
- ---------------------------------------------------------
Other assets 110,155
- ---------------------------------------------------------
Total assets 5,421,107,094
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 76,633,560
- ---------------------------------------------------------
Options written 25,795,994
- ---------------------------------------------------------
Capital stock reacquired 7,180,052
- ---------------------------------------------------------
Deferred compensation 59,575
- ---------------------------------------------------------
Accrued advisory fees 2,735,952
- ---------------------------------------------------------
Accrued administrative service fees 12,099
- ---------------------------------------------------------
Accrued distribution fees 1,499,021
- ---------------------------------------------------------
Accrued transfer agent fees 878,973
- ---------------------------------------------------------
Accrued operating expenses 876,781
- ---------------------------------------------------------
Total liabilities 115,672,007
- ---------------------------------------------------------
Net assets applicable to shares
outstanding $5,305,435,087
=========================================================
NET ASSETS:
Class A $4,977,492,845
=========================================================
Class B $ 267,459,433
=========================================================
Institutional Class $ 60,482,809
=========================================================
CAPITAL STOCK, $.001 PAR VALUE PER
SHARE:
CLASS A:
Authorized 750,000,000
- ---------------------------------------------------------
Outstanding 246,580,037
=========================================================
CLASS B:
Authorized 750,000,000
- ---------------------------------------------------------
Outstanding 13,389,126
=========================================================
INSTITUTIONAL CLASS:
Authorized 200,000,000
- ---------------------------------------------------------
Outstanding 2,955,876
=========================================================
CLASS A:
Net asset value and redemption price
per share $ 20.19
- ---------------------------------------------------------
Offering price per share:
(Net asset value of
$20.19 divided by 94.50%) $ 21.37
=========================================================
CLASS B:
Net asset value and offering price per
share $ 19.98
=========================================================
INSTITUTIONAL CLASS:
Net asset value, offering and
redemption price per share $ 20.46
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $1,308,115 foreign
withholding tax) $ 55,329,053
- ---------------------------------------------------------
Interest 15,225,042
- ---------------------------------------------------------
Total investment income 70,554,095
- ---------------------------------------------------------
EXPENSES:
Advisory fees 31,419,183
- ---------------------------------------------------------
Administrative service fees 132,643
- ---------------------------------------------------------
Custodian fees 402,058
- ---------------------------------------------------------
Directors' fees 31,363
- ---------------------------------------------------------
Distribution fees-Class A 14,212,254
- ---------------------------------------------------------
Distribution fees-Class B 1,514,633
- ---------------------------------------------------------
Transfer agent fees-Class A 8,434,506
- ---------------------------------------------------------
Transfer agent fees-Class B 452,997
- ---------------------------------------------------------
Transfer agent fees-Institutional Class 4,292
- ---------------------------------------------------------
Other 1,337,876
- ---------------------------------------------------------
Total expenses 57,941,805
- ---------------------------------------------------------
Less: Fees waived by advisor (1,458,804)
- ---------------------------------------------------------
Expenses paid indirectly (76,493)
- ---------------------------------------------------------
Net expenses 56,406,508
- ---------------------------------------------------------
Net investment income 14,147,587
- ---------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES, FOREIGN
CURRENCIES, FUTURES AND OPTION
CONTRACTS:
Net realized gain (loss) on sales of:
Investment securities 593,755,723
- ---------------------------------------------------------
Foreign currencies 946,540
- ---------------------------------------------------------
Futures contracts (7,874,291)
- ---------------------------------------------------------
Options contracts 3,720,144
- ---------------------------------------------------------
590,548,116
- ---------------------------------------------------------
Net unrealized appreciation (depreciation)
of:
Investment securities 81,966,541
- ---------------------------------------------------------
Foreign currencies 366,935
- ---------------------------------------------------------
Options contracts (3,194,922)
- ---------------------------------------------------------
79,138,554
- ---------------------------------------------------------
Net gain on investment securities,
foreign currencies, futures and option
contracts 669,686,670
- ---------------------------------------------------------
Net increase in net assets resulting from
operations $ 683,834,257
=========================================================
</TABLE>
See Notes to Financial Statements.
12
<PAGE> 14
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ 14,147,587 $ (1,259,456)
- ---------------------------------------------------------------------------------------------------------------------------
Net realized gain on sales of investment securities, foreign currencies, futures and
options contracts 590,548,116 620,641,509
- ---------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities, foreign currencies, and
options contracts 79,138,554 411,202,260
- ---------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 683,834,257 1,030,584,313
- ---------------------------------------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income:
Class A -- (14,842,521)
- ---------------------------------------------------------------------------------------------------------------------------
Institutional Class -- (290,923)
- ---------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains on investment securities:
Class A (606,609,217) (387,332,253)
- ---------------------------------------------------------------------------------------------------------------------------
Class B (7,814,517) --
- ---------------------------------------------------------------------------------------------------------------------------
Institutional Class (7,332,667) (4,072,920)
- ---------------------------------------------------------------------------------------------------------------------------
Net equalization credits:
Class A 2,368,957 204,025
- ---------------------------------------------------------------------------------------------------------------------------
Class B 992,175 297,921
- ---------------------------------------------------------------------------------------------------------------------------
Institutional Class 65,590 71,195
- ---------------------------------------------------------------------------------------------------------------------------
Share transactions-net:
Class A 362,344,237 (17,628,236)
- ---------------------------------------------------------------------------------------------------------------------------
Class B 210,825,508 41,458,876
- ---------------------------------------------------------------------------------------------------------------------------
Institutional Class 5,462,015 6,504,480
- ---------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 644,136,338 654,953,957
- ---------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 4,661,298,749 4,006,344,792
- ---------------------------------------------------------------------------------------------------------------------------
End of period $5,305,435,087 $4,661,298,749
===========================================================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $3,649,184,459 $3,070,552,699
- ---------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income 44,516,626 25,028,873
- ---------------------------------------------------------------------------------------------------------------------------
Undistributed net realized gain on sales of investment securities, foreign
currencies, futures and options contracts 580,711,311 613,833,040
- ---------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign currencies, and option
contracts 1,031,022,691 951,884,137
- ---------------------------------------------------------------------------------------------------------------------------
$5,305,435,087 $4,661,298,749
===========================================================================================================================
</TABLE>
See Notes to Financial Statements.
13
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS
October 31, 1996
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 six operating diversified
portfolios: AIM Weingarten Fund, AIM Aggressive Growth Fund, AIM Blue Chip Fund,
AIM Capital Development Fund, AIM Charter Fund and AIM Constellation 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 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
14
<PAGE> 16
liability. The amount of the liability is subsequently "marked-to-market" to
reflect the current market value of the option written. The current market
value of a written option is the mean between the last bid and asked prices
on that day. If a written call option expires on the stipulated expiration
date, or if the Fund enters into a closing purchase transaction, the Fund
realizes a gain (or a loss if the closing purchase transaction exceeds the
premium received when the option was written) without regard to any
unrealized gain or loss on the underlying security, and the liability
related to such option is extinguished. If a written option is exercised,
the Fund realizes a gain or a loss from the sale of the underlying security
and the proceeds of the sale are increased by the premium originally
received.
A call option gives the purchaser of such option the right to buy, and
the writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the
call option at any time during the option period. During the option period,
in return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has
retained the risk of loss should the price of the underlying security
decline. During the option period, the Fund may be required at any time to
deliver the underlying security against payment of the exercise price. This
obligation is terminated upon the expiration of the option period or at such
earlier time at which the Fund effects a closing purchase transaction by
purchasing (at a price which may be higher than that received when the call
option was written) a call option identical to the one originally written.
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. On October 31, 1996
$1,913,444 was reclassified from undistributed net realized gains to
undistributed net investment income as a result of differing book/tax
treatment of foreign currency transactions. Net assets of the Fund were
unaffected as a result of this reclassification.
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.
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 year ended October 31, 1996, AIM waived fees
of $1,458,804. 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.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the year ended October 31, 1996, AIM was
reimbursed $132,643 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
year ended October 31, 1996, AFS was reimbursed $4,391,818 for such services.
During the year ended October 31, 1996, the Fund, pursuant to a transfer
agency and service agreement, paid A I M Institutional Fund Services, Inc.
("AIFS") $4,292 for shareholder and transfer agency services with respect to the
Institutional Class.
The Fund received reductions in transfer agency fees of $70,737 from dividends
received on balances in cash management bank
15
<PAGE> 17
accounts. In addition, the Fund incurred expenses of $5,756 for pricing services
which are paid through directed brokerage commissions. The effect of the above
arrangements resulted in a reduction in the Fund's total expenses of $76,493
during the year ended October 31, 1996.
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 year ended October 31,
1996, the Class A shares and the Class B shares paid AIM Distributors
$14,212,254 and $1,514,633, respectively, as compensation under the Plans.
AIM Distributors received commissions of $2,259,328 from sales of shares of
the Class A shares of the Fund during the year ended October 31, 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 year ended
October 31, 1996, AIM Distributors received commissions of $34,185 in contingent
deferred sales charges imposed on redemptions of Fund shares. Certain officers
and directors of the Company are officers and directors of AIM, AIM Capital, AIM
Distributors, AFS, AIFS and FMC.
During the year ended October 31, 1996, the Fund paid legal fees of $14,974
for services rendered by Kramer, Levin, Naftalis & Frankel as counsel to the
Company's directors. A member of that firm is a director of the Company.
NOTE 3-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold during the year ended October 31, 1996 was $7,636,727,517 and
$7,477,919,832, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of October 31, 1996 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $1,085,136,998
- -----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (61,959,672)
- -----------------------------------------------------------
Net unrealized appreciation of investment
securities $1,023,177,326
===========================================================
</TABLE>
Cost of investments for tax purposes is $4,375,530,153.
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 is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $325,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. Interest on
borrowings under the line of credit is payable on maturity or prepayment date.
Prior to an amendment of the line of credit on July 19, 1996, the Fund was
limited to borrowing $68,400,000. During the year ended October 31, 1996, the
Fund did not borrow under the line of credit agreement. The funds which are
party to the line of credit are charged a commitment fee of 0.08% on the unused
balance of the committed line. The commitment fee is allocated among the funds
based on their respective average net assets for the period.
NOTE 6-OPTION CONTRACTS WRITTEN
Transactions in call options written during the year ended October 31, 1996 are
summarized as follows:
<TABLE>
<CAPTION>
OPTION CONTRACTS
---------------------------
NUMBER
OF PREMIUMS
CONTRACTS RECEIVED
--------- ------------
<S> <C> <C>
Beginning of year -0- --
- --------------------------------------------------------------
Written 139,095 $ 55,345,942
- --------------------------------------------------------------
Closed (61,183) (25,179,074)
- --------------------------------------------------------------
Exercised (16,555) (4,365,829)
- --------------------------------------------------------------
Expired (12,549) (3,199,967)
- --------------------------------------------------------------
End of year 48,808 $ 22,601,072
- --------------------------------------------------------------
</TABLE>
16
<PAGE> 18
Open call option contracts written at October 31, 1996 were as follows:
<TABLE>
<CAPTION>
OCTOBER 31, UNREALIZED
CONTRACT STRIKE NUMBER OF PREMIUM 1996 APPRECIATION
ISSUE MONTH PRICE CONTRACTS RECEIVED MARKET VALUE (DEPRECIATION)
----- -------- ------ --------- ----------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Baxter International Inc. Dec 40 77 $ 22,868 $ 19,250 $ 3,618
Beneficial Corp. Jan 55 1,250 635,605 632,813 2,792
Boston Scientific Corp. Jan 50 2,500 1,824,939 1,625,000 199,939
Cascade Communications Corp. Jan 80 2,750 1,535,823 1,546,875 (11,052)
Chase Manhattan Corp. Jan 75 2,000 1,641,945 2,375,000 (733,055)
Electronics For Imaging, Inc. Jan 80 318 242,126 174,900 67,226
Federal Home Loan Mortgage Corp. Jan 90 2,332 1,885,359 2,915,000 (1,029,641)
Federal National Mortgage Association Dec 30 6,086 3,170,699 5,705,625 (2,534,926)
First Data Corp. Dec 85 2,500 554,981 296,875 258,106
HBO & Co. Feb 60 3,000 1,337,955 2,400,000 (1,062,045)
HBO & Co. Feb 70 3,000 1,649,987 1,218,750 431,237
PaineWebber Group Inc. Jan 25 8,500 930,718 850,000 80,718
Parametric Technology Co. Dec 50 1,580 622,066 424,625 197,441
Procter & Gamble Co. Dec 90 1,500 874,771 1,500,000 (625,229)
Storage Technology Corp. Dec 40 4,915 2,451,088 2,058,156 392,932
Sun Microsystems Inc. Nov 60 4,000 2,383,920 1,162,500 1,221,420
Williams Cos., Inc. (The) Dec 50 2,500 836,222 890,625 (54,403)
- ---------------------------------------------------------------------------------------------------------------------------------
48,808 $22,601,072 $25,795,994 $ (3,194,922)
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE 7-CAPITAL STOCK
Changes in the capital stock outstanding during the years ended October 31, 1996
and 1995 were as follows:
<TABLE>
<CAPTION>
1996 1995
--------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Sold:
Class A 34,550,539 $648,183,624 32,034,901 $559,325,258
- ----------------------------------------------------------------------------------------------------------------------------
Class B* 12,381,545 231,706,372 2,180,033 43,415,613
- ----------------------------------------------------------------------------------------------------------------------------
Institutional Class 516,716 9,877,153 559,557 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 7,326,082 -- --
- ----------------------------------------------------------------------------------------------------------------------------
Institutional Class 338,803 5,871,449 199,304 2,950,819
- ----------------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (44,929,759) (843,683,536) (54,445,065) (937,990,088)
- ----------------------------------------------------------------------------------------------------------------------------
Class B* (1,500,861) (28,206,946) (97,524) (1,956,737)
- ----------------------------------------------------------------------------------------------------------------------------
Institutional Class (552,275) (10,286,587) (363,327) (6,538,558)
- ----------------------------------------------------------------------------------------------------------------------------
33,625,773 $578,631,760 4,527,896 $30,335,120
============================================================================================================================
</TABLE>
* Class B shares commenced sales on June 26, 1995.
17
<PAGE> 19
Financials
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a Class A share outstanding during
each of the years in the eight-year period ended October 31, 1996, the ten
months ended October 31, 1988 and the year ended December 31, 1987 and for a
Class B share outstanding during the year ended October 31, 1996 and the period
June 26, 1995 (date sales commenced) through October 31, 1995.(a)
CLASS A:
<TABLE>
<CAPTION>
OCTOBER 31,
---------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 20.33 $ 17.82 $ 17.62 $ 16.68 $ 15.76 $ 11.15 $ 12.32
- ---------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Income from investment operations:
Net investment income 0.06 -- 0.07 0.10 0.10 0.11 0.09
- ---------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Net gains (losses) on securities (both
realized and unrealized) 2.51 4.36 0.57 0.93 0.98 4.80 (0.56)
- ---------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Total from investment operations 2.57 4.36 0.64 1.03 1.08 4.91 (0.47)
- ---------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Less distributions:
Dividends from net investment income -- (0.07) (0.11) (0.09) (0.07) (0.09) (0.06)
- ---------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Distributions from net realized capital
gains (2.71) (1.78) (0.33) -- (0.09) (0.21) (0.64)
- ---------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Total distributions (2.71) (1.85) (0.44) (0.09) (0.16) (0.30) (0.70)
- ---------------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- --------
Net asset value, end of period $ 20.19 $ 20.33 $ 17.82 $ 17.62 $ 16.68 $ 15.76 $ 11.15
======================================== ========== ========== ========== ========== ========== ========== ========
Total return(c) 14.81% 28.20% 3.76% 6.17% 6.85% 44.88% (4.03)%
======================================== ========== ========== ========== ========== ========== ========== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $4,977,493 $4,564,730 $3,965,858 $4,999,983 $5,198,835 $2,534,331 $632,522
======================================== ========== ========== ========== ========== ========== ========== ========
Ratio of expenses to average net
assets(d) 1.12%(f)(g) 1.17% 1.21% 1.13% 1.13% 1.18% 1.25%
======================================== ========== ========== ========== ========== ========== ========== ========
Ratio of net investment income to
average net assets(e) 0.33%(f) (0.02)% 0.45% 0.62% 0.60% 0.72% 0.75%
======================================== ========== ========== ========== ========== ========== ========== ========
Portfolio turnover rate 159% 139% 136% 109% 37% 46% 79%
======================================== ========== ========== ========== ========== ========== ========== ========
Average broker commission rate(i) $ 0.0615 N/A N/A N/A N/A N/A N/A
======================================== ========== ========== ========== ========== ========== ========== ========
Borrowings for the period:
Amount of debt outstanding at end of
period (000s omitted) -- -- -- -- -- -- --
======================================== ========== ========== ========== ========== ========== ========== ========
Average amount of debt outstanding
during the period (000s omitted)(j) -- $ 593 -- -- -- -- $ 485
======================================== ========== ========== ========== ========== ========== ========== ========
Average number of shares outstanding
during the period (000s omitted)(j) 248,189 229,272 249,351 314,490 246,273 102,353 44,770
======================================== ========== ========== ========== ========== ========== ========== ========
Average amount of debt per share during
the period -- $ 0.0026 -- -- -- -- $ 0.011
======================================== ========== ========== ========== ========== ========== ========== ========
<CAPTION>
DECEMBER 31,
------------
1989 1988(b) 1987
-------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of period $ 9.23 $ 8.36 $ 8.82
- ---------------------------------------- -------- -------- --------
Income from investment operations:
Net investment income 0.10 0.07 0.07
- ---------------------------------------- -------- -------- --------
Net gains (losses) on securities (both
realized and unrealized) 3.10 0.80 0.83
- ---------------------------------------- -------- -------- --------
Total from investment operations 3.20 0.87 0.90
- ---------------------------------------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.11) -- (0.09)
- ---------------------------------------- -------- -------- --------
Distributions from net realized capital
gains -- -- (1.27)
- ---------------------------------------- -------- -------- --------
Total distributions (0.11) -- (1.36)
- ---------------------------------------- -------- -------- --------
Net asset value, end of period $ 12.32 $ 9.23 $ 8.36
- ---------------------------------------- -------- -------- --------
Total return(c) 35.13% 10.41% 9.75%
- ---------------------------------------- -------- -------- --------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $393,320 $297,284 $286,453
======================================== ======== ======== ========
Ratio of expenses to average net
assets(d) 1.19% 1.08%(h) 0.95%
======================================== ======== ======== ========
Ratio of net investment income to
average net assets(e) 0.96% 0.90%(h) 0.66%
======================================== ======== ======== ========
Portfolio turnover rate 87% 93% 108%
======================================== ======== ======== ========
Average broker commission rate(i) N/A N/A N/A
======================================== ======== ======== ========
Borrowings for the period:
Amount of debt outstanding at end of
period (000s omitted) $ 3,781 -- $ 355
======================================== ======== ======== ========
Average amount of debt outstanding
during the period (000s omitted)(j) $ 1,083 $ 229 $ 509
======================================== ======== ======== ========
Average number of shares outstanding
during the period (000s omitted)(j) 31,275 33,031 25,825
======================================== ======== ======== ========
Average amount of debt per share during
the period $ 0.035 $ 0.007 $ 0.020
======================================== ======== ======== ========
</TABLE>
(a) Per share information has been restated to reflect a 2 for 1 stock split,
effected in the form of a dividend, on September 29, 1987.
(b) The Fund changed investment advisors on September 30, 1988.
(c) Does not deduct sales charges and, for periods less than one year, total
returns are not annualized.
(d) Ratios of expenses prior to waiver of advisory fees are 1.15%, 1.19%, 1.24%,
1.17%, and 1.15% for the years 1996-1992, respectively.
(e) Ratios of net investment income (loss) prior to waiver of advisory fees are
0.30%, (0.04)%, 0.42%, 0.58%, and 0.58% for the years 1996-1992,
respectively.
(f) After waiver of advisory fees. Ratios are based on average net assets of
$4,737,418,087.
(g) Includes indirectly paid expenses. Excluding indirectly paid expenses, the
ratio of expenses to average net assets would have remained the same.
(h) Annualized.
(i) Disclosure requirement beginning with the Fund's fiscal year ending October
31, 1996.
(j) Averages computed on a daily basis.
18
<PAGE> 20
Financials
CLASS B:
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Net asset value, beginning of period $ 20.28 $ 18.56
- -------------------------------------------------------------------------------------------------- --------- ---------
Income from investment operations:
Net investment income (loss) (0.05)(a) (0.03)
- -------------------------------------------------------------------------------------------------- --------- ---------
Net gains (losses) on securities (both realized and unrealized) 2.46 1.75
- -------------------------------------------------------------------------------------------------- --------- ---------
Total from investment operations 2.41 1.72
- -------------------------------------------------------------------------------------------------- --------- ---------
Less distributions:
Distributions from net realized capital gains (2.71) --
- -------------------------------------------------------------------------------------------------- --------- ---------
Net asset value, end of period $ 19.98 $ 20.28
================================================================================================== ========= =========
Total return(b) 13.95% 9.27%
================================================================================================== ========= =========
Ratios/supplemental data:
Net assets, end of period (000's omitted) $ 267,459 $ 42,238
================================================================================================== ========= =========
Ratio of expenses to average net assets 1.95%(c)(d) 1.91%(e)
================================================================================================== ========= =========
Ratio of net investment income (loss) to average net assets (0.50)%(c) (0.76)%(e)
================================================================================================== ========= =========
Portfolio turnover rate 159% 139%
================================================================================================== ========= =========
Average broker commission rate(f) $ 0.0615 N/A
================================================================================================== ========= =========
Borrowings for the period:
Amount of debt outstanding at end of
period (000s omitted) -- --
================================================================================================== ========= =========
Average amount of debt outstanding during the
period (000s omitted)(g) -- $ 3
================================================================================================== ========= =========
Average number of shares outstanding during the
period (000s omitted)(g) 7,956 1,036
================================================================================================== ========= =========
Average amount of debt per share during the period -- $ 0.0029
================================================================================================== ========= =========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(c) After waiver of advisory fees. Ratios are based on average net assets of
$151,463,325. Ratios of expenses and net investment income (loss) to average
net assets prior to waiver of advisory fees were 1.98% and (0.53)%.
(d) Includes indirectly paid expenses. Excluding indirectly paid expenses, the
ratio of expenses to average net assets would have remained the same.
(e) Annualized. After waiver of advisory fees. Annualized ratios of expenses and
net investment income (loss) to average net assets prior to waiver of
advisory fees were 1.94% and (0.79)%, respectively.
(f) Disclosure requirement beginning with the Fund's fiscal year ending October
31, 1996.
(g) Averages computed on a daily basis.
NOTE 9-SUBSEQUENT EVENT
On November 4, 1996, A I M Management Group Inc. ("AIM Management") and INVESCO
PLC announced the execution of an agreement and plan of merger pursuant to which
AIM Management will be merged with and into a direct wholly-owned subsidiary of
INVESCO PLC. AIM Management is the parent company of the Fund's advisor. The
merger is conditional on, among other things, approval by the shareholders of
INVESCO PLC and AIM Management and the shareholders of the AIM funds and the
mutual funds managed by INVESCO PLC, and is expected to take place during the
first quarter of 1997.
19
<PAGE> 21
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
AIM Weingarten Fund:
We have audited the accompanying statement of assets and
liabilities of AIM Weingarten Fund (a portfolio of AIM
Equity Funds, Inc.), including the schedule of
investments, as of October 31, 1996, the related statement
of operations for the year then ended, the statement of
changes in net assets for each of the years in the
two-year period then ended, and financial highlights for
each of the years in the eight year period then ended, the
ten months ended October 31, 1988, and the year ended
December 31, 1987. These financial statements and
financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on
these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of October 31, 1996, by correspondence
with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM
Weingarten Fund as of October 31, 1996, the results of its
operations for the year then ended, the changes in its net
assets for each of the years in the two-year period then
ended, and the financial highlights for each of the years
in the eight year period then ended, the ten months ended
October 31, 1988, and the year ended December 31, 1987, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
December 6, 1996
20
<PAGE> 22
DIRECTORS & OFFICERS
<TABLE>
<CAPTION>
BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
<S> <C> <C>
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.
Formerly Director, President, and 11 Greenway Plaza
Chief Executive Officer John J. Arthur Suite 1919
COMSAT Corporation Senior Vice President and Treasurer Houston, TX 77046
Owen Daly II Gary T. Crum TRANSFER AGENT
Director Senior Vice President A I M Fund Services, Inc.
Cortland Trust Inc. P.O. Box 4739
Scott G. Lucas Houston, TX 77210-4739
Carl Frischling Senior Vice President
Partner CUSTODIAN
Kramer, Levin, Naftalis & Frankel Carol F. Relihan State Street Bank & Trust
Senior Vice President and Secretary 225 Franklin Street
Robert H. Graham Boston, MA 02110
President and Chief Operating Officer Jonathan C. Schoolar
A I M Management Group Inc. Senior Vice President COUNSEL TO THE FUND
Ballard Spahr
John F. Kroeger Melville B. Cox Andrews & Ingersoll
Formerly Consultant Vice President 1735 Market Street
Wendell & Stockel Associates, Inc. Philadelphia, PA 19103
Dana R. Sutton
Lewis F. Pennock Vice President and Assistant Treasurer COUNSEL TO THE DIRECTORS
Attorney Kramer, Levin, Naftalis & Frankel
P. Michelle Grace 919 Third Avenue
Ian W. Robinson Assistant Secretary New York, NY 10022
Consultant; Formerly Executive Vice President and
Chief Financial Officer David L. Kite DISTRIBUTOR
Bell Atlantic Management Assistant Secretary A I M Distributors, Inc.
Services, Inc. 11 Greenway Plaza
Nancy L. Martin Suite 1919
Louis S. Sklar Assistant Secretary Houston, TX 77046
Executive Vice President
Hines Interests Ofelia M. Mayo AUDITORS
Limited Partnership Assistant Secretary KPMG Peat Marwick LLP
700 Louisiana
Kathleen J. Pflueger NationsBank Bldg.
Assistant Secretary Houston, TX 77002
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
Mary J. Benson
Assistant Treasurer
</TABLE>
REQUIRED FEDERAL INCOME TAX INFORMATION
AIM Weingarten Fund Retail Class paid ordinary dividends in the amount of
$1.266 per share to shareholders of Class A and Class B shares during its tax
year ended October 31, 1996. Of this amount 10.86% is eligible for the
dividends received deduction for corporations. The Fund also distributed
long-term capital gains of $1.44 per share for Class A and Class B shares
during its tax year ended October 31, 1996.
<PAGE> 23
<TABLE>
<S> <C>
THE AIM FAMILY OF FUNDS--Registered Trademark--
[Photo of AGGRESSIVE GROWTH
11 Greenway Plaza AIM Aggressive Growth Fund*
appears here] AIM Capital Development Fund
AIM Constellation Fund
AIM Global Aggressive Growth Fund
GROWTH
AIM Blue Chip Fund
AIM Global Growth Fund
AIM Growth Fund
AIM International Equity Fund
AIM Value Fund
AIM Weingarten Fund
GROWTH AND INCOME
AIM Balanced Fund
AIM Charter Fund
INCOME AND GROWTH
AIM Global Utilities Fund
HIGH CURRENT INCOME
AIM High Yield Fund
CURRENT INCOME
AIM Global Income Fund
AIM Income Fund
CURRENT TAX-FREE INCOME
AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of CT
AIM Tax-Free Intermediate Shares
CURRENT INCOME AND HIGH DEGREE OF SAFETY
AIM Intermediate Government Fund
HIGH DEGREE OF SAFETY AND CURRENT INCOME
AIM Limited Maturity Treasury Shares
STABILITY, LIQUIDITY, AND CURRENT INCOME
AIM Money Market Fund
STABILITY, LIQUIDITY, AND CURRENT TAX-FREE INCOME
AIM Tax-Exempt Cash Fund
A I M Management Group Inc. has *AIM Aggressive Growth Fund was closed
provided leadership in the mutual fund to new investors on July 18, 1995. For
industry since 1976 and currently more complete information about any AIM
manages approximately $60 billion in Fund(s), including sales charges and
assets for more than 3.5 million expenses, ask your financial consultant
shareholders, including individual or securities dealer for a free
investors, corporate clients, and prospectus(es). Please read the
financial institutions. The AIM Family prospectus(es) carefully before you
of Funds--Registered Trademark-- is invest or send money.
distributed nationwide, and AIM today
ranks among the nation's top 15 mutual
fund companies in assets under
management, according to Lipper
Analytical Services, Inc.
</TABLE>
[AIM LOGO APPEARS HERE] ---------------
A I M Distributors, Inc. BULK RATE
11 Greenway Plaza, Suite 1919 U.S. POSTAGE
Houston, TX 77046 PAID
HOUSTON, TX
Permit No. 1919
---------------
