<PAGE> 1
AIM CONSTELLATION FUND
[AIM LOGO APPEARS HERE] SEMIANNUAL REPORT APRIL 30, 1998
<PAGE> 2
-------------------------------------
AIM CONSTELLATION FUND
For shareholders
who seek capital appreciation
through investments
in common stocks, with
emphasis on medium-size
and smaller emerging
growth companies.
-------------------------------------
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Constellation Fund's performance figures are historical and reflect
reinvestment of all distributions and changes in net asset value. Unless
otherwise indicated, the Fund's performance is computed at net asset value
without a sales charge.
o When sales charges are included in performance figures, Class A share
performance reflects the maximum 5.50% sales charge, and Class B and Class C
share performance reflect 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 CDSC on Class C shares is 1% for the first year after purchase.
The performance of the Fund's Class B and Class C shares will differ from
that of Class A shares due to differing fees and expenses.
o Because Class B and Class C shares have been offered for less than one year,
all total return figures for Class B and C shares reflect cumulative total
return that has not been annualized.
o The Fund's average annual total returns, including sales charges, for
periods ended 3/31/98 (the most recent calendar quarter end), are as
follows. For Class A shares, one year, 27.04%; five years, 17.10%; 10 years,
20.03%. Class B shares produced cumulative total return of 0.29% from their
inception (11/3/97) through 3/31/98. Class C shares produced cumulative
total return of 3.22% from their inception (8/4/97) through 3/31/98.
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.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o Standard & Poor's Corporation (S&P) is a credit-rating agency. 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 the stock
market in general. The Standard & Poor's 400 Mid-Cap Index is an unmanaged
index comprising common stocks of approximately 400 mid-capitalization
companies.
o The NASDAQ (National Association of Securities Dealers Automated Quotation
system) Composite Index is a group of more than 4,500 unmanaged
over-the-counter securities widely regarded by investors to be
representative of the small- and medium-sized company stock universe.
o The unmanaged Lipper Mid-Cap Fund Index represents an average of the
performance of middle-capitalization growth funds.
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.
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 Fellow Shareholder:
When we last reported to you, for the fiscal year ended
[PHOTO OF October 31, 1997, equity markets worldwide had just been
Charles T. shaken by the currency crisis in Southeast Asia. By the
Bauer, April 30, 1998, end of this six-month reporting period, most
Chairman of markets had recovered nicely, with domestic equities
the Board of reaching new highs and European markets outdoing even the
THE FUND U.S.'s heady pace. Only Asian markets remained in the
APPEARS HERE] doldrums. Bonds have turned in a solid performance with
generous real returns, though not as spectacular as some had
predicted when the Asian crisis first broke.
Good economic news has been arriving almost daily early
in 1998. Inflation and joblessness in the U.S. have been at
their lowest levels in decades, consumer confidence at its
highest. The economic fundamentals in the U.S. appear sound,
and we at AIM remain cautiously optimistic that the current
economic expansion, and the buoyant financial markets that
accompany it, will continue for the foreseeable future.
Nevertheless, by the close of this reporting period,
many market participants were uneasy. Some worried that economic growth was so
robust and labor markets so tight that the Federal Reserve Board would raise
interest rates to keep inflation at bay. Historically, it has been events such
as a rise in interest rates--or more ominous occurrences such as wars--that have
ended bull markets as experienced in this decade. Other participants fretted
about signs of speculative fever, particularly in U.S. stock markets, where
equity prices continued to rise despite evidence that earnings growth,
especially for larger companies, had slowed considerably. All were aware that
the Asian story was not yet completed, and no one was certain how serious its
ultimate impact would be.
Of course, this bull market will end one day, and markets became less
ebullient shortly after this reporting period closed. In the face of
uncertainty, the best course for investors is to remain realistic and ready. The
market advances of the past three years have been unprecedented and may have
fostered unrealistic expectations among investors. We have never experienced two
years in a row of market returns above 30%, let alone three. Investors would do
well to remember that the long-term average return for equities is closer to 10%
per year.
A well-diversified portfolio is still one of the most effective tools for
coping with shifts in a market's direction because different asset classes and
different national markets tend to move independently of one another. Of course,
your financial consultant remains your best source of information about how to
allocate your investments based on your particular goals and situation.
AIM FURTHER DIVERSIFIES ITS OFFERINGS
Shortly after the close of this reporting period, AIM broadened its offerings to
shareholders through the addition of the GT Global group of mutual funds. During
the next few months, you will be receiving more details about this transaction
and the products it adds to The AIM Family of Funds--Registered Trademark--.
In addition to making a more varied group of investments available to our
shareholders, this transaction helps strengthen AIM's position as a major
participant in the money-management industry worldwide. Such strength will
enable us to continue expanding both the scope of our fund offerings and our
menu of services for our shareholders.
YOUR FUND MANAGERS COMMENT
On the pages that follow, the managers of your AIM Fund discuss how the Fund
performed during the six months covered by this report and give their near-term
market outlook. We hope you will find their discussion informative.
We are pleased to send you this report on your Fund. If you have any
questions or comments, please contact our Client Services department at
800-959-4246 or visit our Web site at www.aimfunds.com. You can access
information about your account on our Web site and also on our automated AIM
Investor Line, 800-246-5463.
Thank you for your continued participation in The AIM Family of
Funds--Registered Trademark--.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
<PAGE> 4
The Managers' Overview
FUND PERFORMANCE REBOUNDS
AFTER BOUT WITH "ASIAN FLU"
A roundtable discussion with the Fund management team for AIM Constellation Fund
for the six months ended April 30, 1998.
- --------------------------------------------------------------------------------
Q. HOW DID THE FUND PERFORM DURING THE SIX MONTHS ENDED APRIL 30, 1998?
A. Total return was 11.16% for Class A shares and 10.74% for Class C shares.
Class B shares, which commenced operations November 3, 1997, produced
cumulative return of 7.57% from then through the close of the reporting
period.
The six-month figures reflect the difficult investing environment
during the first half of the reporting period, when the Asian financial
crisis left mid-cap stocks out of favor. Because of market uncertainty,
investors preferred large, liquid blue chips.
During the latter half of the reporting period, when some concern about
Asia began to wane, the Fund rebounded. During the last three months of the
reporting period, it outperformed both the Standard & Poor's Mid-Cap 400
Index and the Lipper Mid-Cap Index of comparable mutual funds. The Fund's
long-term performance remains excellent, as shown on the following pages.
Q. WHAT SHAPED MARKET CONDITIONS DURING THE REPORTING PERIOD?
A. As mentioned previously, during the first half of the period, Asia's
currency and market crises dampened stock market performance dramatically.
Investors gravitated toward widely traded blue chip stocks and also moved
into sectors such as utilities that often provide a safe haven when markets
are uncertain.
As the new year unfolded, the markets shrugged off these difficulties.
A much- anticipated slowdown in the U.S. economy, predicted to result from
the troubles in Asia, never materialized. U.S. gross domestic output rose
at a 4.8% annual rate during the first quarter of 1998. Inflation, widely
believed to result from such robust economic expansion, never developed.
The Commerce Department's overall price index rose an annualized 0.9%
during the quarter--its slowest rate in 34 years.
Q. DID YOU ALTER THE PORTFOLIO AS MARKET CONDITIONS CHANGED?
A. We maintained our focus on companies with solid earnings history. While
liquidity-focused markets bid up the stocks of the very largest
companies--the so-called "mega-caps"--to extremely high valuations, we
stayed true to our investment discipline. The Fund invests in small- and
mid-cap stocks. In the short run, this has sometimes been a drawback.
Nevertheless, we believe there is greater growth potential in smaller and
mid-cap companies, especially now, after a two-year bear market in these
stocks.
So we modified the portfolio, but not drastically. We trimmed our
holdings of energy stocks, which slumped badly because of Asian turmoil.
Technology stocks in such industries as electronics, computers, and
computer software remained the portfolio's largest sector weighting, and we
increased our holdings in the health-care sector and in consumer cyclicals,
especially retailers.
Q. YOU SAY TECHNOLOGY IS YOUR LARGEST WEIGHTING. HASN'T THAT SECTOR BEEN
VOLATILE?
A. This sector is usually volatile, and it was not generally in favor for much
of the reporting period, partly because this sector was especially hard hit
by the Asian difficulties. Because many technology companies tend to have
manufacturing facilities in Asia, concern was widespread during the fourth
quarter of 1997 that the bottom could drop out under technology stocks.
That reaction may have been excessive. Most of the electronic components
made in Southeast Asia are shipped to computer manufacturers in the U.S.
The devaluation of Asian currencies is cutting costs, not markets, for
these companies.
We did reduce our technology holdings from about 36% of the portfolio
to about 28%. Part of that reduction was in semiconductor holdings, where
serious overcapacity exists for commodity-product producers.
But overall, the technology sector is doing well. Personal computer
sales were up 16% in the U.S. during the first quarter of 1998. We
increased our holdings in the software industry. One of our larger holdings
is BMC Software, Inc., a rapidly growing producer of software products that
improve the efficiency of large-scale business computer environments--the
kind of technology-based productivity improvement that underpins recent
economic expansion and corporate cost control.
We also own several firms known for their expertise in solving the Year
2000 problem, reprogramming computers to recognize this date. Compuware
Corp., a leading information technology professional services company; and
Comdisco, Inc., which specializes in helping businesses recover from
disasters such as tornadoes or hurricanes, and now the Year 2000, are among
holdings in this area.
So despite volatility and some negative earnings surprises, there are
still very good
================================================================================
NET ASSETS UNDER MANAGEMENT
- --------------------------------------------------------------------------------
10/31/97 $14.53 billion
4/30/98 $15.77 billion
================================================================================
See important fund and index dislosures inside front cover.
2
<PAGE> 5
PORTFOLIO COMPOSITION
As of 4/30/98, based on total net assets
<TABLE>
<CAPTION>
========================================================================================================
TOP 10 HOLDINGS TOP 10 INDUSTRIES
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Health Management 1.00% 1. Computers (Software & Services) 10.16%
Associates, Inc.-Class A
2. Oil & Gas (Drilling & Equipment) 5.47
2. HEALTHSOUTH Corp. 1.00
3. Electronics (Semiconductors) 4.00
3. BMC Software, Inc. 0.98
4. Consumer Finance 3.45
4. HBO & Co. 0.95
5. Retail (Specialty-Apparel) 3.28
5. Tenet Healthcare Corp. 0.93
6. Communications Equipment 3.22
6. Service Corp. International 0.92
7. Health Care
7. America Online, Inc. 0.89 (Medical Products & Supplies) 3.21
8. EMC Corp. 0.88 8. Health Care (Hospital Management) 2.93
9. Safeway, Inc. 0.85 9. Services (Data Processing) 2.89
10. Omnicare, Inc. 0.81 10. Health Care (Specialized Services) 2.83
Please keep in mind that the Fund's portfolio composition is subject to change and there is no
guarantee it will continue to hold any particular security.
========================================================================================================
</TABLE>
stocks in the technology sector.
Q. AND WHY IS THE RETAIL INDUSTRY ATTRACTIVE?
A. Consumer cyclicals, including retailers, are doing very well. Personal
earnings are up, and The Conference Board reported consumer confidence at a
29-year high in February. Good times are buoying both discounters like TJX
Companies, Inc., owner of the T.J. Maxx apparel chain, and sellers of
popular high-profile brands like Tommy Hilfiger. Electronics-oriented
stores like Best Buy Co., Inc. are boosted by the arrival of sub-$1,000
personal computers and digital video disks, among other new products. The
Fund's retail holdings were among its best performers early in 1998. More
than 11% of net assets were invested in retail stocks at the close of the
reporting period.
Q. YOU ALSO MENTIONED HEALTH CARE. WHY IS THAT SECTOR DOING WELL?
A. Though reduced slightly during the reporting period, our health-care
holdings are still quite large: about 13% of net assets. Consolidation and
cost cutting in the health-care sector have been benefiting profit margins
for service providers, a number of which were able to raise premiums
recently for the first time in years.
Underlying the improved profit picture of many health-care providers
are systems improvements such as those provided by HBO & Co. HBO produces
software that integrates health-care information so that patient
information, for example, can move seamlessly among doctors' offices,
hospitals and other providers, and insurance companies.
Another positive development in the health-care arena has been the
FDA's gradual streamlining of filing and approval systems, which has been
welcomed by pharmaceutical firms, especially those with new products or
drug delivery systems. Elan Corp. PLC is one such company. It specializes
in designing pharmaceuticals that deliver their effective ingredients to
the patient more efficiently; Elan has significant research in progress,
especially on treatments for central nervous system disorders.
Q. WHAT DO YOU FORESEE FOR THE FUND IN THE NEXT FEW MONTHS?
A. We are optimistic. Values in the mid-cap sector are simply more attractive
than in the large-cap sector. Earnings of mid-cap and smaller companies are
growing in the double digits, whereas first-quarter year-over-year earnings
growth for the large companies in the S&P 500 was in the low single digits.
You simply get more earnings for your investment in smaller and mid-cap
stocks, especially in view of the ultra high price/earnings ratios of many
blue-chip stocks. We think that ultimately this comparative valuation
should translate into strong performance for mid-size company stocks.
There is evidence that this is already happening. Almost unnoticed by
the popular or business press, the dominance of very large-capitalization
stocks had slipped somewhat by the end of this reporting period. For the
three months ended April 30, 1998, the mid-cap Standard & Poor's 400
outperformed the large-cap S&P 500 index, a distinct change from the past
few years.
Q. AND FOR THE ECONOMY AND MARKETS IN GENERAL? WHAT'S YOUR OUTLOOK THERE?
A. Most observers do not expect dramatic change; they foresee stable interest
rates, healthy economic growth, and continued contained inflation as global
competition and lower energy costs offset the inflationary potential of
tight labor markets. While there are worries about whether the ongoing bull
market can be sustained, no one has identified a good reason for the
seven-plus years of domestic economic expansion to end abruptly.
However, most market participants would welcome some cooling off. One
of the events most likely to trigger a halt in the market's prolonged rise
would be an interest rate hike by the Federal Reserve Board (the Fed).
Although the Fed left interest rates unchanged at its meeting shortly after
the reporting period closed, it has been hinting about its concern over
rapid economic growth and the dramatic rise in equity values. An interest
rate rise would be forestalled by evidence that the economy is growing a
little less rapidly.
See important fund and index disclosures inside front cover.
3
<PAGE> 6
Long-Term Performance
THE AIM CONSTELLATION FUND GROWTH STORY
AIM CONSTELLATION FUND CLASS A SHARES VS. BENCHMARK INDEXES
The chart compares your Fund's Class A shares to benchmark indexes. It is
important to understand differences between your Fund and these indexes. An
index measures the performance of a hypothetical portfolio. A market index, such
as the S&P 500 or the NASDAQ Composite Index is not managed; therefore there are
no sales charges, expenses, or fees. If you could buy all the securities that
make up a particular index, you would incur expenses that would affect the
return on your investment. Use of these indexes is intended to give you a
general idea of how your Fund performed compared to these benchmarks.
GROWTH OF A $10,000 INVESTMENT:
April 30, 1976-April 30, 1998
- ---------------------------------------------------------------------------
AIM CONSTELLATION FUND NASDAQ
CLASS A SHARES S&P 500 COMPOSITE INDEX
- ---------------------------------------------------------------------------
4/30/76 $9,443 $10,000 $10,000
4/77 8,801 10,082 10,599
4/78 10,958 10,427 12,786
4/79 13,257 11,546 14,856
4/80 20,264 12,737 15,541
4/81 34,986 16,715 24,061
4/82 25,228 15,493 20,504
4/83 44,966 23,076 32,533
4/84 34,648 23,459 27,469
4/85 38,220 27,594 31,146
4/86 57,277 37,581 42,544
4/87 79,303 47,552 46,382
4/88 67,691 44,490 42,100
4/89 82,788 54,625 47,463
4/90 98,298 60,328 46,633
4/91 117,595 70,925 53,810
4/92 150,546 80,891 64,240
4/93 177,740 88,346 73,426
4/94 212,406 93,051 81,465
4/95 240,519 109,258 93,692
4/96 329,813 142,182 132,162
4/97 324,936 177,885 139,959
4/98 439,880 250,798 207,416
===========================================================================
Past performance is no guarantee of comparable future results.
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
For periods ended 4/30/98, including sales charges
CLASS A SHARES
Since Inception (4/30/76) 18.77%
20 Years 19.94
10 Years 19.91
5 Years 18.53
1 Year 27.92
CLASS B SHARES
Since Inception (11/3/97) 2.59%*
CLASS C SHARES
Since Inception (8/4/97) 5.59%*
================================================================================
*Total return provided is cumulative total return that has not been annualized.
Your Fund's total return includes sales charges, expenses, and management fees.
The performance of Class B and Class C shares will differ from that of 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
THE ROTH IRA: THE POWER TO KEEP MORE
Contribute After-Tax Dollars Now . . . So You Can Get Federally Tax-Free
Savings Later
SOME ROTH IRA CONVERSION GUIDELINES
If you can check most of these boxes, converting your Traditional IRA to a Roth
IRA may make sense for you.
o You have assets outside your retirement savings with which you can easily
afford to pay the taxes due when you convert.
o You have 10 years or more before you retire. The longer you invest tax
free, the more you benefit.
o Your tax rate will probably be higher in retirement than it is now. If so,
you'll pay less taxes now to convert than you would pay at retirement if
you withdrew from a traditional IRA.
o You plan to convert in 1998. On January 1, 1999, the ability to spread tax
payments over four years disappears.
o You want to keep making contributions after age 70 1/2 and may wish to pass
your IRA assets on to your heirs after your death.
A new and potentially more powerful type of IRA--the Roth IRA--became
available on January 1, 1998. What makes it more powerful? The Roth IRA gives
you the opportunity to keep more of what you earn.
Are you eligible to open a Roth IRA? The answer is yes if you or your
spouse has earned income for the tax year for which you want to make the
contribution, and your adjusted gross income is below $110,000 if you are a
single tax filer, $160,000 if you file jointly.
TWO KEY ROTH IRA BENEFITS:
TAX-FREE AND PENALTY-FREE WITHDRAWALS
o Of earnings after five years. Earnings on your Roth IRA are federally tax
free if your Roth IRA account has been open for five years and you are at least
59 1/2 years old, or in the case of death or disability. You may also use up to
$10,000 of your earnings to buy a first home (after five years).
o Of contributions at any time. For instance, if you make annual contributions
of $2,000 for the next three years, you may take out up to $6,000 and use that
money for any purpose.
HOW YOU MIGHT PUT BOTH BENEFITS TO WORK FOR YOU
Here's an example of how you may take full advantage of a Roth IRA. You are
39 1/2 years old. You contribute $2,000 after-tax annually in your Roth IRA
every year for 20 years, earning an average annual return of 10%. After 20
years, your account has grown to $126,005. Now at age 59 1/2 you can begin
taking withdrawals and pay no federal income tax or penalty on any of your
$126,005. Or you can keep your money invested and take it out whenever you need
it.
THE ROTH IRA: TO CONVERT OR NOT TO CONVERT
Can you convert your Traditional IRA to a Roth IRA? The answer is yes if you
meet these requirements:
You must pay taxes on the amount you convert. If you convert in 1998, you
can spread your tax payments over the next four years. This four-year allowance
will not be available after December 31, 1998.
You cannot convert to a Roth IRA if you are married and file your tax
return separately, or if your annual gross income is over $100,000.
The Roth IRA Analyzer & Calculator at AIM's Internet Web site
- --www.aimfunds.com-- can help you determine your IRA eligibility status and
whether it makes sense for you to convert an existing IRA into a Roth IRA.
MAKE YOUR IRA CONVERSION DECISION A TRULY INFORMED ONE
Talk to your financial consultant, who knows your specific needs and goals. You
may also wish to talk with a tax adviser.
This discussion does not constitute tax advice. Your tax adviser can provide
guidance concerning your particular situation.
<PAGE> 8
SCHEDULE OF INVESTMENTS
APRIL 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-90.18%
AEROSPACE/DEFENSE-0.97%
AAR Corp. 1,000,000 $ 26,187,500
- ---------------------------------------------------------------
BE Aerospace, Inc.(a) 600,000 18,712,500
- ---------------------------------------------------------------
Gulfstream Aerospace Corp.(a) 1,000,000 41,937,500
- ---------------------------------------------------------------
Precision Castparts Corp. 500,000 31,062,500
- ---------------------------------------------------------------
Sundstrand Corp. 500,000 34,531,250
- ---------------------------------------------------------------
152,431,250
- ---------------------------------------------------------------
AIR FREIGHT-0.10%
AirNet Systems, Inc.(a) 560,000 15,120,000
- ---------------------------------------------------------------
AIRLINES-0.48%
Continental Airlines, Inc.(a) 1,000,000 58,875,000
- ---------------------------------------------------------------
Southwest Airlines Co. 600,000 16,462,500
- ---------------------------------------------------------------
75,337,500
- ---------------------------------------------------------------
AUTO PARTS & EQUIPMENT-0.04%
Danaher Corp. 82,200 5,908,125
- ---------------------------------------------------------------
BANKS (MAJOR REGIONAL)-0.39%
Summit Bancorp 500,000 25,062,500
- ---------------------------------------------------------------
Northern Trust Corp. 500,000 36,500,000
- ---------------------------------------------------------------
61,562,500
- ---------------------------------------------------------------
BANKS (REGIONAL)-1.42%
AmSouth Bancorporation 500,000 31,187,500
- ---------------------------------------------------------------
Crestar Financial Corp. 500,000 29,906,250
- ---------------------------------------------------------------
Golden State Bancorp, Inc.(a) 750,000 29,250,000
- ---------------------------------------------------------------
Mercantile Bankshares Corp. 500,000 19,187,500
- ---------------------------------------------------------------
National Commerce Bancorporation 107,700 4,819,575
- ---------------------------------------------------------------
North Fork Bancorporation, Inc. 1,000,000 37,125,000
- ---------------------------------------------------------------
Star Banc Corp. 625,000 39,492,188
- ---------------------------------------------------------------
TCF Financial Corp. 1,000,000 32,562,500
- ---------------------------------------------------------------
223,530,513
- ---------------------------------------------------------------
BEVERAGES (NON-ALCOHOLIC)-0.26%
Coca-Cola Enterprises Inc. 1,100,000 41,525,000
- ---------------------------------------------------------------
BIOTECHNOLOGY-0.39%
Biogen, Inc.(a) 825,000 36,609,375
- ---------------------------------------------------------------
Curative Health Services,
Inc.(a)(b) 795,000 24,645,000
- ---------------------------------------------------------------
61,254,375
- ---------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE)-1.50%
Chancellor Media Corp.(a) 280,002 13,282,595
- ---------------------------------------------------------------
Clear Channel Communications,
Inc.(a) 400,000 37,700,000
- ---------------------------------------------------------------
Comcast Corp.-Class A 1,500,000 53,718,750
- ---------------------------------------------------------------
Cox Communications, Inc.-Class A(a) 750,000 33,468,750
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
BROADCASTING (TELEVISION, RADIO
& CABLE)-(CONTINUED)
Heftel Broadcasting Corp.(a) 501,000 $ 21,981,375
- ---------------------------------------------------------------
Jacor Communications, Inc.(a) 700,000 39,812,500
- ---------------------------------------------------------------
Liberty Media Group(a) 1,080,000 35,842,500
- ---------------------------------------------------------------
235,806,470
- ---------------------------------------------------------------
CHEMICALS-0.25%
IMC Global, Inc. 1,000,000 36,000,000
- ---------------------------------------------------------------
NL Industries, Inc.(a) 121,700 2,745,856
- ---------------------------------------------------------------
38,745,856
- ---------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-2.11%
ADC Telecommunications, Inc.(a) 750,000 22,453,125
- ---------------------------------------------------------------
Andrew Corp.(a) 1,000,000 22,875,000
- ---------------------------------------------------------------
Aspect Telecommunications
Corp.(a) 1,000,000 28,750,000
- ---------------------------------------------------------------
Brightpoint, Inc.(a) 1,500,000 29,250,000
- ---------------------------------------------------------------
Comverse Technology, Inc.(a) 850,000 40,268,750
- ---------------------------------------------------------------
Digital Microwave Corp.(a) 500,000 5,687,500
- ---------------------------------------------------------------
General Instrument Corp.(a) 1,000,000 22,437,500
- ---------------------------------------------------------------
PairGain Technologies, Inc.(a) 2,000,000 36,875,000
- ---------------------------------------------------------------
REMEC, Inc.(a) 750,000 18,656,250
- ---------------------------------------------------------------
Tellabs, Inc.(a) 1,500,000 106,312,500
- ---------------------------------------------------------------
333,565,625
- ---------------------------------------------------------------
COMPUTERS (HARDWARE)-1.74%
Comdisco, Inc. 1,971,700 87,247,725
- ---------------------------------------------------------------
Dell Computer Corp.(a) 1,200,000 96,900,000
- ---------------------------------------------------------------
Gateway 2000, Inc.(a) 1,019,100 59,808,431
- ---------------------------------------------------------------
IDX Systems Corp.(a) 700,000 30,493,750
- ---------------------------------------------------------------
274,449,906
- ---------------------------------------------------------------
COMPUTERS (NETWORKING)-1.44%
Ascend Communications, Inc.(a) 2,790,000 121,539,375
- ---------------------------------------------------------------
Cisco Systems, Inc.(a) 500,000 36,625,000
- ---------------------------------------------------------------
FORE Systems, Inc.(a) 3,000,000 68,625,000
- ---------------------------------------------------------------
226,789,375
- ---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-1.61%
EMC Corp.(a) 3,000,000 138,375,000
- ---------------------------------------------------------------
Lexmark International Group,
Inc.(a) 900,000 52,087,500
- ---------------------------------------------------------------
Storage Technology Corp.(a) 750,000 63,328,125
- ---------------------------------------------------------------
253,790,625
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-10.05%
America Online, Inc.(a) 1,750,000 140,000,000
- ---------------------------------------------------------------
Applied Voice Technology, Inc.(a) 155,000 6,839,375
- ---------------------------------------------------------------
Aspect Development, Inc.(a) 363,000 22,982,438
- ---------------------------------------------------------------
</TABLE>
7
<PAGE> 9
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (SOFTWARE & SERVICES)-(CONTINUED)
Autodesk, Inc. 700,000 $ 32,900,000
- ---------------------------------------------------------------
BMC Software, Inc.(a) 1,650,000 154,378,125
- ---------------------------------------------------------------
Broderbund Software, Inc.(a)(b) 656,900 11,742,088
- ---------------------------------------------------------------
Cadence Design Systems, Inc.(a) 3,500,000 127,093,750
- ---------------------------------------------------------------
Citrix Systems, Inc.(a) 525,000 32,615,625
- ---------------------------------------------------------------
Computer Associates
International, Inc. 750,000 43,921,875
- ---------------------------------------------------------------
Computer Sciences Corp.(a) 1,193,000 62,930,750
- ---------------------------------------------------------------
Compuware Corp.(a) 2,500,000 122,187,500
- ---------------------------------------------------------------
Concord EFS, Inc.(a) 3,000,000 94,500,000
- ---------------------------------------------------------------
Electronic Arts, Inc.(a) 1,000,000 46,250,000
- ---------------------------------------------------------------
HBO & Co. 2,500,000 149,531,250
- ---------------------------------------------------------------
Intuit, Inc.(a) 725,000 38,560,938
- ---------------------------------------------------------------
J.D. Edwards & Co.(a) 800,000 28,500,000
- ---------------------------------------------------------------
Microsoft Corp.(a) 400,000 36,050,000
- ---------------------------------------------------------------
Network Associates, Inc.(a) 250,000 17,125,000
- ---------------------------------------------------------------
Oracle Corp.(a) 1,387,900 35,911,913
- ---------------------------------------------------------------
Parametric Technology Co.(a) 3,500,000 111,890,625
- ---------------------------------------------------------------
Platinum Technology, Inc.(a) 1,250,000 31,875,000
- ---------------------------------------------------------------
Sterling Commerce, Inc.(a) 2,000,000 85,125,000
- ---------------------------------------------------------------
Sterling Software, Inc.(a) 1,250,000 33,046,873
- ---------------------------------------------------------------
Symantec Corp.(a) 1,000,000 29,000,000
- ---------------------------------------------------------------
Synopsys, Inc.(a) 1,300,000 55,900,000
- ---------------------------------------------------------------
Wind River Systems(a) 1,000,000 34,625,000
- ---------------------------------------------------------------
1,585,483,125
- ---------------------------------------------------------------
CONSUMER (JEWELRY, NOVELTIES & GIFTS)-0.30%
Action Performance Companies,
Inc.(a) 500,000 17,312,500
- ---------------------------------------------------------------
Blyth Industries, Inc.(a) 806,200 29,577,463
- ---------------------------------------------------------------
46,889,963
- ---------------------------------------------------------------
CONSUMER FINANCE-3.45%
Capital One Financial Corp. 1,000,000 96,062,500
- ---------------------------------------------------------------
ContiFinancial Corp.(a) 446,600 14,402,850
- ---------------------------------------------------------------
Countrywide Credit Industries,
Inc. 636,900 30,810,038
- ---------------------------------------------------------------
FIRSTPLUS Financial Group, Inc.(a) 1,500,000 72,750,000
- ---------------------------------------------------------------
Household International, Inc. 900,000 118,293,750
- ---------------------------------------------------------------
IMC Mortgage Co.(a)(b) 1,500,000 23,906,250
- ---------------------------------------------------------------
MBNA Corp. 2,750,000 93,156,250
- ---------------------------------------------------------------
Providian Financial Corp. 650,000 39,121,875
- ---------------------------------------------------------------
SLM Holding Corp. 1,286,000 54,896,125
- ---------------------------------------------------------------
543,399,638
- ---------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-1.72%
Bergen Brunswig Corp.-Class A 1,000,000 45,375,000
- ---------------------------------------------------------------
Cardinal Health, Inc. 1,300,000 125,125,000
- ---------------------------------------------------------------
McKesson Corp. 1,422,400 100,545,900
- ---------------------------------------------------------------
271,045,900
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRICAL EQUIPMENT-1.86%
American Power Conversion Corp.(a) 1,250,000 $ 40,234,375
- ---------------------------------------------------------------
Avid Technology, Inc.(a) 500,000 21,687,500
- ---------------------------------------------------------------
Berg Electronics Corp.(a) 1,000,000 23,812,500
- ---------------------------------------------------------------
Sanmina Corp.(a) 700,000 63,000,000
- ---------------------------------------------------------------
SCI Systems, Inc.(a) 1,500,000 61,781,250
- ---------------------------------------------------------------
Solectron Corp.(a) 1,000,000 44,312,500
- ---------------------------------------------------------------
Symbol Technologies, Inc. 1,000,000 38,500,000
- ---------------------------------------------------------------
293,328,125
- ---------------------------------------------------------------
ELECTRONICS (COMPONENT DISTRIBUTORS)-0.23%
Arrow Electronics, Inc.(a) 1,300,000 35,506,250
- ---------------------------------------------------------------
ELECTRONICS (DEFENSE)-0.23%
General Motors Corp.-Class H(a) 663,000 36,630,750
- ---------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION)-0.22%
Perkin-Elmer Corp. 500,000 34,187,500
- ---------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-4.00%
Advanced Micro Devices, Inc.(a) 1,000,000 27,750,000
- ---------------------------------------------------------------
Altera Corp.(a) 850,000 34,425,000
- ---------------------------------------------------------------
Analog Devices, Inc.(a) 1,788,800 69,651,400
- ---------------------------------------------------------------
Atmel Corp.(a) 1,000,000 20,187,500
- ---------------------------------------------------------------
Burr-Brown Corp.(a) 1,125,000 34,242,188
- ---------------------------------------------------------------
Lattice Semiconductor Corp.(a) 500,000 22,812,500
- ---------------------------------------------------------------
Linear Technology Corp.(a) 1,000,000 80,500,000
- ---------------------------------------------------------------
LSI Logic Corp.(a) 2,000,000 54,250,000
- ---------------------------------------------------------------
Maxim Integrated Products, Inc.(a) ,500,000 100,937,500
- ---------------------------------------------------------------
Microchip Technology, Inc.(a)(b) 2,000,175 56,754,966
- ---------------------------------------------------------------
PMC-Sierra, Inc.(a) 1,000,000 45,500,000
- ---------------------------------------------------------------
Sipex Corp.(a) 100,000 1,987,500
- ---------------------------------------------------------------
Vitesse Semiconductor Corp.(a) 700,000 40,381,250
- ---------------------------------------------------------------
Xilinx, Inc.(a) 892,700 40,841,024
- ---------------------------------------------------------------
630,220,828
- ---------------------------------------------------------------
EQUIPMENT (SEMICONDUCTORS)-0.83%
Applied Materials, Inc.(a) 1,000,000 36,125,000
- ---------------------------------------------------------------
Etec Systems, Inc.(a) 214,200 12,155,850
- ---------------------------------------------------------------
KLA-Tencor Corp.(a) 1,250,000 50,390,625
- ---------------------------------------------------------------
Teradyne, Inc.(a) 900,000 32,850,000
- ---------------------------------------------------------------
131,521,475
- ---------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-1.20%
FINOVA Group, Inc. 1,000,000 58,562,500
- ---------------------------------------------------------------
MGIC Investment Corp. 1,450,000 91,350,000
- ---------------------------------------------------------------
SunAmerica, Inc. 800,000 39,950,000
- ---------------------------------------------------------------
189,862,500
- ---------------------------------------------------------------
FOODS-0.26%
Suiza Foods Corp.(a) 700,000 41,475,000
- ---------------------------------------------------------------
</TABLE>
8
<PAGE> 10
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FOOTWEAR-0.18%
Wolverine World Wide, Inc. 1,000,000 $ 28,875,000
- ---------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL COMPANIES-0.18%
International Game Technology 1,000,000 27,812,500
- ---------------------------------------------------------------
GOLD & PRECIOUS METALS MINING-0.02%
Battle Mountain Gold Co. 537,800 3,865,438
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-1.63%
Alpharma, Inc.-Class A 254,967 5,800,499
- ---------------------------------------------------------------
Columbia Laboratories, Inc.(a) 500,000 4,500,000
- ---------------------------------------------------------------
Forest Laboratories, Inc.(a) 1,200,000 43,425,000
- ---------------------------------------------------------------
Jones Medical Industries, Inc.(b) 1,600,850 47,225,075
- ---------------------------------------------------------------
Mylan Laboratories, Inc. 2,500,000 67,812,500
- ---------------------------------------------------------------
Parexel International Corp.(a) 350,000 11,725,000
- ---------------------------------------------------------------
R.P. Scherer Corp.(a) 156,900 11,453,700
- ---------------------------------------------------------------
Watson Pharmaceuticals, Inc.(a) 1,500,000 64,500,000
- ---------------------------------------------------------------
256,441,774
- ---------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT)-2.93%
Health Management Associates,
Inc.-Class A(a) 5,000,030 157,500,945
- ---------------------------------------------------------------
Quorum Health Group, Inc.(a) 1,800,000 57,825,000
- ---------------------------------------------------------------
Tenet Healthcare Corp.(a) 3,913,800 146,522,888
- ---------------------------------------------------------------
Universal Health Services,
Inc.-Class B(a) 1,750,000 100,734,374
- ---------------------------------------------------------------
462,583,207
- ---------------------------------------------------------------
HEALTH CARE (LONG TERM CARE)-1.62%
Beverly Enterprises, Inc.(a) 3,000,000 47,250,000
- ---------------------------------------------------------------
Health Care and Retirement
Corp.(a) 1,250,000 50,937,500
- ---------------------------------------------------------------
HEALTHSOUTH Corp.(a) 5,200,000 156,975,000
- ---------------------------------------------------------------
255,162,500
- ---------------------------------------------------------------
HEALTH CARE (MANAGED CARE)-0.88%
American Oncology Resources,
Inc.(a) 450,000 6,750,000
- ---------------------------------------------------------------
Concentra Managed Care, Inc.(a) 1,150,000 35,793,750
- ---------------------------------------------------------------
Express Scripts, Inc.-Class A(a)(b) 700,000 56,000,000
- ---------------------------------------------------------------
First Health Group Corp.(a) 500,000 29,500,000
- ---------------------------------------------------------------
Trigon Healthcare, Inc.(a) 372,500 11,314,687
- ---------------------------------------------------------------
139,358,437
- ---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS
& SUPPLIES)-3.21%
Allegiance Corp. 1,020,200 46,546,625
- ---------------------------------------------------------------
Arterial Vascular Engineering,
Inc.(a) 500,000 17,687,500
- ---------------------------------------------------------------
Biomet, Inc. 800,000 24,000,000
- ---------------------------------------------------------------
Boston Scientific Corp.(a) 500,000 36,156,250
- ---------------------------------------------------------------
DENTSPLY International Inc. 842,200 27,687,325
- ---------------------------------------------------------------
Guidant Corp. 1,250,000 83,593,750
- ---------------------------------------------------------------
Henry Schein, Inc.(a) 900,000 35,100,000
- ---------------------------------------------------------------
Medtronic, Inc. 500,000 26,312,500
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (MEDICAL PRODUCTS
& SUPPLIES)-(CONTINUED)
PSS World Medical, Inc.(a) 1,200,000 $ 26,925,000
- ---------------------------------------------------------------
Sofamor Danek Group, Inc.(a) 300,000 26,325,000
- ---------------------------------------------------------------
St. Jude Medical, Inc.(a) 900,000 31,893,750
- ---------------------------------------------------------------
Stryker Corp. 400,000 18,000,000
- ---------------------------------------------------------------
Sybron International Corp.(a) 4,000,000 106,000,000
- ---------------------------------------------------------------
506,227,700
- ---------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES)-2.75%
Alza Corp.(a) 700,000 33,556,250
- ---------------------------------------------------------------
American HomePatient, Inc.(a)(b) 246,200 4,539,312
- ---------------------------------------------------------------
Covance, Inc.(a) 2,109,600 45,224,550
- ---------------------------------------------------------------
FPA Medical Management, Inc.(a) 1,000,000 12,500,000
- ---------------------------------------------------------------
Lincare Holdings, Inc.(a) 1,000,000 81,125,000
- ---------------------------------------------------------------
Omnicare, Inc. 3,750,000 128,437,500
- ---------------------------------------------------------------
Orthodontic Centers of
America, Inc.(a) 524,200 11,204,775
- ---------------------------------------------------------------
Quintiles Transnational Corp.(a) 1,210,000 59,895,000
- ---------------------------------------------------------------
Total Renal Care Holdings, Inc.(a) 1,692,933 56,078,406
- ---------------------------------------------------------------
Transition Systems, Inc.(a) 33,300 749,250
- ---------------------------------------------------------------
433,310,043
- ---------------------------------------------------------------
HOMEBUILDING-0.70%
Clayton Homes, Inc. 3,090,000 61,993,125
- ---------------------------------------------------------------
Fleetwood Enterprises, Inc. 507,000 23,417,063
- ---------------------------------------------------------------
Kaufman and Broad Home Corp. 616,900 17,928,656
- ---------------------------------------------------------------
Oakwood Homes Corp. 250,000 7,046,875
- ---------------------------------------------------------------
110,385,719
- ---------------------------------------------------------------
HOUSEHOLD FURNITURE & APPLIANCES-0.33%
Leggett & Platt, Inc. 1,000,000 51,937,500
- ---------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES)-0.26%
Fort James Corp. 835,000 41,436,875
- ---------------------------------------------------------------
HOUSEWARES-0.16%
Central Garden and Pet Co.(a) 485,500 16,628,375
- ---------------------------------------------------------------
Helen of Troy Ltd.(a) 435,000 8,917,500
- ---------------------------------------------------------------
25,545,875
- ---------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-0.31%
Provident Companies, Inc. 1,250,000 48,828,125
- ---------------------------------------------------------------
INSURANCE (PROPERTY-CASUALTY)-0.78%
Everest Reinsurance Holdings, Inc. 750,000 30,937,500
- ---------------------------------------------------------------
Executive Risk Inc. 500,000 33,343,750
- ---------------------------------------------------------------
Mercury General Corp. 914,700 59,226,825
- ---------------------------------------------------------------
123,508,075
- ---------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE-0.50%
Edwards (A.G.), Inc. 750,000 33,750,000
- ---------------------------------------------------------------
Paine Webber Group Inc. 1,000,000 44,812,500
- ---------------------------------------------------------------
78,562,500
- ---------------------------------------------------------------
</TABLE>
9
<PAGE> 11
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
INVESTMENT MANAGEMENT-0.70%
Franklin Resources, Inc. 1,000,000 $ 53,500,000
- ---------------------------------------------------------------
T. Rowe Price Associates, Inc. 763,900 57,674,450
- ---------------------------------------------------------------
111,174,450
- ---------------------------------------------------------------
LEISURE TIME (PRODUCTS)-0.59%
Harley-Davidson, Inc. 2,000,000 72,000,000
- ---------------------------------------------------------------
North Face, Inc. (The)(a) 330,000 7,404,375
- ---------------------------------------------------------------
Speedway Motorsports, Inc.(a) 511,200 13,962,150
- ---------------------------------------------------------------
93,366,525
- ---------------------------------------------------------------
LODGING-HOTELS-0.50%
Host Marriott Corp.(a) 896,000 17,416,000
- ---------------------------------------------------------------
Promus Hotel Corp.(a) 1,304,050 58,926,759
- ---------------------------------------------------------------
Sunburst Hospitality Corp.(a) 299,800 2,417,137
- ---------------------------------------------------------------
78,759,896
- ---------------------------------------------------------------
MACHINERY (DIVERSIFIED)-0.02%
Applied Power, Inc.-Class A 95,000 3,550,625
- ---------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-1.04%
AMETEK, Inc. 300,000 9,131,250
- ---------------------------------------------------------------
Crane Co. 309,700 16,665,731
- ---------------------------------------------------------------
Hillenbrand Industries, Inc. 520,000 32,435,000
- ---------------------------------------------------------------
Pentair, Inc. 500,000 21,625,000
- ---------------------------------------------------------------
Thermo Electron Corp.(a) 1,000,000 39,812,500
- ---------------------------------------------------------------
Tyco International Ltd. 823,964 44,906,038
- ---------------------------------------------------------------
164,575,519
- ---------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-0.53%
Avery Dennison Corp. 500,000 26,187,500
- ---------------------------------------------------------------
Cognex Corp.(a) 1,000,000 24,187,500
- ---------------------------------------------------------------
US Filter Corp.(a) 1,032,800 33,695,100
- ---------------------------------------------------------------
84,070,100
- ---------------------------------------------------------------
METAL FABRICATORS-0.17%
Kennametal, Inc. 500,000 26,656,250
- ---------------------------------------------------------------
NATURAL GAS-0.88%
El Paso Natural Gas Co. 1,500,000 55,406,250
- ---------------------------------------------------------------
Equitable Resources, Inc. 750,000 24,375,000
- ---------------------------------------------------------------
KN Energy, Inc. 1,000,000 58,687,500
- ---------------------------------------------------------------
138,468,750
- ---------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES-0.41%
Herman Miller, Inc. 1,100,000 33,206,250
- ---------------------------------------------------------------
HON INDUSTRIES, Inc. 963,800 30,841,600
- ---------------------------------------------------------------
64,047,850
- ---------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-5.10%
Baker Hughes, Inc. 500,000 20,250,000
- ---------------------------------------------------------------
BJ Services Co.(a) 1,672,400 62,715,000
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
OIL & GAS (DRILLING & EQUIPMENT)-(CONTINUED)
Camco International, Inc. 1,000,000 $ 67,875,000
- ---------------------------------------------------------------
Cooper Cameron Corp.(a) 1,050,000 69,759,375
- ---------------------------------------------------------------
EVI, Inc.(a) 800,000 42,600,000
- ---------------------------------------------------------------
Global Industries Ltd.(a) 2,500,000 56,718,750
- ---------------------------------------------------------------
Input/Output, Inc.(a) 1,500,000 37,312,500
- ---------------------------------------------------------------
Marine Drilling Companies, Inc.(a) 1,650,000 40,115,625
- ---------------------------------------------------------------
National-Oilwell, Inc.(a) 906,000 34,371,375
- ---------------------------------------------------------------
Noble Drilling Corp.(a) 1,250,000 40,390,625
- ---------------------------------------------------------------
Patterson Energy, Inc.(a) 658,500 9,219,000
- ---------------------------------------------------------------
Pride International, Inc.(a) 2,000,000 48,625,000
- ---------------------------------------------------------------
R&B Falcon Corp.(a) 1,000,000 32,062,500
- ---------------------------------------------------------------
Rowan Cos., Inc.(a) 529,000 15,572,438
- ---------------------------------------------------------------
Santa Fe International Corp. 394,200 15,447,712
- ---------------------------------------------------------------
Smith International, Inc.(a) 1,000,000 58,750,000
- ---------------------------------------------------------------
Transocean Offshore Inc. 500,000 27,937,500
- ---------------------------------------------------------------
Varco International, Inc.(a) 3,000,000 92,250,000
- ---------------------------------------------------------------
Veritas DGC, Inc.(a) 600,000 32,512,500
- ---------------------------------------------------------------
804,484,900
- ---------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-0.76%
Apache Corp. 750,000 26,531,250
- ---------------------------------------------------------------
Burlington Resources, Inc. 750,000 35,250,000
- ---------------------------------------------------------------
Ocean Energy, Inc.(a) 1,521,000 37,264,500
- ---------------------------------------------------------------
Santa Fe Energy Resources,
Inc.(a) 1,750,000 18,046,875
- ---------------------------------------------------------------
St. Mary Land & Exploration Co. 100,000 3,200,000
- ---------------------------------------------------------------
120,292,625
- ---------------------------------------------------------------
PERSONAL CARE-0.38%
Rexall Sundown, Inc.(a) 1,891,800 60,419,363
- ---------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT)-0.56%
AES Corp.(a) 1,600,000 88,300,000
- ---------------------------------------------------------------
PUBLISHING (NEWSPAPERS)-0.22%
A.H. Belo Corp. 650,000 34,409,375
- ---------------------------------------------------------------
RAILROADS-0.29%
Kansas City Southern
Industries, Inc. 1,000,000 45,187,500
- ---------------------------------------------------------------
RESTAURANTS-0.92%
Brinker International, Inc.(a) 1,500,000 36,000,000
- ---------------------------------------------------------------
CKE Restaurants, Inc. 1,042,690 36,103,141
- ---------------------------------------------------------------
Cracker Barrel Old Country
Store, Inc. 800,000 29,400,000
- ---------------------------------------------------------------
Outback Steakhouse, Inc.(a) 500,000 19,062,500
- ---------------------------------------------------------------
Starbucks Corp.(a) 500,000 24,062,500
- ---------------------------------------------------------------
144,628,141
- ---------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-0.29%
Lowe's Companies, Inc. 650,000 45,459,375
- ---------------------------------------------------------------
</TABLE>
10
<PAGE> 12
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (COMPUTERS & ELECTRONICS)-1.74%
Best Buy Co., Inc.(a) 700,000 $ 49,175,000
- ---------------------------------------------------------------
CDW Computer Centers, Inc.(a)(b) 1,188,700 57,651,950
- ---------------------------------------------------------------
Circuit City Stores, Inc. 1,500,000 60,937,500
- ---------------------------------------------------------------
CompUSA, Inc.(a) 500,000 9,281,250
- ---------------------------------------------------------------
Ingram Micro, Inc.-Class A(a) 750,000 34,218,750
- ---------------------------------------------------------------
Tech Data Corp.(a) 1,275,000 63,590,625
- ---------------------------------------------------------------
274,855,075
- ---------------------------------------------------------------
RETAIL (DEPARTMENT STORES)-0.51%
Kohl's Corp.(a) 1,000,000 41,312,500
- ---------------------------------------------------------------
Proffitt's, Inc.(a) 1,000,000 39,750,000
- ---------------------------------------------------------------
81,062,500
- ---------------------------------------------------------------
RETAIL (DISCOUNTERS)-0.93%
Dollar General Corp. 781,352 29,593,707
- ---------------------------------------------------------------
Dollar Tree Stores, Inc.(a) 1,040,400 56,441,700
- ---------------------------------------------------------------
Family Dollar Stores, Inc. 800,000 27,200,000
- ---------------------------------------------------------------
Ross Stores, Inc. 734,000 33,993,375
- ---------------------------------------------------------------
147,228,782
- ---------------------------------------------------------------
RETAIL (DRUG STORES)-0.74%
CVS Corp. 450,000 33,187,500
- ---------------------------------------------------------------
Rite Aid Corp. 2,600,040 83,526,285
- ---------------------------------------------------------------
116,713,785
- ---------------------------------------------------------------
RETAIL (FOOD CHAINS)-1.55%
Kroger Co.(a) 2,637,400 110,441,125
- ---------------------------------------------------------------
Safeway, Inc.(a) 3,500,000 133,875,000
- ---------------------------------------------------------------
244,316,125
- ---------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE)-0.95%
Costco Companies, Inc.(a) 500,000 27,937,500
- ---------------------------------------------------------------
Dayton Hudson Corp. 500,000 43,656,250
- ---------------------------------------------------------------
Fred Meyer, Inc.(a) 1,760,000 78,980,000
- ---------------------------------------------------------------
150,573,750
- ---------------------------------------------------------------
RETAIL (SPECIALTY)-3.28%
AutoZone, Inc.(a) 1,500,000 45,281,250
- ---------------------------------------------------------------
Bed Bath & Beyond, Inc.(a) 1,000,000 49,250,000
- ---------------------------------------------------------------
Finish Line, Inc. (The)-Class A(a) 500,000 12,375,000
- ---------------------------------------------------------------
General Nutrition Cos., Inc.(a) 650,000 23,318,750
- ---------------------------------------------------------------
Hollywood Entertainment Corp.(a) 1,500,000 18,843,750
- ---------------------------------------------------------------
Inacom Corp.(a) 580,000 20,771,250
- ---------------------------------------------------------------
Michaels Stores, Inc.(a)(b) 1,363,800 41,254,950
- ---------------------------------------------------------------
Office Depot, Inc.(a) 2,200,000 72,875,000
- ---------------------------------------------------------------
OfficeMax, Inc.(a) 581,600 10,941,350
- ---------------------------------------------------------------
PETsMART, Inc.(a) 3,094,300 36,358,025
- ---------------------------------------------------------------
Staples, Inc.(a) 5,073,000 125,239,688
- ---------------------------------------------------------------
Tiffany & Co. 26,600 1,210,300
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (SPECIALTY)-(CONTINUED)
Viking Office Products, Inc.(a) 1,300,000 $ 31,443,750
- ---------------------------------------------------------------
Williams-Sonoma, Inc.(a) 500,000 27,468,750
- ---------------------------------------------------------------
516,631,813
- ---------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-1.21%
Gap, Inc. 1,000,000 51,437,500
- ---------------------------------------------------------------
Men's Wearhouse, Inc.(The)(a)(b) 1,500,050 63,189,606
- ---------------------------------------------------------------
Stage Stores, Inc.(a) 329,400 16,943,513
- ---------------------------------------------------------------
TJX Companies, Inc. 1,350,000 59,737,500
- ---------------------------------------------------------------
191,308,119
- ---------------------------------------------------------------
SAVINGS & LOAN COMPANIES-0.57%
Charter One Financial, Inc. 300,000 20,306,250
- ---------------------------------------------------------------
Dime Bancorp, Inc. 1,250,000 38,359,375
- ---------------------------------------------------------------
GreenPoint Financial Corp. 800,000 31,750,000
- ---------------------------------------------------------------
90,415,625
- ---------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING)-0.85%
Omnicom Group, Inc. 1,500,000 71,062,500
- ---------------------------------------------------------------
Outdoor Systems, Inc.(a) 1,000,000 31,750,000
- ---------------------------------------------------------------
Snyder Communications, Inc.(a) 750,000 31,875,000
- ---------------------------------------------------------------
134,687,500
- ---------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-1.96%
Choice Hotels International,
Inc.(a) 427,800 7,326,075
- ---------------------------------------------------------------
ChoicePoint, Inc.(a) 467,300 25,584,675
- ---------------------------------------------------------------
Cintas Corp. 940,700 44,800,837
- ---------------------------------------------------------------
Equity Corp. International (a) 779,100 19,331,419
- ---------------------------------------------------------------
Service Corp. International 3,500,000 144,375,000
- ---------------------------------------------------------------
Stewart Enterprises, Inc.-Class A 2,600,000 66,950,000
- ---------------------------------------------------------------
308,368,006
- ---------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS)-1.33%
Cambridge Technology Partners,
Inc.(a) 645,400 33,722,150
- ---------------------------------------------------------------
Gartner Group, Inc.-Class A(a) 1,500,000 49,687,500
- ---------------------------------------------------------------
Shared Medical Systems Corp. 750,000 54,703,125
- ---------------------------------------------------------------
SunGard Data Systems, Inc.(a) 2,000,000 71,250,000
- ---------------------------------------------------------------
209,362,775
- ---------------------------------------------------------------
SERVICES (DATA PROCESSING)-2.89%
Affiliated Computer Services,
Inc.(a) 1,000,000 35,125,000
- ---------------------------------------------------------------
Billing Information Concepts
Corp.(a) 1,596,800 44,710,400
- ---------------------------------------------------------------
Ceridian Corp.(a) 1,000,000 56,562,500
- ---------------------------------------------------------------
CSG Systems International, Inc.(a) 903,100 41,091,050
- ---------------------------------------------------------------
DST Systems, Inc.(a) 949,300 52,330,163
- ---------------------------------------------------------------
Equifax, Inc. 500,000 19,343,750
- ---------------------------------------------------------------
Fiserv, Inc.(a) 1,275,200 83,366,200
- ---------------------------------------------------------------
National Data Corp. 750,000 30,609,375
- ---------------------------------------------------------------
</TABLE>
11
<PAGE> 13
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SERVICES (DATA PROCESSING)-(CONTINUED)
Paychex, Inc. 1,250,000 $ 67,890,625
- ---------------------------------------------------------------
PMT Services, Inc.(a) 1,250,000 24,375,000
- ---------------------------------------------------------------
455,404,063
- ---------------------------------------------------------------
SERVICES (EMPLOYMENT)-0.20%
AccuStaff, Inc.(a) 900,000 32,287,500
- ---------------------------------------------------------------
SERVICES (FACILITIES & ENVIRONMENTAL)-0.13%
Corrections Corp. of America(a) 727,900 20,199,225
- ---------------------------------------------------------------
SPECIALTY PRINTING-0.19%
Valassis Communications, Inc.(a) 750,000 29,437,500
- ---------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-0.61%
AirTouch Communications, Inc.(a) 1,150,000 61,093,750
- ---------------------------------------------------------------
Nextel Communications, Inc.(a) 1,250,000 35,859,375
- ---------------------------------------------------------------
96,953,125
- ---------------------------------------------------------------
TELEPHONE-0.38%
Century Telephone Enterprises 520,450 22,151,653
- ---------------------------------------------------------------
Cincinnati Bell, Inc. 1,000,000 38,250,000
- ---------------------------------------------------------------
60,401,653
- ---------------------------------------------------------------
TEXTILES (APPAREL)-1.90%
Jones Apparel Group, Inc.(a) 1,000,000 59,812,500
- ---------------------------------------------------------------
Liz Claiborne, Inc. 1,000,000 49,187,500
- ---------------------------------------------------------------
Nautica Enterprises, Inc.(a) 1,000,000 24,875,000
- ---------------------------------------------------------------
St. John Knits, Inc. 702,400 31,344,600
- ---------------------------------------------------------------
Tommy Hilfiger Corp.(a) 1,500,000 91,500,000
- ---------------------------------------------------------------
Warnaco Group, Inc. (The) 1,000,000 42,250,000
- ---------------------------------------------------------------
298,969,600
- ---------------------------------------------------------------
TEXTILES (SPECIALTY)-0.18%
Unifi, Inc. 750,000 28,734,375
- ---------------------------------------------------------------
WASTE MANAGEMENT-1.23%
American Disposal Services,
Inc.(a)(b) 1,026,200 41,144,206
- ---------------------------------------------------------------
Thermo Instrument Systems,
Inc.(a) 1,049,900 30,972,050
- ---------------------------------------------------------------
USA Waste Services, Inc.(a) 2,500,000 122,656,250
- ---------------------------------------------------------------
194,772,506
- ---------------------------------------------------------------
Total Domestic Common Stocks
(Cost $9,310,895,113) 14,223,744,088
- ---------------------------------------------------------------
</TABLE>
CONVERTIBLE BONDS & NOTES-0.39%
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
BROADCASTING (TELEVISION, RADIO &
CABLE)-0.07%
Jacor Communications Inc.,
Conv. Sr. LYON, 5.50%,
06/12/11(c) $ 14,450,000 11,226,639
- ---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-0.24%
EMC Corp., Conv. Sub. Notes,
3.25%, 03/15/02 17,500,000 37,423,750
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
HEALTH CARE (SPECIALIZED SERVICES)-0.08%(A)
Alza Corp., Conv. Sub. LYON,
5.25%, 07/14/14(c) $ 19,000,000 $ 12,351,330
- ---------------------------------------------------------------
Total Convertible Bonds &
Notes (Cost $42,461,937) 61,001,719
- ---------------------------------------------------------------
</TABLE>
FOREIGN STOCKS & OTHER EQUITY INTERESTS-3.64%
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
CANADA-1.11%
Barrick Gold Corp. (Gold &
Precious Metals Mining) 750,000 16,828,125
- ---------------------------------------------------------------
Biovail Corp. International
(Health Care-Drugs-Generic &
Other)(a) 250,000 10,218,750
- ---------------------------------------------------------------
CanWest Global Communications
Corp. (Broadcasting-Television,
Radio & Cable) 1,500,000 28,125,000
- ---------------------------------------------------------------
Newcourt Credit Group, Inc.
(Financial-Diversified) 1,087,500 53,423,438
- ---------------------------------------------------------------
Potash Corp. of Saskatchewan,
Inc. (Chemicals) 350,000 31,259,375
- ---------------------------------------------------------------
Precision Drilling Corp. (Oil
& Gas-Drilling & Equipment)(a) 1,500,000 35,812,500
- ---------------------------------------------------------------
175,667,188
- ---------------------------------------------------------------
FINLAND-0.81%
Nokia Oyj A.B.-Class A-ADR
(Communications Equipment) 1,610,300 107,688,813
- ---------------------------------------------------------------
Nokia Oyj A.B.-Class A
(Communications Equipment) 305,300 20,482,212
- ---------------------------------------------------------------
128,171,025
- ---------------------------------------------------------------
FRANCE-0.20%
Coflexip S.A.
(Manufacturing-Specialized) 439,500 31,314,375
- ---------------------------------------------------------------
GERMANY-0.11%
Adidas Salomon A.G. (Footwear) 100,000 16,582,130
- ---------------------------------------------------------------
IRELAND-0.37%
CBT Group PLC-ADR
(Computers-Software &
Services)(a) 98,800 5,026,450
- ---------------------------------------------------------------
Elan Corp. PLC-ADR (Health
Care-Drugs-Generic & Other)(a) 850,000 52,806,250
- ---------------------------------------------------------------
57,832,700
- ---------------------------------------------------------------
ISRAEL-0.17%
ECI Telecommunications Ltd.
(Communications Equipment) 500,000 15,250,000
- ---------------------------------------------------------------
Tecnomatix Technologies Ltd.
(Computers-Software &
Services)(a) 479,500 12,167,312
- ---------------------------------------------------------------
27,417,312
- ---------------------------------------------------------------
</TABLE>
12
<PAGE> 14
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ITALY-0.07%
Telecom Italia Mobile S.p.A.
(Telecommunications-Cellular/
Wireless) 1,074,000 $ 6,152,907
- ---------------------------------------------------------------
Telecom Italia S.p.A.
(Telephone) 596,666 4,495,163
- ---------------------------------------------------------------
10,648,070
- ---------------------------------------------------------------
NETHERLANDS-0.21%
Core Laboratories N.V. (Oil &
Gas-Drilling & Equipment)(a) 800,000 22,700,000
- ---------------------------------------------------------------
VNU-Verenigde Nederlandse
Uitgeversbedrijven Vereniged
Bezit (Publishing) 328,500 10,635,068
- ---------------------------------------------------------------
33,335,068
- ---------------------------------------------------------------
SWEDEN-0.33%
Telefonaktiebolaget LM
Ericsson-ADR (Communications
Equipment) 496,300 25,528,431
- ---------------------------------------------------------------
Telefonaktiebolaget LM
Ericsson-Class B
(Communications Equipment) 503,700 26,544,768
- ---------------------------------------------------------------
52,073,199
- ---------------------------------------------------------------
UNITED KINGDOM-0.26%
Granada Group PLC (Leisure
Time-Products) 390,000 6,718,433
- ---------------------------------------------------------------
Stolt Comex Seaway, S.A. (Oil
& Gas-Exploration &
Production)(a) 1,050,000 34,125,000
- ---------------------------------------------------------------
40,843,433
- ---------------------------------------------------------------
Total Foreign Stocks & Other Equity
Interests (Cost $388,271,464) 573,884,500
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
MASTER NOTE AGREEMENT-0.54%
Merrill Lynch Co. Inc.,
5.75%(d) (Cost $85,000,000) $ 85,000,000 $ 85,000,000
- ---------------------------------------------------------------
REPURCHASE AGREEMENTS-4.72%(E)
BZW Securities Inc., 5.55%,
05/01/98(f) 369,950,070 369,950,070
- ---------------------------------------------------------------
Dean Witter Reynolds, Inc.,
5.55%, 05/01/98(g) 11,239 11,239
- ---------------------------------------------------------------
Goldman, Sachs & Co., 5.53%,
05/01/98(h) 22,353,793 22,353,793
- ---------------------------------------------------------------
HSBC Securities, Inc., 5.55%,
05/01/98(i) 345,000,000 345,000,000
- ---------------------------------------------------------------
UBS Securities LLC, 5.58%,
05/01/98(j) 7,696,137 7,696,137
- ---------------------------------------------------------------
Total Repurchase Agreements
(Cost $745,011,239) 745,011,239
- ---------------------------------------------------------------
TIME DEPOSIT-0.57%
Deutsche Morgan Grenfell Inc.,
5.50% (Cost $90,000,000) 90,000,000 90,000,000
- ---------------------------------------------------------------
TOTAL INVESTMENTS-100.04% 15,778,641,546
- ---------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-(0.04%) (5,835,525)
- ---------------------------------------------------------------
NET ASSETS-100.00% $ 15,772,806,021
===============================================================
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) Affiliated issuers are those in which the Fund's holdings of an issuer
represent 5% or more of the outstanding voting securities of the issuer. The
Fund has never owned enough of the outstanding voting securities of any
issuer to have control (as defined in the Investment Company Act of 1940) of
that issuer. The aggregate market value of these securities as of 04/30/98
was $428,053,403 which represented 2.71% of the Fund's net assets.
(c) Zero coupon bond. The interest rate shown represents the rate of original
issue discount.
(d) Master Note Purchase Agreement may be terminated by either party upon two
business days' prior written notice, at which time all amounts outstanding
under notes purchased under the Master Note Agreement will become payable.
Interest rates on master notes are redetermined periodically. Rate shown is
the rate in effect on 04/30/98.
(e) Collateral on repurchase agreements, include the Fund's pro-rata interest in
joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value as being 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(f) Joint repurchase agreement entered into 04/30/98 with a maturing value of
$700,107,917. Collateralized by $710,068,000 U.S. Government obligations,
5.50% to 5.75% due 11/15/98 to 04/15/03 with an aggregate market value at
04/30/98 of $714,001,370.
(g) Joint repurchase agreement entered into 04/30/98 with a maturing value of
$300,046,250. Collateralized by $307,111,000 U.S. Government obligations,
0% to 9.40% due 06/10/98 to 09/26/19 with an aggregate market value at
04/30/98 of $306,000,308.
(h) Joint repurchase agreement entered into 04/30/98 with a maturing value of
$500,076,806. Collateralized by $495,889,000 U.S. Government obligations,
0% to 7.75% due 07/23/98 to 01/15/08 with an aggregate market value at
04/30/98 of $510,500,080.
(i) Joint repurchase agreement entered into 04/30/98 with a maturing value of
$600,092,500. Collateralized by $613,541,000 U.S. Government obligations,
0% to 5.755% due 05/13/98 to 07/30/07 with an aggregate market value at
04/30/98 of $612,003,354.
(j) Joint repurchase agreement entered into 04/30/98 with a maturing value of
$500,077,500. Collateralized by $787,814,792 U.S. Government obligations,
0% to 15% due 01/01/01 to 05/01/28 with an aggregate market value at
04/30/98 of $510,029,679.
ABBREVIATIONS:
<TABLE>
<S> <C>
ADR - American Depositary Receipt
Conv. - Convertible
Deb. - Debentures
LYON - Liquid Yield Option Notes
Sub. - Subordinated
</TABLE>
See Notes to Financial Statements.
13
<PAGE> 15
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1998
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$10,661,639,753) $15,778,641,546
- ------------------------------------------------------------
Receivables for:
Investments sold 134,687,761
- ------------------------------------------------------------
Capital stock sold 31,826,007
- ------------------------------------------------------------
Dividends and interest 1,989,266
- ------------------------------------------------------------
Investment for deferred compensation plan 116,435
- ------------------------------------------------------------
Other assets 64,698
- ------------------------------------------------------------
Total assets 15,947,325,713
- ------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 111,831,771
- ------------------------------------------------------------
Capital stock reacquired 46,035,207
- ------------------------------------------------------------
Deferred compensation 116,435
- ------------------------------------------------------------
Accrued advisory fees 7,761,900
- ------------------------------------------------------------
Accrued administrative services fees 23,840
- ------------------------------------------------------------
Accrued directors' fees 23,600
- ------------------------------------------------------------
Accrued distribution fees 3,919,133
- ------------------------------------------------------------
Accrued transfer agent fees 2,919,114
- ------------------------------------------------------------
Accrued operating expenses 1,888,692
- ------------------------------------------------------------
Total liabilities 174,519,692
- ------------------------------------------------------------
Net assets applicable to shares outstanding $15,772,806,021
============================================================
NET ASSETS:
Class A $15,315,819,440
============================================================
Class B $ 187,027,884
============================================================
Class C $ 55,892,833
============================================================
Institutional Class $ 214,065,864
============================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Class A:
Authorized 750,000,000
- ------------------------------------------------------------
Outstanding 509,744,770
============================================================
Class B:
Authorized 1,000,000,000
- ------------------------------------------------------------
Outstanding 6,258,445
============================================================
Class C:
Authorized 750,000,000
- ------------------------------------------------------------
Outstanding 1,870,434
============================================================
Institutional Class:
Authorized 200,000,000
- ------------------------------------------------------------
Outstanding 6,910,252
============================================================
Class A:
Net asset value and redemption price per
share $ 30.05
- ------------------------------------------------------------
Offering price per share:
(Net asset value of $30.05
divided by 94.50%) $ 31.80
============================================================
Class B:
Net asset value and offering price per
share $ 29.88
============================================================
Class C:
Net asset value and offering price per
share $ 29.88
============================================================
Institutional Class:
Net asset value, offering and redemption
price per share $ 30.98
============================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended April 30, 1998
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $382,423 foreign
withholding tax) $ 19,770,258
- ------------------------------------------------------------
Interest 23,324,243
- ------------------------------------------------------------
Total investment income 43,094,501
- ------------------------------------------------------------
EXPENSES:
Advisory fees 45,482,932
- ------------------------------------------------------------
Administrative services fees 138,746
- ------------------------------------------------------------
Custodian fees 472,092
- ------------------------------------------------------------
Directors' fees 62,896
- ------------------------------------------------------------
Distribution fees-Class A 21,302,650
- ------------------------------------------------------------
Distribution fees-Class B 412,862
- ------------------------------------------------------------
Distribution fees-Class C 179,794
- ------------------------------------------------------------
Transfer agent fees-Class A 11,608,835
- ------------------------------------------------------------
Transfer agent fees-Class B 107,105
- ------------------------------------------------------------
Transfer agent fees-Class C 39,775
- ------------------------------------------------------------
Transfer agent fees-Institutional Class 8,715
- ------------------------------------------------------------
Other 947,321
- ------------------------------------------------------------
Total expenses 80,763,723
- ------------------------------------------------------------
Less: Fees waived by advisor (1,562,903)
- ------------------------------------------------------------
Expenses paid indirectly (131,832)
- ------------------------------------------------------------
Net expenses 79,068,988
- ------------------------------------------------------------
Net investment income (loss) (35,974,487)
- ------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES,
FUTURES AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities 527,178,883
- ------------------------------------------------------------
Foreign currencies 8,919
- ------------------------------------------------------------
Futures contracts (22,094,375)
- ------------------------------------------------------------
Option contracts 286,346
- ------------------------------------------------------------
505,379,773
- ------------------------------------------------------------
Net unrealized appreciation (depreciation) of:
Investment securities 1,114,670,612
- ------------------------------------------------------------
Foreign currencies (1,959)
- ------------------------------------------------------------
Futures contracts 16,400,635
- ------------------------------------------------------------
1,131,069,288
- ------------------------------------------------------------
Net gain from investment securities,
foreign currencies, futures and
option contracts 1,636,449,061
- ------------------------------------------------------------
Net increase in net assets resulting from
operations $1,600,474,574
============================================================
</TABLE>
See Notes to Financial Statements.
14
<PAGE> 16
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 1998 and the year ended October 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
1998 1997
--------------- ---------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (35,974,487) $ (51,626,612)
- -------------------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies, futures and option contracts 505,379,773 1,046,160,029
- -------------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities,
foreign currencies, futures and option contracts 1,131,069,288 1,234,273,644
- -------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 1,600,474,574 2,228,807,061
- -------------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A (1,004,026,712) (401,536,883)
- -------------------------------------------------------------------------------------------------
Class B (2,316,706) --
- -------------------------------------------------------------------------------------------------
Class C (1,919,835) --
- -------------------------------------------------------------------------------------------------
Institutional Class (13,223,346) (10,336,039)
- -------------------------------------------------------------------------------------------------
Share transactions-net:
Class A 442,661,670 1,280,740,251
- -------------------------------------------------------------------------------------------------
Class B 173,539,816 --
- -------------------------------------------------------------------------------------------------
Class C 31,310,483 22,611,449
- -------------------------------------------------------------------------------------------------
Institutional Class 17,247,105 (139,767,829)
- -------------------------------------------------------------------------------------------------
Net increase in net assets 1,243,747,049 2,980,518,010
- -------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 14,529,058,972 11,548,540,962
- -------------------------------------------------------------------------------------------------
End of period $15,772,806,021 $14,529,058,972
=================================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $10,185,392,653 $ 9,520,633,579
- -------------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (36,244,730) (270,243)
- -------------------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies, futures and option
contracts 506,656,051 1,022,762,877
- -------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies, futures and option contracts 5,117,002,047 3,985,932,759
- -------------------------------------------------------------------------------------------------
$15,772,806,021 $14,529,058,972
=================================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
April 30, 1998
(Unaudited)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Constellation Fund (the "Fund") is a series portfolio of AIM Equity Funds,
Inc. (the "Company"). The Company is a Maryland corporation registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of six separate portfolios: AIM
Constellation Fund, AIM Aggressive Growth Fund, AIM Blue Chip Fund, AIM Capital
Development Fund, AIM Charter Fund and AIM Weingarten Fund. The Fund currently
offers four different classes of shares: Class A shares, Class B shares, Class C
shares and the Institutional Class. Class B shares commenced sales on November
3, 1997. Class A shares are sold with a front-end sales charge. Class B shares
and Class C shares are sold with a contingent deferred sales charge. Matters
affecting each portfolio or class will be voted on exclusively by the
shareholders of such portfolio or class. The assets, liabilities and operations
of each portfolio are accounted for separately. Information presented in these
financial statements pertains only to the Fund. The Fund's investment objective
is to seek capital appreciation.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the preparation of its financial statements.
A. Security Valuations--A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular
day, the security is valued at the mean between the closing bid and asked
prices on that day. Each security traded in the over-the-counter market
(but not including securities reported on the NASDAQ National Market
System) is valued at the mean between the last bid and asked prices based
upon quotes furnished by market makers for such securities. If a mean is
15
<PAGE> 17
not available, as is the case in some foreign markets, the closing bid will
be used absent a last sales price. Each security reported on the NASDAQ
National Market System is valued at the last sales price on the valuation
date or absent a last sales price, at the mean of the closing bid and asked
prices. Debt obligations (including convertible bonds) are valued on the
basis of prices provided by an independent pricing service. Prices provided
by the pricing service may be determined without exclusive reliance on
quoted prices, and may reflect appropriate factors such as yield, type of
issue, coupon rate and maturity date. Securities for which market
quotations are not readily available or are questionable are valued at fair
value as determined in good faith by or under the supervision of the
Company's officers in a manner specifically authorized by the Board of
Directors of the Company. Short-term obligations having 60 days or less to
maturity are valued at amortized cost which approximates market value.
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the New York Stock Exchange. The
values of such securities used in computing the net asset value of the
Fund's shares are determined as of such times. Foreign currency exchange
rates are also generally determined prior to the close of the New York
Stock Exchange. Occasionally, events affecting the values of such
securities and such exchange rates may occur between the times at which
they are determined and the close of the New York Stock Exchange which
would not be reflected in the computation of the Fund's net asset value. If
events materially affecting the value of such securities occur during such
period, then these securities will be valued at their fair market value as
determined in good faith by or under the supervision of the Board of
Directors.
B. Securities Transactions, Investment Income and Distributions--Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date
and is recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date.
C. Federal Income Taxes--The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
D. Expenses--Distribution and transfer agency expenses directly attributable
to a class of shares are charged to that class' operations. All other
expenses which are attributable to more than one class are allocated among
the classes.
E. Foreign Currency Translations--Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are
translated into U.S. dollar amounts on the respective dates of such
transactions.
F. Foreign Currency Contracts--A foreign currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract for the purchase
or sale of a security denominated in a foreign currency in order to "lock
in" the U.S. dollar price of that security. The Fund could be exposed to
risk if counterparties to the contracts are unable to meet the terms of
their contracts.
G. 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 contracts are open, changes in the
value of the contracts are recognized as unrealized gains or losses by
"marking to market" on a daily basis to reflect the market value of the
contracts at the end of each day's trading. Variation margin payments are
made or received depending upon whether unrealized gains or losses are
incurred. When the contracts are closed, the Fund recognizes a realized
gain or loss equal to the difference between the proceeds from, or cost of,
the closing transaction and the Fund's basis in the contract. Risks include
the possibility of an illiquid market and the change in the value of the
contracts may not correlate with changes in the value of the securities
being hedged.
H. Covered Call Options -- The Fund may write call options, but only on a
covered basis; that is, the Fund will own the underlying security. Options
written by the Fund normally will have expiration dates between three and
nine months from the date written. The exercise price of a call option may
be below, equal to, or above the current market value of the underlying
security at the time the option is written. When the Fund writes a covered
call option, an amount equal to the premium received by the Fund is
recorded as an asset and an equivalent liability. The amount of the
liability is subsequently "marked-to-market" to reflect the current market
value of the option written. The current market value of a written option
is the mean between the last bid and asked prices on that day. If a written
call option expires on the stipulated expiration date, or if the Fund
enters into a closing purchase transaction, the Fund realizes a gain (or a
loss if the closing purchase transaction exceeds the premium received when
the option was written) without regard to any unrealized gain or loss on
the underlying security, and the liability related to such option is
extinguished. If a written option is exercised, the Fund realizes a gain or
a loss from the sale of the underlying security and the proceeds of the
sale are increased by the premium originally received.
A call option gives the purchaser of such option the right to buy, and
the writer (the Fund) the obligation to sell, the underlying security at
the stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the
call option at any time during the option period. During the option period,
in return for the premium paid by the purchaser of the
16
<PAGE> 18
option, the Fund has given up the opportunity for capital appreciation
above the exercise price should the market price of the underlying security
increase, but has retained the risk of loss should the price of the
underlying security decline. During the option period, the Fund may be
required at any time to deliver the underlying security against payment of
the exercise price. This obligation is terminated upon the expiration of
the option period or at such earlier time at which the Fund effects a
closing purchase transaction by purchasing (at a price which may be higher
than that received when the call option was written) a call option
identical to the one originally written.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment agreement with A I M Advisors,
Inc. ("AIM"). Under the terms of the master investment advisory agreement, the
Fund pays an advisory fee to AIM at the annual rate of 1.0% of the first $30
million of the Fund's average daily net assets, plus 0.75% of the Fund's average
daily net assets in excess of $30 million to and including $150 million, plus
0.625% of the Fund's average daily net assets in excess of $150 million. AIM has
agreed to voluntarily waive a portion of its advisory fees paid by the Fund to
AIM to the extent necessary to reduce the fees paid by the Fund at net asset
levels higher than those currently incorporated in the present advisory fee
schedule. Under the voluntary waiver, AIM will receive a fee calculated at the
annual rate of 1.0% of the first $30 million of the Fund's average daily net
assets, plus 0.75% of the Fund's average daily net assets in excess of $30
million to and including $150 million, plus 0.625% of the Fund's average daily
net assets in excess of $150 million to and including $2 billion, plus 0.60% of
the Fund's average daily net assets in excess of $2 billion. During the six
months ended April 30, 1998, AIM waived fees of $1,562,903. The waiver is
entirely voluntary but approval is required by the Board of Directors for any
decision by AIM to discontinue the waiver. Under the terms of a master
sub-advisory agreement between AIM and A I M Capital Management, Inc. ("AIM
Capital"), AIM pays AIM Capital 50% of the amount paid by the Fund to AIM.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the six months ended April 30, 1998, AIM
was reimbursed $138,746 for such services.
The Fund, pursuant to a transfer agent and shareholder service agreement, has
agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer
agency and shareholder services to the Fund. On September 20, 1997, the Board of
Directors approved appointment of AFS as transfer agent of the Institutional
Class effective December 29, 1997. During the six months ended April 30, 1998,
AFS was paid $5,353,661 with respect to the Class A, Class B and Class C shares
and for the period December 29, 1997 through April 30, 1998, AFS was paid $6,030
with respect to the Institutional Class. Prior to the effective date of the
agreement with AFS, the Fund paid A I M Institutional Fund Services, Inc. $2,685
pursuant to a transfer agency and shareholder services agreement with respect to
the Institutional Class for the period November 1, 1997 through December 28,
1997.
The Company has entered into master distribution agreements with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Class A, Class B and Class C shares of the Fund. The Company has adopted
distribution plans pursuant to Rule 12b-1 under the 1940 Act with respect to the
Fund's Class A shares and Class C shares (the "Class A and C Plan"), and the
Fund's Class B shares (the "Class B Plan") (collectively, the "Plans"). The
Fund, pursuant to the Class A and C Plan, pays AIM Distributors compensation at
an annual rate of 0.30% of the average daily net assets of the Class A shares
and 1.00% of the average daily net assets of Class C shares. 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
these amounts, the Fund may pay a service fee of 0.25% of the average daily net
assets of the Class A, Class B or C shares to selected dealers and financial
institutions who furnish continuing personal shareholder services to their
customers who purchase and own the appropriate class of shares of the Fund. Any
amounts not paid as a service fee under the Plans would constitute an
asset-based sales charge. The Plans also impose a cap on the total sales
charges, including asset-based sales charges that may be paid by the respective
classes. AIM Distributors may, from time to time, assign, transfer, or pledge to
one or more designees, its rights to all or a designated portion of (a)
compensation received by AIM Distributors from the Fund pursuant to the Class B
Plan (but not AIM Distributors' duties and obligations pursuant to the Class B
Plan) and (b) any contingent deferred sales charges received by AIM Distributors
related to the Class B shares. During the six months ended April 30, 1998, the
Class A shares, Class B shares and Class C shares paid AIM Distributors
$21,302,650, $412,862, and $179,794, respectively as compensation under the
Plans.
AIM Distributors received commissions of $3,247,503 from sales of the Class A
shares of the Fund during six months ended April 30, 1998. Such commissions are
not an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares. During the year six months ended April
30, 1998, AIM Distributors received commissions of $208,489 in contingent
deferred sales charges imposed on the redemptions of Fund shares. Certain
officers and directors of the Company are officers and directors of AIM, AIM
Capital, AIM Distributors, AFS, and FMC.
During the six months ended April 30, 1998, the Fund paid legal fees of
$11,568 for services rendered by Kramer, Levin, Naftalis & Frankel as counsel to
the Company's directors. A member of that firm is a director of the Company.
NOTE 3-INDIRECT EXPENSES
During the six months ended April 30, 1998, the fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian
fees of $80,915 and $50,917, respectively, under expense offset arrangements.
The effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $131,832 during the six months ended April 30, 1998.
17
<PAGE> 19
NOTE 4-DIRECTOR'S FEES
Director's fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $500,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. Interest on
borrowings under the line of credit is payable on maturity or prepayment date.
During the six months ended April 30, 1998, the Fund did not borrow under the
line of credit agreement. The funds which are party to the line of credit are
charged a commitment fee of 0.05% on the unused balance of the committed line.
The commitment fee is allocated among the funds based on their respective
average net assets for the period.
Pursuant to an amendment to the line of credit agreement effective May 1,
1998, the Fund may borrow up to the lesser of (i) $1,000,000,000 or (ii) the
limits set by the prospectus for borrowings.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the six months ended April 30, 1998 was
$5,208,411,142 and $5,779,274,077, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of April 30, 1998, on a tax basis, is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $5,246,115,470
- ----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (140,690,702)
- ----------------------------------------------------------
Net unrealized appreciation of investment
securities $5,105,424,768
==========================================================
</TABLE>
Cost of investments for tax purposes is $10,673,216,778.
NOTE 7-CAPITAL STOCK
Changes in the capital stock outstanding during the six months ended April 30,
1998 and the year ended October 31, 1997 were as follows:
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
1998 1997
------------------------------ ------------------------------
SHARES AMOUNT SHARES AMOUNT
------------ --------------- ------------ ---------------
<S> <C> <C> <C> <C>
Sold:
Class A 136,637,646 $ 3,814,563,362 211,624,665 $ 5,717,830,615
- --------------------------------------------------------------------------------------
Class B* 6,686,341 185,919,918 -- --
- --------------------------------------------------------------------------------------
Class C** 1,269,109 35,353,346 745,655 22,872,597
- --------------------------------------------------------------------------------------
Institutional Class 1,247,605 35,117,654 5,274,034 141,917,489
- --------------------------------------------------------------------------------------
Issued as
reinvestment of
dividends:
Class A 37,921,261 959,396,206 15,529,296 381,406,093
- --------------------------------------------------------------------------------------
Class B* 88,205 2,225,150 -- --
- --------------------------------------------------------------------------------------
Class C** 72,234 1,823,183 -- --
- --------------------------------------------------------------------------------------
Institutional Class 484,141 12,607,035 387,258 9,720,186
- --------------------------------------------------------------------------------------
Reacquired:
Class A (154,721,807) (4,331,297,898) (178,999,514) (4,818,496,457)
- --------------------------------------------------------------------------------------
Class B* (516,101) (14,605,252) -- --
- --------------------------------------------------------------------------------------
Class C** (208,072) (5,866,046) (8,492) (261,148)
- --------------------------------------------------------------------------------------
Institutional Class (1,091,093) (30,477,584) (10,657,023) (291,405,504)
- --------------------------------------------------------------------------------------
27,869,469 $ 664,759,074 43,895,879 $ 1,163,583,871
======================================================================================
</TABLE>
*Class B Shares commenced sales on November 3, 1997.
**Class C Shares commenced sales on August 4, 1997.
NOTE 8-OPTION CONTRACTS WRITTEN
Transactions in call options written during the six months ended April 30, 1998
are summarized as follows:
<TABLE>
<CAPTION>
OPTION CONTRACTS
-----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- -----------
<S> <C> <C>
Beginning of period -- --
- ----------------------------------- ------ -----------
Written 18,204 $ 4,967,371
- ----------------------------------- ------ -----------
Closed (9,204) (2,394,658)
- ----------------------------------- ------ -----------
Exercised (4,000) (2,262,924)
- ----------------------------------- ------ -----------
Expired (5,000) (309,789)
- ----------------------------------- ------ -----------
End of Period 0 $ 0
=================================== ====== ===========
</TABLE>
18
<PAGE> 20
NOTE 9-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A capital stock
outstanding during the six months ended April 30, 1998 and each of the years in
the five-year period ended October 31, 1997, for a share of Class B capital
stock outstanding during the period November 3, 1997 (date sales commenced)
through April 30, 1998 and for a share of Class C capital stock outstanding
during the six months ended April 30, 1998 and the period August 4, 1997 (dates
sales commenced) through October 31, 1997.
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------------------------
OCTOBER 31,
APRIL 30, ----------------------------------------------------------------
1998 1997 1996 1995 1994 1993
----------- ----------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 29.23 $ 25.48 $ 23.69 $ 18.31 $ 17.04 $ 13.25
- ---------------------------------------------- ----------- ----------- ----------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss) (0.07) (0.11) (0.06) (0.05) (0.02) (0.04)
- ---------------------------------------------- ----------- ----------- ----------- ---------- ---------- ----------
Net gains on securities (both realized and
unrealized) 2.95 4.75 2.60 5.95 1.29 3.83
- ---------------------------------------------- ----------- ----------- ----------- ---------- ---------- ----------
Total from investment operations 2.88 4.64 2.54 5.90 1.27 3.79
- ---------------------------------------------- ----------- ----------- ----------- ---------- ---------- ----------
Distributions from net realized gains (2.06) (0.89) (0.75) (0.52) -- --
- ---------------------------------------------- ----------- ----------- ----------- ---------- ---------- ----------
Net asset value, end of period $ 30.05 $ 29.23 $ 25.48 $ 23.69 $ 18.31 $ 17.04
============================================== =========== =========== =========== ========== ========== ==========
Total return(a) 11.16% 18.86% 11.26% 33.43% 7.45% 28.60%
============================================== =========== =========== =========== ========== ========== ==========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $15,315,819 $14,319,441 $11,255,506 $7,000,350 $3,726,029 $2,756,497
============================================== =========== =========== =========== ========== ========== ==========
Ratio of expenses to average net assets(b) 1.09%(c)(d) 1.11% 1.14% 1.16% 1.20% 1.22%
============================================== =========== =========== =========== ========== ========== ==========
Ratio of net investment income (loss) to
average net assets(e) (0.50)%(c) (0.40)% 0.27)% (0.32)% (0.15)% (0.31)%
============================================== =========== =========== =========== ========== ========== ==========
Portfolio turnover rate 37% 67% 58% 45% 79% 70%
============================================== =========== =========== =========== ========== ========== ==========
Average brokerage commission rate paid(f) $ 0.0565 $ 0.0576 $ 0.0596 N/A N/A N/A
============================================== =========== =========== =========== ========== ========== ==========
</TABLE>
(a) Does not deduct sales charges and are not annualized for periods less than
one year.
(b) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.11% (annualized) 1.13%, 1.16%, 1.18% and 1.21% for 1998-1994.
(c) Ratios are annualized and based on average net assets of $14,319,461,021.
(d) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly,
the ratio of expenses to average net assets would have been the same.
(e) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursement were (0.52)% (annualized), (0.42)%, (0.29)%, (0.34)% and
(0.16)% for 1998-1994.
(f) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
<TABLE>
<CAPTION>
CLASS B CLASS C
--------- -------------------------
APRIL 30, APRIL 30, OCTOBER 31,
1998 1998 1997
--------- --------- -----------
<S> <C> <C> <C>
Net asset value, beginning of period $ 30.04 $ 29.18 $ 30.32
- ------------------------------------------------------------ -------- ------- -------
Income from investment operations:
Net investment income (loss) (0.18)(a) (0.18)(a) (0.04)
- ------------------------------------------------------------ -------- ------- -------
Net gains (losses) on securities (both realized and
unrealized) 2.08 2.94 (1.10)
- ------------------------------------------------------------ -------- ------- -------
Total from investment operations 1.90 2.76 (1.14)
- ------------------------------------------------------------ -------- ------- -------
Distributions from net realized gains (2.06) (2.06)
- ------------------------------------------------------------ -------- ------- -------
Net asset value, end of period $ 29.88 $ 29.88 $ 29.18
============================================================ ======== ======= =======
Total return(b) 7.57% 10.74% (3.76)%
============================================================ ======== ======= =======
Ratios/supplement data:
Net assets, end of period (000s omitted) $187,028 $55,893 $21,508
============================================================ ======== ======= =======
Ratio of expenses to average net assets(c) 1.90%(d)(e) 1.90%(d)(e) 1.84%(f)
============================================================ ======== ======= =======
Ratio of net investment income (loss) to average net
assets(g) (1.31)%(d) (1.31)%(d) (1.12)%(f)
============================================================ ======== ======= =======
Portfolio turnover rate 37% 37% 67%(f)
============================================================ ======== ======= =======
Average brokerage commission rate paid(h) $ 0.0565 $0.0565 $0.0576
============================================================ ======== ======= =======
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and are not annualized for periods less than one
year.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses to average net assets prior to
fee waivers and/or expense reimbursements were 1.92% (annualized) for 1998 for Class B and 1.92%
(annualized) and 1.86% (annualized) for 1998-1997 for Class C.
(d) Ratios are annualized and based on average net assets of $83,256,633 and $36,256,833 for Class B
and Class C, respectively.
(e) Ratios include expenses paid indirectly. Excluding expenses paid indirectly, the ratios of expenses
to average net assets would have been the same for Class B and Class C, respectively.
(f) Annualized.
(g) After fee waivers and/or expense reimbursements. Ratios of net investment income (loss) to average
net assets prior to fee waivers and/or expense reimbursements were (1.33)% (annualized) for 1998
for Class B and (1.33)% (annualized) and (1.15)% (annualized), for 1998-1997 for Class C.
(h) The average commission rate paid is the total brokerage commissions paid on applicable purchases
and sales of securities for the period divided by the total number of related shares purchased and
sold.
</TABLE>
19
<PAGE> 21
Directors & Officers
<TABLE>
<CAPTION>
BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
<S> <C> <C>
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman Chairman Suite 100
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Director
ACE Limited; John J. Arthur A I M Advisors, Inc.
Formerly Director, President, and Senior Vice President and Treasurer 11 Greenway Plaza
Chief Executive Officer Suite 100
COMSAT Corporation Carol F. Relihan Houston, TX 77046
Senior Vice President and Secretary
Owen Daly II Sub-Advisor
Director Gary T. Crum A I M Capital Management, Inc.
Cortland Trust Inc. Senior Vice President 11 Greenway Plaza
Suite 100
Edward K. Dunn Jr. Jonathan C. Schoolar Houston, TX 77046
Chairman, Mercantile Mortgage Corp.; Senior Vice President
Formerly Vice Chairman and President, TRANSFER AGENT
Mercantile-Safe Deposit & Trust Co.; and Dana R. Sutton
President, Mercantile Bankshares Vice President and Assistant Treasurer A I M Fund Services, Inc.
P.O. Box 4739
Jack Fields Melville B. Cox Houston, TX 77210-4739
Chief Executive Officer Vice President
Texana Global, Inc.; CUSTODIAN
Formerly Member Renee A. Bamford
of the U.S. House of Representatives Assistant Secretary State Street Bank and Trust Company
225 Franklin Street
Carl Frischling P. Michelle Grace Boston MA 02110
Partner Assistant Secretary
Kramer, Levin, Naftalis & Frankel COUNSEL TO THE FUND
Jeffrey H. Kupor
Robert H. Graham Assistant Secretary Ballard Spahr
President and Chief Executive Officer Andrews & Ingersoll, LLP
A I M Management Group Inc. Nancy L. Martin 1735 Market Street
Assistant Secretary Philadelphia, PA 19103
John F. Kroeger
Formerly Consultant Ofelia M. Mayo COUNSEL TO THE DIRECTORS
Wendell & Stockel Associates, Inc. Assistant Secretary
Kramer, Levin, Naftalis & Frankel
Lewis F. Pennock Lisa A. Moss 919 Third Avenue
Attorney Assistant Secretary New York, NY 10022
Ian W. Robinson Kathleen J. Pflueger DISTRIBUTOR
Consultant; Formerly Executive Assistant Secretary
Vice President and A I M Distributors, Inc.
Chief Financial Officer Samuel D. Sirko 11 Greenway Plaza
Bell Atlantic Management Assistant Secretary Suite 100
Services, Inc. Houston, TX 77046
Stephen I. Winer
Louis S. Sklar Assistant Secretary
Executive Vice President
Hines Interests Mary J. Benson
Limited Partnership Assistant Treasurer
</TABLE>
20
<PAGE> 22
HOW AIM MAKES INVESTING
EASY FOR YOU
o LOW INITIAL INVESTMENT. You can get your investment program started for as
little as $500. Subsequent investments can be made for only $50.
o AUTOMATIC REINVESTMENT OF DIVIDENDS AND/OR CAPITAL GAINS. Distributions may
be received in cash or reinvested in the Fund free of charge. Over time, the
power of compounding can significantly increase the value of your assets.
o AUTOMATIC INVESTMENT PLAN. You may build your investment by regularly
purchasing additional shares. Pre-authorized checks for $50 or more can be
drafted monthly from your personal checking account.
o EASY ACCESS TO YOUR MONEY. Your shares may be redeemed at net asset value
any day the New York Stock Exchange is open. The price of shares sold may be
more or less than their original cost, depending on market conditions.
o SYSTEMATIC WITHDRAWAL PLAN. You may elect to receive checks of at least $50
monthly or quarterly through a systematic withdrawal plan.
o EXCHANGE PRIVILEGE. As your goals change, you may exchange all or part of
your assets for those of other funds within the same share class of The AIM
Family of Funds--Registered Trademark--. The exchange privilege may be
modified or discontinued for any of the AIM funds. Certain restrictions
apply.
o RETIREMENT PLANS. You may purchase shares of the fund for your Individual
Retirement Account (IRA) or any other type of retirement plan, and earn
tax-deferred dollars for your retirement.
o TOLL-FREE ACCESS. Current shareholders can call our AIM Investor Line at
800-246-5463 for 24-hour-a-day account information. Or, of course, you may
contact your financial consultant for assistance.
o WWW.AIMFUNDS.COM. As a current shareholder, you can check account balances
24 hours a day over the Internet. State-of-the-art encryption lets you send
us questions that include confidential information without the fear of
eavesdropping, tampering, or forgery.
-------------------------
Current shareholders
can call our
AIM Investor Line at
800-246-5463
for 24-hour-a-day
account information.
-------------------------
<PAGE> 23
<TABLE>
<S> <C>
THE AIM FAMILY OF FUNDS--Registered Trademark--
AGGRESSIVE GROWTH
AIM Aggressive Growth Fund*
AIM Asian Growth Fund
AIM Capital Development Fund
AIM Constellation Fund
AIM European Development Fund
AIM Global Aggressive Growth Fund
[PHOTO OF GROWTH OF CAPITAL
11 GREENWAY PLAZA AIM Advisor International Value Fund
APPEARS HERE] AIM Blue Chip Fund
AIM Global Growth Fund
AIM International Equity Fund
AIM Select Growth Fund**
AIM Value Fund
AIM Weingarten Fund
GROWTH AND INCOME OR INCOME WITH CAPITAL GROWTH
AIM Advisor Flex Fund
AIM Advisor Large Cap Value Fund
AIM Advisor MultiFlex Fund
AIM Advisor Real Estate Fund
AIM Balanced Fund
AIM Charter Fund
AIM Global Utilities Fund
HIGH CURRENT INCOME OR CURRENT INCOME
AIM High Yield Fund
AIM Global Income Fund
AIM Income Fund
CURRENT TAX-FREE INCOME
AIM High Income Municipal Fund
AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of Connecticut
AIM Tax-Free Intermediate Fund
CURRENT INCOME AND HIGH DEGREE OF SAFETY
AIM Intermediate Government Fund
A I M Management Group Inc. has provided leadership in the AIM Limited Maturity Treasury Fund
mutual fund industry since 1976 and manages approximately AIM Money Market Fund
$89 billion in assets for more than 4.4 million shareholders, AIM Tax-Exempt Cash Fund
including individual investors, corporate clients, and financial
institutions as of March 31, 1998. The AIM Family of *AIM Aggressive Growth Fund was closed to new investors on
Funds--Registered Trademark-- is distributed nationwide, and June 5, 1997. **On May 1, 1998, AIM Growth Fund was renamed
AIM today ranks among the nation's top 15 mutual fund AIM Select Growth Fund. For more complete information about
companies in assets under management, according to Lipper any AIM Fund(s), including sales charges and expenses, ask
Analytical Services, Inc. your financial consultant or securities dealer for a free
prospectus(es). Please read the prospectus(es) carefully
before you invest or send money.
INVEST WITH DISCIPLINE-SM-
BULK RATE
U.S. POSTAGE
PAID
HOUSTON, TX
Permit No. 1919
</TABLE>
