<PAGE> 1
AIM WEINGARTEN FUND
[AIM LOGO APPEARS HERE] SEMIANNUAL REPORT APRIL 30, 1998
<PAGE> 2
AIM WEINGARTEN FUND
For shareholders who seek
long-term growth of capital
through investments
primarily in common stocks
of leading U.S. companies
considered by management
to have strong
earnings momentum.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Weingarten 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 C shares have been offered for less than one year, all total
return figures for Class 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, 36.68%; five years, 17.30%; 10 years,
16.81%. Class B shares, one year, 38.44%; since inception (6/15/95) 23.19%.
Class C shares produced cumulative total return of 12.23% 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 unmanaged Lipper Growth Fund Index represents an average of the
performance of the 30 largest growth funds charted by Lipper Analytical
Services, Inc., an independent mutual fund performance monitor. Results
shown reflect reinvestment of dividends.
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 April
Bauer, 30, 1998, end of this six-month reporting period, most
Chairman of markets had recovered nicely, with domestic equities reaching
the Board of new highs and European markets outdoing even the U.S.'s heady
THE FUND pace. Only Asian markets remained in the doldrums. Bonds have
APPEARS HERE] 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 SOLID AS MARKETS
SHRUG OFF "ASIAN FLU"
A roundtable discussion with the management team for AIM Weingarten Fund for the
six-month period ended April 30, 1998.
- --------------------------------------------------------------------------------
Q. THE MARKETS PERFORMED A TURNAROUND DURING THE SIX MONTHS ENDED APRIL 30,
COMING BACK FROM THE STEEP DECLINE LATE IN OCTOBER 1997. HOW DID THE FUND DO
IN THIS ENVIRONMENT?
A. Fund performance was very good: 17.94% total return for Class A shares,
17.52% for Class B shares, and 17.57% for Class C shares. This essentially
matches the performance of other growth funds included in the Lipper Growth
Fund Index, which produced total return of 18.15% over the same period. Net
assets continued to grow nicely, as shown in the chart.
================================================================================
GROWTH OF NET ASSETS
- --------------------------------------------------------------------------------
$6.36 $7.33
billion billion
10/31/97 4/30/98
================================================================================
Q. WHAT WERE MARKET CONDITIONS LIKE DURING THE REPORTING PERIOD?
A. During the first half of the reporting period, Asia's currency and market
crises dampened stock market performance dramatically. Investors gravitated
toward widely traded blue chip stocks, so mid-size stocks were particularly
hard hit. While predominantly a large-cap mutual fund, AIM Weingarten Fund
has a big stake in smaller companies also--about one-third of net assets
were mid-capitalization stocks at the close of the reporting period. So when
markets focus so intensely on the very largest companies--the so-called
"mega-caps"--those mid-cap Fund holdings tend to underperform.
As the new year unfolded, however, the markets seemed to shrug off
Asia's difficulties. The much-anticipated slowdown in the U.S. economy,
predicted to result from the Asian troubles, has been less serious than
expected. U.S. gross domestic output rose at a 4.8% annual rate during the
first quarter of 1998. Inflation, perhaps as a consequence, remained low.
The Commerce Department's overall price index rose an annualized 0.9% during
the quarter--its slowest rate in 34 years. Fund performance rebounded, too,
and during the latter half of the reporting period, the Fund outperformed
both the S&P 500 and the Lipper Growth Fund Index.
Q. DID YOU ALTER THE PORTFOLIO AS MARKET CONDITIONS CHANGED?
A. Not drastically. We trimmed holdings of energy stocks, which fell out of
favor in the wake of the Asian situation. We slightly increased our holdings
in the health-care sector. Financial stocks and technology stocks remained
our two largest sector weightings even though we did not increase or
decrease holdings of either group very much.
Q. WHY ARE FINANCIAL STOCKS STILL ATTRACTIVE? THEY WERE PROMINENT IN THE
PORTFOLIO SIX MONTHS AGO AS WELL.
A. Traditionally, financial stocks--companies like banks and brokerage
houses--have not been thought of as growth stocks. But we follow earnings
growth for individual companies, so our model picks up sectors that are
showing relative earnings momentum. This pulls us into sectors that may grow
very well for a few years that a traditional growth manager might not even
consider. With financial markets ebullient, interest rates stable, and the
trend toward globalization and consolidation unabated, financial stocks have
certainly shown growth-stock-like profits recently. At approximately 20% of
net assets, financials represented the largest sector weighting in the
Fund's portfolio at the reporting period's close, as they did six months
earlier.
Emblematic of what is going on in this field is the merger, announced in
April, of insurance giant Travelers Group, Inc. and major money-center
banker Citicorp--two stocks in the portfolio. This is the largest corporate
merger in history; it melds two financial-services leaders that both
reported solid earnings for the first quarter of 1998.
Q. YOU SAY TECHNOLOGY, A TRADITIONAL GROWTH SECTOR, IS YOUR SECOND-LARGEST
WEIGHTING. WHY?
A. This sector was not generally in favor during much of the reporting period
because of the Asian downdraft and because a few leading companies reported
disappointing earnings.
Nevertheless, the technology sector is still doing well. For example,
personal computer sales were up 16 percent in the U.S. during the first
quarter of 1998. This was good news for portfolio holdings such as Dell
Computer Corp., which has reported a string of earnings increases, and also
for other technology sector leaders such as Microsoft Corp. and Intel Corp.,
which are among our largest holdings. All together, technology stocks
represented about 19% of net assets at the close of the reporting period.
Q. AND WHY DOES THE HEALTH CARE SECTOR REMAIN A MAJOR EMPHASIS?
A. Our health-care holdings were increased during the reporting period to
See important fund and index disclosures on inside front cover.
2
<PAGE> 5
PORTFOLIO COMPOSITION
As of 4/30/98, Based on Net Assets
<TABLE>
<CAPTION>
=======================================================================================================
TOP 10 INDUSTRIES TOP 10 HOLDINGS
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Computers (Software & Services) 5.80% 1. Microsoft Corp. 1.97%
2. Financial (Diversified) 5.45 2. Intel Corp. 1.86
3. Health Care (Medical Products & Supplies) 4.19 3. Merck & Co., Inc. 1.86
4. Health Care (Diversified) 3.66 4. MCI Communications Corp. 1.75
5. Health Care (Drugs-Major Pharmaceuticals) 3.56 5. Service Corp. International 1.29
6. Manufacturing (Diversified) 3.02 6. Freddie Mac 1.26
7. Broadcasting (Television, Radio & Cable) 2.96 7. Lucent Technologies, Inc. 1.25
8. Banks (Major Regional) 2.92 8. Warner-Lambert Co. 1.10
9. Telecommunications (Long Distance) 2.61 9. Chase Manhattan Corp. (The) 1.09
10.Equipment (Semiconductors) 2.60 10.Fannie Mae 1.06
TOTAL NUMBER OF HOLDINGS: 194
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>
about 15% of net assets.
A major positive factor here has been the FDA's gradual streamlining of
filing and approval systems. This development has been welcomed by
pharmaceutical firms, especially those with new products or drug delivery
systems. A steady stream of new pharmaceutical products has been a
significant contributor to this sector's recent good performance. For
example, Merck & Co., Inc., a solid portfolio holding with such
well-established products as the anti-cholesterol drug Zocor, has developed
an anti-migraine drug that is currently being reviewed for marketing in the
U.S.
A consistent growth stock, Merck represents what we dub the "core"
portion of the Fund, companies with proven long-term consistent earnings
performance. Other portfolio holdings are companies showing momentum in
their earnings growth. As corporate earnings growth has decelerated
recently, we have found ourselves migrating more into core companies with
reliable earnings records.
Q. WHAT IS YOUR OUTLOOK FOR THE FUND?
A. Toward the close of the reporting period, there were some cautionary signs
for a few of our major holdings, especially the antitrust campaign against
Microsoft and the heightened scrutiny of mergers, such as the one involving
MCI Communications Corp., which planned to merge with WorldCom, Inc.
By and large, though, the environment for the Fund appears promising.
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 very narrow markets of the past few years. Given AIM
Weingarten Fund's sizable stake in the mid-cap portion of the market, this
is good news. Of course, large-cap stocks were still performing well too, so
the Fund seems very well balanced to us.
Q. AND FOR THE ECONOMY AND MARKETS IN GENERAL? WHAT'S YOUR OUTLOOK THERE?
A. For the investing environment in general, most observers do not expect
dramatic change; they foresee stable interest rates, reasonable economic
growth, and continued contained inflation as global competition and lower
energy costs offset the inflationary potential of tight labor markets. 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 close of the reporting period, 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.
------------------------------------
But we follow earnings growth for
individual companies, so our model
picks up sectors that are showing
relative earnings momentum.
------------------------------------
See important fund and index disclosures on inside front cover.
3
<PAGE> 6
Long-Term Performance
AIM WEINGARTEN FUND CLASS A SHARES VS. BENCHMARK INDEXES
The chart compares your Fund's Class A shares to indexes. It is important to
understand differences between your fund and these indexes. An index measures
performance of a hypothetical portfolio. A market index, such as the Standard &
Poor's 500, is not managed, incurring no sales charges, expenses or fees. If you
could buy all the securities that make up an index, you would incur expenses
that would affect your investment's return. An index of funds, such as the
Lipper Growth Fund Index, includes a number of mutual funds grouped by
investment objective. Each of those funds interprets that objective differently,
and each employs a different management style and investment strategy. Use of
these indexes is intended to give you a general idea of how your Fund performed
compared to these benchmarks.
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
For periods ended 4/30/98, including sales charges
A Shares
Since Inception (6/17/69) 15.38%
20 Years 19.68
10 Years 17.04
5 Years 18.74
1 Year 33.78
B Shares
Since Inception (6/15/95) 23.19%
1 Year 35.48
C Shares
Since Inception (8/4/97) 14.07%*
================================================================================
* Total return provided is cumulative total return that has not been annualized.
<PAGE> 7
THE AIM WEINGARTEN FUND GROWTH STORY
Growth of a $10,000 Investment: June 17, 1969-April 30, 1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
AIM WEINGARTEN LIPPER GROWTH
FUND CLASS A SHARES S&P 500 FUND INDEX
- ------------------------------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C>
6/17/69 $9,444.00 $10,000.00 $10,000.00
4/70 $7,576.00 $8,610.00 $8,147.00
4/71 $11,339.00 $11,381.00 $11,091.00
4/72 $14,477.00 $12,149.00 $13,032.00
4/73 $11,603.00 $12,416.00 $11,038.00
4/74 $9,842.00 $10,845.00 $9,335.00
4/75 $10,382.00 $11,013.00 $9,373.00
4/76 $11,407.00 $13,342.00 $10,682.00
4/77 $12,080.00 $13,451.00 $10,533.00
4/78 $16,156.00 $13,912.00 $11,676.00
4/79 $19,867.00 $15,405.00 $13,476.00
4/80 $27,403.00 $16,994.00 $15,597.00
4/81 $43,205.00 $22,301.00 $22,488.00
4/82 $36,883.00 $20,670.00 $19,966.00
4/83 $65,713.00 $30,788.00 $30,664.00
4/84 $57,791.00 $31,299.00 $28,638.00
4/85 $70,366.00 $36,816.00 $32,779.00
4/86 $103,121.00 $50,140.00 $45,074.00
4/87 $127,515.00 $66,444.00 $53,356.00
4/88 $122,037.00 $59,359.00 $50388.00
4/89 $147,107.00 $72,880.00 $60,558.00
4/90 $170,565.00 $80,488.00 $64,386.00
4/91 $219,345.00 $94,628.00 $75,590.00
4/92 $248,067.00 $107,924.00 $86,099.00
4/93 $249,169.00 $117,870.00 $94,469.00
4/94 $268,499.00 $124,147.00 $103,250.00
4/95 $302,255.00 $145,770.00 $114,597.00
4/96 $395,188.00 $189,698.00 $147,689.00
4/97 $439,831.00 $237,332.00 $168,510.00
4/98 $622,443.00 $334,613.00 $235,606.00
Past performance cannot guarantee comparable future results.
======================================================================================================
</TABLE>
Class A shares' total return includes sales charges, expenses, and management
fees. The performance of Class B and Class C shares will differ from that of
Class A shares due to differing fees and expenses. For Fund performance
calculations and descriptions of indexes cited on this page, please refer to the
inside front cover. Sources: Towers Data Systems HYPO--Registered Trademark--,
Fund Station.
<PAGE> 8
For Consideration
THE ROTH IRA: THE POWER TO KEEP MORE
Contribute After-Tax Dollars Now . . . So You Can Get Federally Tax-Free Savings
Later
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.
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.
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.
6
<PAGE> 9
SCHEDULE OF INVESTMENTS
April 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-86.48%
AEROSPACE/DEFENSE-0.61%
Sundstrand Corp. 650,000 $ 44,890,625
- ---------------------------------------------------------------
AGRICULTURAL PRODUCTS-0.36%
Universal Corp. 700,000 26,206,250
- ---------------------------------------------------------------
AUTO PARTS & EQUIPMENT-0.53%
Federal-Mogul Corp. 600,000 38,812,500
- ---------------------------------------------------------------
BANKS (MONEY CENTER)-2.53%
BankAmerica Corp. 450,000 38,250,000
- ---------------------------------------------------------------
Chase Manhattan Corp. (The) 575,000 79,673,438
- ---------------------------------------------------------------
Citicorp 450,000 67,725,000
- ---------------------------------------------------------------
185,648,438
- ---------------------------------------------------------------
BANKS (REGIONAL)-0.38%
North Fork Bancorporation, Inc. 750,000 27,843,750
- ---------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO &
CABLE)-2.96%
CBS Corp. 1,100,000 39,187,500
- ---------------------------------------------------------------
Chancellor Media Corp.(a) 550,000 26,090,625
- ---------------------------------------------------------------
Clear Channel Communications,
Inc.(a) 180,230 16,986,678
- ---------------------------------------------------------------
Comcast Corp.-Class A 1,500,000 53,718,750
- ---------------------------------------------------------------
Jacor Communications, Inc.(a) 400,000 22,750,000
- ---------------------------------------------------------------
Tele-Communications, Inc.(a) 1,800,000 58,050,000
- ---------------------------------------------------------------
216,783,553
- ---------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.32%
Millennium Chemicals Inc. 650,000 23,318,750
- ---------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-1.78%
Lucent Technologies, Inc. 1,200,000 91,350,000
- ---------------------------------------------------------------
Tellabs, Inc.(a) 550,000 38,981,250
- ---------------------------------------------------------------
130,331,250
- ---------------------------------------------------------------
COMPUTERS (HARDWARE)-2.17%
Compaq Computer Corp. 1,200,000 33,675,000
- ---------------------------------------------------------------
Dell Computer Corp.(a) 575,000 46,431,250
- ---------------------------------------------------------------
Gateway 2000, Inc.(a) 650,000 38,146,875
- ---------------------------------------------------------------
International Business Machines
Corp. 350,000 40,556,250
- ---------------------------------------------------------------
158,809,375
- ---------------------------------------------------------------
COMPUTERS (NETWORKING)-0.35%
Cisco Systems, Inc.(a) 350,000 25,637,500
- ---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-0.72%
EMC Corp.(a) 1,150,000 53,043,750
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (SOFTWARE &
SERVICES)-5.80%
Advanced Fibre Communications,
Inc.(a) 800,000 $ 33,900,000
- ---------------------------------------------------------------
BMC Software, Inc.(a) 500,000 46,781,250
- ---------------------------------------------------------------
Cadence Design Systems, Inc.(a) 950,000 34,496,875
- ---------------------------------------------------------------
Computer Associates
International, Inc. 600,000 35,137,500
- ---------------------------------------------------------------
Computer Sciences Corp.(a) 700,000 36,925,000
- ---------------------------------------------------------------
Compuware Corp.(a) 750,000 36,656,250
- ---------------------------------------------------------------
Concord EFS, Inc.(a) 740,000 23,310,000
- ---------------------------------------------------------------
Microsoft Corp.(a) 1,600,000 144,200,000
- ---------------------------------------------------------------
Unisys Corp.(a) 1,500,000 33,656,250
- ---------------------------------------------------------------
425,063,125
- ---------------------------------------------------------------
CONSUMER FINANCE-1.14%
Countrywide Credit Industries,
Inc. 425,000 20,559,375
- ---------------------------------------------------------------
FIRSTPLUS Financial Group,
Inc.(a) 775,000 37,587,500
- ---------------------------------------------------------------
Providian Financial Corp. 232,900 14,017,669
- ---------------------------------------------------------------
SLM Holding Corp. 263,100 11,231,081
- ---------------------------------------------------------------
83,395,625
- ---------------------------------------------------------------
DISTRIBUTORS (FOOD &
HEALTH)-1.71%
AmeriSource Health Corp.-Class
A(a) 917,700 50,014,650
- ---------------------------------------------------------------
Bergen Brunswig Corp.-Class A 686,500 31,149,938
- ---------------------------------------------------------------
Cardinal Health, Inc. 250,000 24,062,500
- ---------------------------------------------------------------
Sysco Corp. 835,700 19,900,106
- ---------------------------------------------------------------
125,127,194
- ---------------------------------------------------------------
ELECTRICAL EQUIPMENT-1.79%
American Power Conversion
Corp.(a) 600,000 19,312,500
- ---------------------------------------------------------------
General Electric Co. 850,000 72,356,250
- ---------------------------------------------------------------
SCI Systems, Inc.(a) 94,400 3,888,100
- ---------------------------------------------------------------
Symbol Technologies, Inc. 915,450 35,244,825
- ---------------------------------------------------------------
130,801,675
- ---------------------------------------------------------------
ELECTRONICS
(INSTRUMENTATION)-0.47%
Waters Corp.(a) 650,000 34,775,000
- ---------------------------------------------------------------
ELECTRONICS
(SEMICONDUCTORS)-2.42%
Altera Corp.(a) 1,000,000 40,500,000
- ---------------------------------------------------------------
Intel Corp. 1,689,700 136,548,881
- ---------------------------------------------------------------
177,048,881
- ---------------------------------------------------------------
ENTERTAINMENT-0.44%
Viacom, Inc.-Class B(a) 560,700 32,520,600
- ---------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR)-2.60%
Applied Materials, Inc.(a) 1,900,000 68,637,500
- ---------------------------------------------------------------
KLA-Tencor Corp.(a) 1,075,000 43,335,938
- ---------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
EQUIPMENT (SEMICONDUCTOR)-(CONTINUED)
Lam Research Corp.(a) 1,250,000 $ 38,750,000
- ---------------------------------------------------------------
Teradyne, Inc.(a) 1,100,000 40,150,000
- ---------------------------------------------------------------
190,873,438
- ---------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-4.38%
American Express Co. 400,000 40,800,000
- ---------------------------------------------------------------
Amresco, Inc.(a) 478,000 17,327,500
- ---------------------------------------------------------------
Fannie Mae 1,300,000 77,837,500
- ---------------------------------------------------------------
Freddie Mac 2,000,000 92,625,000
- ---------------------------------------------------------------
MBIA, Inc. 348,400 25,999,350
- ---------------------------------------------------------------
MGIC Investment Corp. 554,900 34,958,700
- ---------------------------------------------------------------
Morgan Stanley, Dean Witter,
Discover & Co. 400,000 31,550,000
- ---------------------------------------------------------------
321,098,050
- ---------------------------------------------------------------
FOOTWEAR-0.30%
Wolverine World Wide, Inc. 750,000 21,656,250
- ---------------------------------------------------------------
HARDWARE & TOOLS-0.35%
Black & Decker Corp. (The) 500,000 25,812,500
- ---------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-3.66%
Abbott Laboratories 643,700 47,070,563
- ---------------------------------------------------------------
American Home Products Corp. 550,000 51,218,750
- ---------------------------------------------------------------
Bristol-Myers Squibb Co. 510,000 53,996,250
- ---------------------------------------------------------------
Johnson & Johnson 500,000 35,687,500
- ---------------------------------------------------------------
Warner-Lambert Co. 425,000 80,404,688
- ---------------------------------------------------------------
268,377,751
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-1.82%
ICN Pharmaceuticals, Inc. 1,484,000 73,087,000
- ---------------------------------------------------------------
Watson Pharmaceuticals, Inc.(a) 1,400,000 60,200,000
- ---------------------------------------------------------------
133,287,000
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR
PHARMACEUTICALS)-3.56%
Lilly (Eli) & Co. 375,000 26,085,938
- ---------------------------------------------------------------
Merck & Co., Inc. 1,128,900 136,032,450
- ---------------------------------------------------------------
Pfizer Inc. 366,500 41,712,281
- ---------------------------------------------------------------
Schering-Plough Corp. 717,200 57,465,650
- ---------------------------------------------------------------
261,296,319
- ---------------------------------------------------------------
HEALTH CARE (HOSPITAL
MANAGEMENT)-1.07%
Columbia/HCA Healthcare Corp. 900,000 29,643,750
- ---------------------------------------------------------------
Quorum Health Group, Inc.(a) 1,000,000 32,125,000
- ---------------------------------------------------------------
Universal Health Services,
Inc.-Class B(a) 290,600 16,727,663
- ---------------------------------------------------------------
78,496,413
- ---------------------------------------------------------------
HEALTH CARE (LONG TERM
CARE)-0.74%
Health Care and Retirement
Corp.(a) 442,350 18,025,763
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (LONG TERM CARE)-(CONTINUED)
HEALTHSOUTH Corp.(a) 1,200,000 $ 36,225,000
- ---------------------------------------------------------------
54,250,763
- ---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-4.19%
Arterial Vascular Engineering,
Inc.(a)(b) 1,648,000 58,298,000
- ---------------------------------------------------------------
Baxter International Inc. 528,100 29,276,544
- ---------------------------------------------------------------
Becton, Dickinson & Co. 1,000,000 69,625,000
- ---------------------------------------------------------------
Biomet, Inc. 1,010,800 30,324,000
- ---------------------------------------------------------------
Guidant Corp. 467,400 31,257,375
- ---------------------------------------------------------------
Medtronic, Inc. 300,000 15,787,500
- ---------------------------------------------------------------
Stryker Corp. 766,500 34,492,500
- ---------------------------------------------------------------
Sybron International Corp.(a) 1,430,700 37,913,550
- ---------------------------------------------------------------
306,974,469
- ---------------------------------------------------------------
HOUSEHOLD FURNITURE & APPLIANCES-0.75%
Furniture Brands International,
Inc.(a) 559,900 16,447,063
- ---------------------------------------------------------------
Maytag Corp. 750,000 38,625,000
- ---------------------------------------------------------------
55,072,063
- ---------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES)-1.27%
Colgate-Palmolive Co. 425,000 38,117,187
- ---------------------------------------------------------------
Dial Corp. (The) 750,000 18,281,250
- ---------------------------------------------------------------
Procter & Gamble Co. (The) 450,000 36,984,375
- ---------------------------------------------------------------
93,382,812
- ---------------------------------------------------------------
HOUSEWARES-0.27%
Sunbeam Corp. 800,000 20,100,000
- ---------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-0.93%
Equitable Companies, Inc. 390,000 23,936,250
- ---------------------------------------------------------------
Nationwide Financial Services,
Inc.-Class A 627,900 27,235,163
- ---------------------------------------------------------------
Torchmark Corp. 375,000 16,710,938
- ---------------------------------------------------------------
67,882,351
- ---------------------------------------------------------------
INSURANCE (MULTI-LINE)-2.22%
Ace, Ltd. 570,000 21,588,750
- ---------------------------------------------------------------
Allmerica Financial Corp. 400,000 25,050,000
- ---------------------------------------------------------------
American International Group,
Inc. 220,000 28,943,750
- ---------------------------------------------------------------
Lincoln National Corp. 169,100 15,018,193
- ---------------------------------------------------------------
Travelers Group, Inc. 1,173,750 71,818,828
- ---------------------------------------------------------------
162,419,521
- ---------------------------------------------------------------
INSURANCE
(PROPERTY-CASUALTY)-0.94%
Allstate Corp. 199,100 19,163,375
- ---------------------------------------------------------------
Everest Reinsurance Holdings,
Inc. 231,000 9,528,750
- ---------------------------------------------------------------
Fremont General Corp. 400,000 22,300,000
- ---------------------------------------------------------------
Old Republic International Corp. 390,000 17,647,500
- ---------------------------------------------------------------
68,639,625
- ---------------------------------------------------------------
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
INVESTMENT
BANKING/BROKERAGE-0.51%
Merrill Lynch & Co., Inc. 425,000 $ 37,293,750
- ---------------------------------------------------------------
INVESTMENT MANAGEMENT-1.03%
Franklin Resources, Inc. 700,000 37,450,000
- ---------------------------------------------------------------
T. Rowe Price Associates, Inc. 500,000 37,750,000
- ---------------------------------------------------------------
75,200,000
- ---------------------------------------------------------------
LEISURE TIME (PRODUCTS)-0.93%
Harley-Davidson, Inc. 734,400 26,438,400
- ---------------------------------------------------------------
Mattel, Inc. 1,089,700 41,749,131
- ---------------------------------------------------------------
68,187,531
- ---------------------------------------------------------------
LODGING-HOTELS-1.05%
Carnival Corp.-Class A 800,000 55,650,000
- ---------------------------------------------------------------
Host Marriott Corp.(a) 315,800 6,138,362
- ---------------------------------------------------------------
Promus Hotel Corp.(a) 342,350 15,469,941
- ---------------------------------------------------------------
77,258,303
- ---------------------------------------------------------------
MACHINERY (DIVERSIFIED)-0.12%
Ingersoll-Rand Co. 188,600 8,687,388
- ---------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-2.50%
Crane Co. 291,900 15,707,869
- ---------------------------------------------------------------
Thermo Electron Corp.(a) 900,000 35,831,250
- ---------------------------------------------------------------
Tyco International Ltd. 800,000 43,600,000
- ---------------------------------------------------------------
U.S. Industries, Inc. 882,100 23,926,963
- ---------------------------------------------------------------
United Technologies Corp. 650,000 63,984,375
- ---------------------------------------------------------------
183,050,457
- ---------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-2.57%
BJ Services Co.(a) 750,000 28,125,000
- ---------------------------------------------------------------
Cooper Cameron Corp.(a) 250,000 16,609,375
- ---------------------------------------------------------------
Diamond Offshore Drilling, Inc. 450,000 22,781,250
- ---------------------------------------------------------------
ENSCO International, Inc. 650,000 18,362,500
- ---------------------------------------------------------------
Halliburton Co. 425,000 23,375,000
- ---------------------------------------------------------------
Santa Fe International Corp. 575,000 22,532,812
- ---------------------------------------------------------------
Western Atlas Inc.(a) 721,400 56,990,600
- ---------------------------------------------------------------
188,776,537
- ---------------------------------------------------------------
PERSONAL CARE-1.14%
Avon Products, Inc. 597,000 49,065,937
- ---------------------------------------------------------------
Gillette Co. 300,000 34,631,250
- ---------------------------------------------------------------
83,697,187
- ---------------------------------------------------------------
PHOTOGRAPHY/IMAGING-0.54%
Xerox Corp. 350,000 39,725,000
- ---------------------------------------------------------------
POWER PRODUCERS
(INDEPENDENT)-0.37%
AES Corp.(a) 492,700 27,190,880
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
PUBLISHING (NEWSPAPERS)-0.42%
Gannett Co., Inc. 375,000 $ 25,523,438
- ---------------------------------------------------------------
New York Times Co.-Class A 77,200 5,476,375
- ---------------------------------------------------------------
30,999,813
- ---------------------------------------------------------------
REAL ESTATE INVESTMENT
TRUST-1.02%
Crescent Real Estate Equities,
Co. 625,000 21,328,125
- ---------------------------------------------------------------
Patriot American Hospitality,
Inc. 700,000 17,675,000
- ---------------------------------------------------------------
Starwood Hotels & Resorts 714,144 35,841,102
- ---------------------------------------------------------------
74,844,227
- ---------------------------------------------------------------
RESTAURANTS-0.51%
McDonald's Corp. 600,000 37,125,000
- ---------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-1.24%
Home Depot, Inc. 755,250 52,584,280
- ---------------------------------------------------------------
Lowe's Companies, Inc. 550,000 38,465,625
- ---------------------------------------------------------------
91,049,905
- ---------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS)-0.93%
Circuit City Stores-Circuit City
Group 850,000 34,531,250
- ---------------------------------------------------------------
Ingram Micro, Inc.-Class A(a) 742,400 33,872,000
- ---------------------------------------------------------------
68,403,250
- ---------------------------------------------------------------
RETAIL (DEPARTMENT STORES)-0.77%
Federated Department Stores,
Inc.(a) 375,000 18,445,312
- ---------------------------------------------------------------
Proffitt's, Inc.(a) 950,000 37,762,500
- ---------------------------------------------------------------
56,207,812
- ---------------------------------------------------------------
RETAIL (DISCOUNTERS)-0.42%
Family Dollar Stores, Inc. 200,400 6,813,600
- ---------------------------------------------------------------
Ross Stores, Inc. 525,000 24,314,062
- ---------------------------------------------------------------
31,127,662
- ---------------------------------------------------------------
RETAIL (DRUG STORES)-0.68%
CVS Corp. 350,000 25,812,500
- ---------------------------------------------------------------
Rite Aid Corp. 750,000 24,093,750
- ---------------------------------------------------------------
49,906,250
- ---------------------------------------------------------------
RETAIL (FOOD CHAINS)-1.08%
Albertson's, Inc. 525,000 26,250,000
- ---------------------------------------------------------------
Kroger Co.(a) 958,000 40,116,250
- ---------------------------------------------------------------
Safeway, Inc.(a) 340,600 13,027,950
- ---------------------------------------------------------------
79,394,200
- ---------------------------------------------------------------
RETAIL (GENERAL
MERCHANDISE)-2.41%
Costco Companies, Inc.(a) 725,000 40,509,375
- ---------------------------------------------------------------
Dayton Hudson Corp. 425,000 37,107,813
- ---------------------------------------------------------------
Fred Meyer, Inc.(a) 800,000 35,900,000
- ---------------------------------------------------------------
Kmart Corp.(a) 2,186,000 38,118,375
- ---------------------------------------------------------------
</TABLE>
9
<PAGE> 12
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (GENERAL MERCHANDISE)-(CONTINUED)
Wal-Mart Stores, Inc. 500,000 $ 25,281,250
- ---------------------------------------------------------------
176,916,813
- ---------------------------------------------------------------
RETAIL (SPECIALTY)-1.27%
Bed Bath & Beyond, Inc.(a) 282,500 13,913,125
- ---------------------------------------------------------------
Office Depot, Inc.(a) 1,370,700 45,404,437
- ---------------------------------------------------------------
Staples, Inc.(a) 1,366,800 33,742,875
- ---------------------------------------------------------------
93,060,437
- ---------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-1.24%
Brylane Inc.(a) 89,000 5,228,750
- ---------------------------------------------------------------
Gap, Inc. 625,000 32,148,437
- ---------------------------------------------------------------
Intimate Brands, Inc. 845,800 24,528,200
- ---------------------------------------------------------------
TJX Companies, Inc. 650,000 28,762,500
- ---------------------------------------------------------------
90,667,887
- ---------------------------------------------------------------
SAVINGS & LOAN COMPANIES-0.47%
Ahmanson (H.F.) & Co. 225,000 17,156,250
- ---------------------------------------------------------------
Washington Mutual, Inc. 250,000 17,515,624
- ---------------------------------------------------------------
34,671,874
- ---------------------------------------------------------------
SERVICES
(ADVERTISING/MARKETING)-0.34%
Outdoor Systems, Inc.(a) 790,350 25,093,613
- ---------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-1.75%
H&R Block, Inc. 750,000 33,750,000
- ---------------------------------------------------------------
Service Corp. International 2,292,000 94,545,000
- ---------------------------------------------------------------
128,295,000
- ---------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS)-0.03%
Ciber, Inc.(a) 71,900 2,336,750
- ---------------------------------------------------------------
SERVICES (DATA PROCESSING)-1.08%
Equifax, Inc. 1,276,400 49,380,725
- ---------------------------------------------------------------
Fiserv, Inc.(a) 460,400 30,098,650
- ---------------------------------------------------------------
79,479,375
- ---------------------------------------------------------------
SERVICES (EMPLOYMENT)-0.37%
AccuStaff, Inc.(a) 761,200 27,308,050
- ---------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-2.61%
AT&T Corp. 1,050,000 63,065,625
- ---------------------------------------------------------------
MCI Communications Corp. 2,552,400 128,417,625
- ---------------------------------------------------------------
191,483,250
- ---------------------------------------------------------------
TEXTILES (APPAREL)-0.96%
Tommy Hilfiger Corp.(a) 630,000 38,430,000
- ---------------------------------------------------------------
Warnaco Group, Inc. (The) 750,000 31,687,500
- ---------------------------------------------------------------
70,117,500
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
WASTE MANAGEMENT-0.59%
Waste Management, Inc. 1,300,000 $ 43,550,000
- ---------------------------------------------------------------
Total Domestic Common Stocks
(Cost $4,509,190,967) 6,340,782,867
- ---------------------------------------------------------------
DOMESTIC CONVERTIBLE PREFERRED STOCK-0.57%
FINANCIAL (DIVERSIFIED)-0.57%
MGIC Investment Corp.-$3.12 Conv.
Pfd.
(Cost $27,289,579) 400,000 42,000,000
- ---------------------------------------------------------------
DOMESTIC CONVERTIBLE BONDS & PRINCIPAL
NOTES-0.54% AMOUNT
ELECTRICAL EQUIPMENT-0.54%
SCI Systems, Inc., Conv. Sub.
Notes, 5.00%, 05/01/06
(acquired 10/31/96-12/06/96;
cost $27,581,905)(c) $22,050,000 $ 39,380,418
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
<S> <C> <C>
FOREIGN STOCKS & OTHER
EQUITY INTERESTS-7.42%
CANADA-0.99%
Bank of Montreal (Banks-Major
Regional) 276,000 $ 15,056,124
- ---------------------------------------------------------------
Newcourt Credit Group, Inc.
(Financial-Diversified) 750,000 36,843,750
- ---------------------------------------------------------------
Royal Bank of Canada (Banks-Major
Regional) 344,800 20,593,713
- ---------------------------------------------------------------
72,493,587
- ---------------------------------------------------------------
FINLAND-0.64%
Nokia Oyj A.B.-Class A
(Communications Equipment) 559,000 37,502,642
- ---------------------------------------------------------------
Nokia Oyj A.B.-Class A-ADR
(Communications Equipment) 141,400 9,456,125
- ---------------------------------------------------------------
46,958,767
- ---------------------------------------------------------------
FRANCE-2.37%
Alcatel Alsthom
(Manufacturing-Diversified) 205,000 38,026,119
- ---------------------------------------------------------------
Banque Nationale de Paris
(Banks-Major Regional) 670,000 56,511,396
- ---------------------------------------------------------------
Renault S.A. (Automobiles)(a) 600,000 27,848,944
- ---------------------------------------------------------------
Societe Generale (Banks-Major
Regional) 245,000 51,029,780
- ---------------------------------------------------------------
173,416,239
- ---------------------------------------------------------------
GERMANY-0.18%
Adidas Salomon A.G. (Footwear) 78,800 13,066,718
- ---------------------------------------------------------------
ITALY-0.81%
Telecom Italia Mobile S.p.A.
(Telecommunications-Cellular/Wireless) 6,000,000 34,373,783
- ---------------------------------------------------------------
Telecom Italia S.p.A. (Telephone) 3,333,333 25,112,671
- ---------------------------------------------------------------
59,486,454
- ---------------------------------------------------------------
NETHERLANDS-0.92%
Akzo Nobel N.V.
(Chemicals-Diversified) 135,750 27,619,054
- ---------------------------------------------------------------
</TABLE>
10
<PAGE> 13
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
NETHERLANDS-(CONTINUED)
Philips Electronics N.V.
(Household Furniture &
Appliances) 450,000 $ 39,651,502
- ---------------------------------------------------------------
67,270,556
- ---------------------------------------------------------------
SWEDEN-0.54%
Telefonaktiebolaget LM
Ericsson-ADR (Communications
Equipment) 676,700 34,807,755
- ---------------------------------------------------------------
Telefonaktiebolaget LM
Ericsson-Class B
(Communications Equipment) 98,900 5,211,987
- ---------------------------------------------------------------
40,019,742
- ---------------------------------------------------------------
SWITZERLAND-0.97%
UBS-Union Bank of Switzerland
(Banks-Major Regional) 44,000 70,836,276
- ---------------------------------------------------------------
Total Foreign Stocks & Other
Equity Interests (Cost
$399,121,244) 543,548,339
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
REPURCHASE AGREEMENTS-4.51%(d)
Dean Witter Reynolds, Inc.,
5.55%, 05/01/98(e) $ 698,048 $ 698,048
- ----------------------------------------------------------------
Goldman, Sachs & Co., 5.30%,
05/01/98(f) 300,000,000 300,000,000
- ----------------------------------------------------------------
HSBC Securities, Inc., 5.45%,
05/01/98(g) 30,000,000 30,000,000
- ----------------------------------------------------------------
Total Repurchase Agreements
(Cost $330,698,048) 330,698,048
- ----------------------------------------------------------------
TOTAL INVESTMENTS-99.52% 7,296,409,672
- ----------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-0.48% 35,421,766
- ----------------------------------------------------------------
TOTAL NET ASSETS-100.00% $7,331,831,438
================================================================
</TABLE>
Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
Pfd. - Preferred
Sub. - Subordinated
Notes to Schedule of Investments:
(a)Non-income producing security.
(b)A portion of this security is subject to call options written. See Note 7.
(c)Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of 1933,
as amended. The valuation of this security has been determined in accordance
with procedures established by the Board of Directors. The market value of
this security at 04/30/98 represented 0.54% of the Fund's net assets.
(d)Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value as being 102% of the 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.
(e)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.
(f)Joint repurchase agreement entered into 04/30/98 with a maturing value of
$434,638,319. Collateralized by $432,438,000 U.S. Government obligations,
3.625% to 7.125% due 09/30/99 to 08/15/23 with an aggregate market value at
04/30/98 of $443,699,960.
(g)Joint repurchase agreement entered into 04/30/98 with a maturing value of
$30,004,542. Collateralized by $31,320,000 U.S. Government obligations, 0%
due 10/08/98 with an aggregate market value at 04/30/98 of $30,601,206.
See Notes to Financial Statements.
11
<PAGE> 14
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$5,293,881,743) $7,296,409,672
- --------------------------------------------------------
Foreign currencies, at value (cost
$1,200,210) 1,190,746
- --------------------------------------------------------
Receivables for:
Investments sold 53,437,831
- --------------------------------------------------------
Capital stock sold 7,062,678
- --------------------------------------------------------
Dividends and interest 5,219,566
- --------------------------------------------------------
Investment for deferred compensation
plan 90,768
- --------------------------------------------------------
Other assets 156,485
- --------------------------------------------------------
Total assets 7,363,567,746
- --------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 11,467,275
- --------------------------------------------------------
Options written 501,572
- --------------------------------------------------------
Capital stock reacquired 11,731,770
- --------------------------------------------------------
Deferred compensation 90,768
- --------------------------------------------------------
Accrued advisory fees 3,538,625
- --------------------------------------------------------
Accrued administrative services fees 28,529
- --------------------------------------------------------
Accrued directors' fees 11,324
- --------------------------------------------------------
Accrued distribution fees 2,166,265
- --------------------------------------------------------
Accrued transfer agent fees 1,024,930
- --------------------------------------------------------
Accrued operating expenses 1,175,250
- --------------------------------------------------------
Total liabilities 31,736,308
- --------------------------------------------------------
Net assets applicable to shares
outstanding $7,331,831,438
========================================================
NET ASSETS:
Class A $6,585,111,025
========================================================
Class B $ 659,963,917
========================================================
Class C $ 12,914,474
========================================================
Institutional Class $ 73,842,022
========================================================
CAPITAL STOCK, $0.001 PAR VALUE PER
SHARE:
Class A:
Authorized 750,000,000
- --------------------------------------------------------
Outstanding 288,013,829
========================================================
Class B:
Authorized 750,000,000
- --------------------------------------------------------
Outstanding 29,551,565
========================================================
Class C:
Authorized 750,000,000
- --------------------------------------------------------
Outstanding 578,077
========================================================
Institutional Class:
Authorized 200,000,000
- --------------------------------------------------------
Outstanding 3,168,169
========================================================
Class A:
Net asset value and redemption price
per share $ 22.86
========================================================
Offering price per share:
(Net asset value of
$22.86 divided by 94.50%) $ 24.19
========================================================
Class B:
Net asset value and offering price per
share $ 22.33
========================================================
Class C:
Net asset value and offering price per
share $ 22.34
========================================================
Institutional Class:
Net asset value, offering and
redemption price per share $ 23.31
========================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1998
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $530,841 foreign
withholding tax) $ 27,729,747
- ----------------------------------------------------------
Interest 13,884,800
- ----------------------------------------------------------
Total investment income 41,614,547
- ----------------------------------------------------------
EXPENSES:
Advisory fees 21,094,936
- ----------------------------------------------------------
Administrative services fees 134,422
- ----------------------------------------------------------
Custodian fees 452,161
- ----------------------------------------------------------
Directors' fees 34,008
- ----------------------------------------------------------
Distribution fees-Class A 9,063,792
- ----------------------------------------------------------
Distribution fees-Class B 2,767,704
- ----------------------------------------------------------
Distribution fees-Class C 34,347
- ----------------------------------------------------------
Transfer agent fees-Class A 3,725,436
- ----------------------------------------------------------
Transfer agent fees-Class B 566,561
- ----------------------------------------------------------
Transfer agent fees-Class C 9,240
- ----------------------------------------------------------
Transfer agent fees-Institutional Class 2,970
- ----------------------------------------------------------
Other 688,670
- ----------------------------------------------------------
Total expenses 38,574,247
- ----------------------------------------------------------
Less: Fees waived by advisor (1,385,142)
- ----------------------------------------------------------
Expenses paid indirectly (46,271)
- ----------------------------------------------------------
Net expenses 37,142,834
- ----------------------------------------------------------
Net investment income 4,471,713
- ----------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN
CURRENCIES, FUTURES AND OPTION
CONTRACTS:
Net realized gain (loss) from:
Investment securities 573,504,010
- ----------------------------------------------------------
Foreign currencies 338,057
- ----------------------------------------------------------
Futures contracts 20,742,644
- ----------------------------------------------------------
Option contracts (10,168,430)
- ----------------------------------------------------------
584,416,281
- ----------------------------------------------------------
Net unrealized appreciation (depreciation)
of:
Investment securities 533,325,625
- ----------------------------------------------------------
Foreign currencies (22,793)
- ----------------------------------------------------------
Futures contracts 264,000
- ----------------------------------------------------------
Option contracts 957,635
- ----------------------------------------------------------
534,524,467
- ----------------------------------------------------------
Net gain from investment securities,
foreign currencies, futures and option
contracts 1,118,940,748
- ----------------------------------------------------------
Net increase in net assets resulting from
operations $1,123,412,461
==========================================================
</TABLE>
See Notes to Financial Statements.
12
<PAGE> 15
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 $ 4,471,713 $ 1,100,893
- ----------------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies, futures and option contracts 584,416,281 933,882,009
- ----------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities,
foreign currencies, futures and option contracts 534,524,467 438,536,902
- ----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 1,123,412,461 1,373,519,804
- ----------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A -- (14,688,010)
- ----------------------------------------------------------------------------------------------
Institutional Class -- (444,894)
- ----------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A (849,671,209) (552,547,910)
- ----------------------------------------------------------------------------------------------
Class B (74,924,739) (32,151,485)
- ----------------------------------------------------------------------------------------------
Class C (567,891) --
- ----------------------------------------------------------------------------------------------
Institutional Class (9,053,017) (6,655,833)
- ----------------------------------------------------------------------------------------------
Net equalization credits (charges) (See Note 1):
Class A -- 436,828
- ----------------------------------------------------------------------------------------------
Class B -- 62,469
- ----------------------------------------------------------------------------------------------
Class C -- --
- ----------------------------------------------------------------------------------------------
Institutional Class -- (91,147)
- ----------------------------------------------------------------------------------------------
Share transactions-net:
Class A 605,894,028 126,373,106
- ----------------------------------------------------------------------------------------------
Class B 156,244,190 166,861,272
- ----------------------------------------------------------------------------------------------
Class C 9,914,560 2,401,569
- ----------------------------------------------------------------------------------------------
Institutional Class 9,445,736 (7,373,537)
- ----------------------------------------------------------------------------------------------
Net increase in net assets 970,694,119 1,055,702,232
- ----------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 6,361,137,319 5,305,435,087
- ----------------------------------------------------------------------------------------------
End of period $7,331,831,438 $6,361,137,319
==============================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $4,747,625,830 $3,937,446,869
- ----------------------------------------------------------------------------------------------
Undistributed net investment income 4,307,555 28,516,289
- ----------------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies, futures and option
contracts 575,813,993 925,614,568
- ----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies, futures and option contracts 2,004,084,060 1,469,559,593
- ----------------------------------------------------------------------------------------------
$7,331,831,438 $6,361,137,319
==============================================================================================
</TABLE>
See Notes to Financial Statements.
13
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1998
(UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Weingarten 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
Weingarten Fund, AIM Aggressive Growth Fund, AIM Blue Chip Fund, AIM Capital
Development Fund, AIM Charter Fund and AIM Constellation Fund. The Fund
currently offers four different classes of shares: Class A shares, Class B
shares, Class C shares and the Institutional Class. 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 growth of capital.
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 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. 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. Foreign Currency Translations--Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are translated
into U.S. dollar amounts on the respective dates of such transactions.
C. Foreign Currency Contracts--A foreign currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a 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.
D. Stock Index Futures Contracts--The Fund may purchase or sell stock index
futures contracts as a hedge against changes in market conditions. Initial
margin deposits required upon entering into futures contracts are satisfied
by the segregation of specific securities or cash, and/or by securing a
standby letter of credit from a major commercial bank, as collateral, for
the account of the broker (the Fund's agent in acquiring the futures
position). During the period the futures 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 that the change in the value of the
contracts may not correlate with changes in the value of the securities
being hedged.
E. Covered Call Options--The Fund may write call options, but only on a covered
basis; that is, the Fund will own the underlying security. Options written
by the Fund normally will have expiration dates between three and nine
months from the date written. The exercise price of a call option may be
below, equal to, or above the current market value of the underlying
security at the time the option is written. When the Fund writes a covered
call option, an amount equal to the premium received by the Fund is recorded
as an asset and an equivalent liability. The amount of the liability is
subsequently "marked-to-
14
<PAGE> 17
market" to reflect the current market value of the option written. The
current market value of a written option is the mean between the last bid
and asked prices on that day. If a written call option expires on the
stipulated expiration date, or if the Fund enters into a closing purchase
transaction, the Fund realizes a gain (or a loss if the closing purchase
transaction exceeds the premium received when the option was written)
without regard to any unrealized gain or loss on the underlying security,
and the liability related to such option is extinguished. If a written
option is exercised, the Fund realizes a gain or a loss from the sale of the
underlying security and the proceeds of the sale are increased by the
premium originally received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the
call option at any time during the option period. During the option period,
in return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has
retained the risk of loss should the price of the underlying security
decline. During the option period, the Fund may be required at any time to
deliver the underlying security against payment of the exercise price. This
obligation is terminated upon the expiration of the option period or at such
earlier time at which the Fund effects a closing purchase transaction by
purchasing (at a price which may be higher than that received when the call
option was written) a call option identical to the one originally written.
F. Put options--The Fund may purchase put options. By purchasing a put option,
the Fund obtains the right (but not the obligation) to sell the option's
underlying instrument at a fixed strike price. In return for this right, a
Fund pays an option premium. The option's underlying instrument may be a
security, or a futures contract. Put options may be used by a Fund to hedge
securities it owns by locking in a minimum price at which the Fund can sell.
If security prices fall, the put option could be exercised to offset all or
a portion of the Fund's resulting losses. At the same time, because the
maximum the Fund has at risk is the cost of the option, purchasing put
options does not eliminate the potential for the Fund to profit from an
increase in the value of the securities hedged.
G. Securities Transactions, Investment Income and Distributions--Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the specific identification of securities
sold. Interest income is recorded as earned from settlement date and is
recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date.
H. 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.
I. 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.
J. Equalization--The Fund previously followed the accounting practice known as
equalization by which a portion of the proceeds from sales and costs of
repurchases of Fund shares, equivalent on a per share basis to the amount of
undistributed net investment income, is credited or charged to undistributed
net income when the transaction is recorded so that the undistributed net
investment income per share is unaffected by sales or redemptions of Fund
shares. Effective November 1, 1997, the Fund discontinued equalization
accounting and reclassified the cumulative equalization credits of
$28,680,447 from undistributed net investment income to paid-in capital.
This change has no effect on the net assets, the results of operations or
the net asset value per share of the Fund.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). The terms of the master investment advisory agreement
provide that the Fund shall pay an advisory fee to AIM at an annual rate of 1.0%
of the first $30 million of the Fund's average daily net assets, plus 0.75% of
the Fund's average daily net assets in excess of $30 million to and including
$350 million, plus 0.625% of the Fund's average daily net assets in excess of
$350 million. AIM is currently voluntarily waiving a portion of its advisory
fees payable by the Fund to AIM to the extent necessary to reduce the fees paid
by the Fund at net asset levels higher than those currently incorporated in the
present advisory fee schedule. AIM will receive a fee calculated at the annual
rate of 1.0% of the first $30 million of the Fund's average daily net assets,
plus 0.75% of the Fund's average daily net assets in excess of $30 million to
and including $350 million, plus 0.625% of the Fund's average daily net assets
in excess of $350 million to and including $2 billion, plus 0.60% of the Fund's
average daily net assets in excess of $2 billion to and including $3 billion,
plus 0.575% of the Fund's average daily net assets in excess of $3 billion to
and including $4 billion, plus 0.55% of the Fund's average daily net assets in
excess of $4 billion. The waiver of fees is entirely voluntary but approval is
required by the Board of Directors of the Company for any decision by AIM to
discontinue the waiver. During the six months ended April 30, 1998, AIM waived
fees of $1,385,142. 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 $134,422 for such services.
The Fund, pursuant to a transfer agent and 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 $3,350,741 with respect to the Class A, Class B, and
15
<PAGE> 18
Class C shares and for the period December 29, 1997 through April 30, 1998, AFS
was paid $2,018 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. $952 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, Class B and Class C shares paid AIM Distributors $9,063,792,
$2,767,704, and $34,347, respectively, as compensation under the Plans.
AIM Distributors received commissions of $863,459 from sales of the Class A
shares of the Fund during the 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 six months ended April 30,
1998, AIM Distributors received commissions of $20,702 in contingent deferred
sales charges imposed on redemptions of Fund shares. Certain officers and
directors of the Company are officers and directors of AIM, AIM Capital, AIM
Distributors, AFS and FMC.
During the six months ended April 30, 1998, the Fund paid legal fees of $5,831
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 $37,433 and $8,838, respectively, under expense offset arrangements. The
effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $46,271 during the six months ended April 30, 1998.
NOTE 4-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company invests directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $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 during the six months ended April 30, 1998 was $3,608,085,490
and $3,861,426,587, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of April 30, 1998 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $2,059,851,632
- ----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (63,648,258)
- ----------------------------------------------------------
Net unrealized appreciation of investment
securities $1,996,203,374
==========================================================
</TABLE>
Cost of investments for tax purposes is $5,300,206,298.
16
<PAGE> 19
NOTE 7-OPTION CONTRACTS WRITTEN
Transactions in call options written during the six months ended April 30, 1998
are summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION CONTRACTS
-------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ------------
<S> <C> <C>
Beginning of period 3,000 $ 1,216,939
- ---------------------------------------------------------------------------------------
Written 123,193 38,537,794
- ---------------------------------------------------------------------------------------
Closed (65,164) (23,494,987)
- ---------------------------------------------------------------------------------------
Exercised (36,794) (8,353,416)
- ---------------------------------------------------------------------------------------
Expired (16,592) (5,830,183)
- ---------------------------------------------------------------------------------------
End of period 7,643 $ 2,076,147
=======================================================================================
</TABLE>
Open call option contracts written at April 30, 1998 were as follows:
<TABLE>
<CAPTION>
APRIL 30,
CONTRACT STRIKE NUMBER OF PREMIUM 1998 UNREALIZED
MONTH PRICE CONTRACTS RECEIVED MARKET VALUE APPRECIATION
ISSUE -------- ------ --------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Arterial Vascular Engineering, Inc. May 40 7,643 $2,076,147 $501,572 $1,574,575
============================================================================================================================
</TABLE>
NOTE 8-PUT OPTIONS PURCHASED
Transactions in put options purchased during the six months ended April 30, 1998
are summarized as follows:
<TABLE>
<CAPTION>
PUT OPTION CONTRACTS
--------------------------
NUMBER OF PREMIUMS
CONTRACTS PAID
--------- ------------
<S> <C> <C>
Beginning of period -- --
- ----------------------------------------------------------------------------------------
Purchased 55,429 $ 15,868,426
- ----------------------------------------------------------------------------------------
Closed (33,432) (10,182,918)
- ----------------------------------------------------------------------------------------
Expired (21,997) (5,685,508)
- ----------------------------------------------------------------------------------------
End of period 0 $ 0
========================================================================================
</TABLE>
NOTE 9-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 31,189,960 $ 669,765,639 36,066,523 $ 748,100,033
- -----------------------------------------------------------------------------------------------------------------------------
Class B 5,690,989 119,693,104 9,401,446 192,004,936
- -----------------------------------------------------------------------------------------------------------------------------
Class C* 519,820 10,957,161 117,736 2,708,502
- -----------------------------------------------------------------------------------------------------------------------------
Institutional Class 224,814 5,023,383 377,655 7,900,669
- -----------------------------------------------------------------------------------------------------------------------------
Issued as a reinvestment of dividends:
Class A 41,124,131 799,035,141 29,415,559 528,061,835
- -----------------------------------------------------------------------------------------------------------------------------
Class B 3,748,457 71,332,604 1,715,350 30,687,644
- -----------------------------------------------------------------------------------------------------------------------------
Class C* 28,544 543,474 -- --
- -----------------------------------------------------------------------------------------------------------------------------
Institutional Class 448,039 8,857,736 313,585 5,650,803
- -----------------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (40,094,880) (862,906,752) (56,267,501) (1,149,788,762)
- -----------------------------------------------------------------------------------------------------------------------------
Class B (1,645,109) (34,781,518) (2,748,694) (55,831,308)
- -----------------------------------------------------------------------------------------------------------------------------
Class C* (74,391) (1,586,075) (13,632) (306,933)
- -----------------------------------------------------------------------------------------------------------------------------
Institutional Class (199,970) (4,435,383) (951,830) (20,925,009)
- -----------------------------------------------------------------------------------------------------------------------------
40,960,404 $ 781,498,514 17,426,197 $ 288,262,410
=============================================================================================================================
</TABLE>
* Class C shares commenced sales on August 4, 1997.
17
<PAGE> 20
NOTE 10-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 six months ended April 30, 1998, each of the years
in the two-year period ended October 31, 1997 and the period June 26, 1995 (date
sales commenced) through October 31, 1995, and for a share of Class C capital
stock outstanding during the six months ended April 30, 1998 and the period
August 4, 1997 (date 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 $ 22.72 $ 20.19 $ 20.33 $ 17.82 $ 17.62 $ 16.68
- ------------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income 0.02 0.01 0.06 -- 0.07 0.10
- ------------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Net gains on securities (both realized and
unrealized) 3.47 4.82 2.51 4.36 0.57 0.93
- ------------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 3.49 4.83 2.57 4.36 0.64 1.03
- ------------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income -- (0.06) -- (0.07) (0.11) (0.09)
- ------------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Distributions from net realized gains (3.35) (2.24) (2.71) (1.78) (0.33) --
- ------------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Total distributions (3.35) (2.30) (2.71) (1.85) (0.44) (0.09)
- ------------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 22.86 $ 22.72 $ 20.19 $ 20.33 $ 17.82 $ 17.62
================================================= ========== ========== ========== ========== ========== ==========
Total return(a) 17.94% 26.83% 14.81% 28.20% 3.76% 6.17%
================================================= ========== ========== ========== ========== ========== ==========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $6,585,111 $5,810,582 $4,977,493 $4,564,730 $3,965,858 $4,999,983
================================================= ========== ========== ========== ========== ========== ==========
Ratio of expenses to average net assets(b) 1.05%(c)(d) 1.07% 1.12% 1.17% 1.21% 1.13%
================================================= ========== ========== ========== ========== ========== ==========
Ratio of net investment income (loss) to average
net assets(e) 0.20%(c) 0.07% 0.33% (0.02)% 0.45% 0.62%
================================================= ========== ========== ========== ========== ========== ==========
Portfolio turnover rate 57% 128% 159% 139% 136% 109%
================================================= ========== ========== ========== ========== ========== ==========
Average brokerage commission rate paid(f) $ 0.0607 $ 0.0618 $ 0.0615 N/A N/A N/A
================================================= ========== ========== ========== ========== ========== ==========
Borrowings for the period:
Amount of debt outstanding at end of period (000s
omitted) -- -- -- -- -- --
================================================= ========== ========== ========== ========== ========== ==========
Average amount of debt outstanding during the
period (000s omitted)(g) -- -- -- $ 593 -- --
================================================= ========== ========== ========== ========== ========== ==========
Average number of shares outstanding during the
period (000s omitted)(g) 282,646 262,563 248,189 229,272 249,351 314,490
================================================= ========== ========== ========== ========== ========== ==========
Average amount of debt per share during the
period -- -- -- $ 0.0026 -- --
================================================= ========== ========== ========== ========== ========== ==========
</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
1.09% (annualized), 1.11%, 1.15%, 1.19%, 1.24% and 1.17% for 1998-1993.
(c) Ratios are annualized and based on average net assets of $6,092,604,056.
(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
reimbursements were 0.15% (annualized), 0.03%, 0.30%, (0.04%), 0.42% and
0.58% for 1998-1993.
(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.
(g) Averages computed on a daily basis.
18
<PAGE> 21
NOTE 10-FINANCIAL HIGHLIGHTS-continued
<TABLE>
<CAPTION>
CLASS B CLASS C
---------------------------------------------- -------------------------
OCTOBER 31,
APRIL 30, ------------------------------- APRIL 30, OCTOBER 31,
1998 1997 1996 1995 1998 1997
--------- -------- -------- -------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 22.34 $ 19.98 $ 20.28 $ 18.56 $ 22.34 $ 22.83
- --------------------------------------------------- -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income (loss) (0.06)(a) (0.15)(a) (0.05)(a) (0.03) (0.06)(a) (0.04)(a)
- --------------------------------------------------- -------- -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized
and unrealized) 3.40 4.75 2.46 1.75 3.41 (0.45)
- --------------------------------------------------- -------- -------- -------- -------- -------- --------
Total from investment operations 3.34 4.60 2.41 1.72 3.35 (0.49)
- --------------------------------------------------- -------- -------- -------- -------- -------- --------
Distributions from net realized gains (3.35) (2.24) (2.71) -- (3.35) --
- --------------------------------------------------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 22.33 $ 22.34 $ 19.98 $ 20.28 $ 22.34 $ 22.34
- --------------------------------------------------- -------- -------- -------- -------- -------- --------
Total return(b) 17.52% 25.78% 13.95% 9.27% 17.57% (2.15)%
- --------------------------------------------------- -------- -------- -------- -------- -------- --------
Ratios/supplemental data:
Net assets, end of period (000's omitted) $659,964 $486,105 $267,459 $ 42,238 $ 12,914 $ 2,326
=================================================== ======== ======== ======== ======== ======== ========
Ratio of expenses to average net assets(c) 1.84%(d)(e) 1.87% 1.95% 1.91%(f) 1.84%(d)(e) 1.84%(f)
=================================================== ======== ======== ======== ======== ======== ========
Ratio of net investment income (loss) to average
net assets(g) (0.59)%(d) (0.73)% (0.50)% (0.76)%(f) (0.59)%(d) (0.70)%(f)
=================================================== ======== ======== ======== ======== ======== ========
Portfolio turnover rate 57% 128% 159% 139% 57% 128%
=================================================== ======== ======== ======== ======== ======== ========
Average brokerage commission rate paid(h) $ 0.0607 $ 0.0618 $ 0.0615 N/A $ 0.0607 $ 0.0618
=================================================== ======== ======== ======== ======== ======== ========
Borrowings for the period:
Amount of debt outstanding at end of period (000s
omitted) -- -- -- -- -- --
=================================================== ======== ======== ======== ======== ======== ========
Average amount of debt outstanding during the
period (000s omitted)(i) -- -- -- $ 3 -- --
=================================================== ======== ======== ======== ======== ======== ========
Average number of shares outstanding during the
period (000s omitted)(i) 26,430 18,505 7,956 1,036 327 41,282
=================================================== ======== ======== ======== ======== ======== ========
Average amount of debt per share during the period -- -- -- $ 0.0029 -- --
=================================================== ======== ======== ======== ======== ======== ========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and 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
1.88% (annualized), 1.91%, 1.98% and 1.94% (annualized) for 1998-1995 for
Class B and 1.88% (annualized) and 1.88% (annualized) for 1998-1997 for
Class C.
(d) Ratios are annualized and based on average net assets of $558,128,245 and
$6,926,287 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
1.83% (annualized) and 1.83% (annualized) 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 (0.63)% (annualized), (0.77)%, (0.53)% and (0.79)%
(annualized) for 1998-1995 for Class B and (0.63)% (annualized) and (0.74)%
(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, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
(i) Averages computed on a daily basis.
19
<PAGE> 22
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
Cortland Trust Inc. Senior Vice President A I M Capital Management, Inc.
11 Greenway Plaza
Edward K. Dunn Jr. Jonathan C. Schoolar Suite 100
Chairman, Mercantile Mortgage Corp.; Senior Vice President Houston, TX 77046
Formerly Vice Chairman and President,
Mercantile-Safe Deposit & Trust Co.; and Dana R. Sutton TRANSFER AGENT
President, Mercantile Bankshares Vice President and Assistant Treasurer
A I M Fund Services, Inc.
Jack Fields Melville B. Cox P.O. Box 4739
Chief Executive Officer Vice President Houston, TX 77210-4739
Texana Global, Inc.;
Formerly Member Renee A. Bamford CUSTODIAN
of the U.S. House of Representatives Assistant Secretary
State Street Bank and Trust Company
Carl Frischling P. Michelle Grace 225 Franklin Street
Partner Assistant Secretary Boston, MA 02110
Kramer, Levin, Naftalis & Frankel
Jeffrey H. Kupor COUNSEL TO THE FUND
Robert H. Graham Assistant Secretary
President and Chief Executive Officer Ballard Spahr
A I M Management Group Inc. Nancy L. Martin Andrews & Ingersoll, LLP
Assistant Secretary 1735 Market Street
John F. Kroeger Philadelphia, PA 19103
Formerly Consultant Ofelia M. Mayo
Wendell & Stockel Associates, Inc. Assistant Secretary COUNSEL TO THE DIRECTORS
Lewis F. Pennock Lisa A. Moss Kramer, Levin, Naftalis & Frankel
Attorney Assistant Secretary 919 Third Avenue
New York, NY 10022
Ian W. Robinson Kathleen J. Pflueger
Consultant; Formerly Executive Assistant Secretary DISTRIBUTOR
Vice President and
Chief Financial Officer Samuel D. Sirko A I M Distributors, Inc.
Bell Atlantic Management Assistant Secretary 11 Greenway Plaza
Services, Inc. Suite 100
Stephen I. Winer Houston, TX 77046
Louis S. Sklar Assistant Secretary
Executive Vice President
Hines Interests Mary J. Benson
Limited Partnership Assistant Treasurer
</TABLE>
20
<PAGE> 23
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> 24
<TABLE>
<S> <C>
THE AIM FAMILY OF FUNDS--Registered Trademark--
FOR AGGRESSIVE GROWTH
AIM Aggressive Growth Fund*
AIM Asian Growth Fund
[PHOTO OF AIM Capital Development Fund
11 GREENWAY PLAZA AIM Constellation Fund
APPEARS HERE] AIM European Development Fund
AIM Global Aggressive Growth Fund
FOR GROWTH OF CAPITAL
AIM Advisor International Value Fund
AIM Blue Chip Fund
AIM Global Growth Fund
AIM International Equity Fund
AIM Select Growth Fund **
AIM Value Fund
AIM Weingarten Fund
FOR 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
FOR HIGH CURRENT INCOME OR CURRENT INCOME
AIM High Yield Fund
AIM Global Income Fund
AIM Income Fund
FOR 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
FOR CURRENT INCOME AND HIGH DEGREE OF SAFETY
AIM Intermediate Government Fund
AIM Limited Maturity Treasury Fund
AIM Money Market Fund
AIM Tax-Exempt Cash Fund
A I M Management Group Inc. has provided leadership in
the mutual fund industry since 1976 and managed approximately *AIM Aggressive Growth Fund was closed to new investors
$89 billion in assets for more than 4.4 million shareholders, on June 5, 1997. ** On May 1, 1998, AIM Growth Fund was
including individual investors, corporate clients, and financial renamed AIM Select Growth Fund. For more complete
institutions as of March 31, 1998. The AIM Family of Funds information about any AIM Fund(s), including sales
- --Registered Trademark-- is distributed nationwide, and charges and expenses, ask your financial consultant or
AIM today ranks among the nation's top 15 mutual fund securities dealer for a free prospectus(es). Please read
companies in assets under management, according to Lipper the prospectus(es) carefully before you invest or
Analytical Services, Inc. send money.
INVEST WITH DISCIPLINE-SM-
</TABLE>
