<PAGE> 1
[COVER IMAGE]
AIM
EQUITY FUNDS, INC.
INSTITUTIONAL CLASSES
AIM CHARTER FUND
AIM CONSTELLATION FUND
AIM WEINGARTEN FUND
[AIM LOGO APPEARS HERE] SEMIANNUAL REPORT APRIL 30,1999
<PAGE> 2
TABLE OF CONTENTS
AIM CHARTER FUND 2-14
AIM CONSTELLATION FUND 15-29
AIM WEINGARTEN FUND 30-43
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
SEMIANNUAL REPORT / CHAIRMAN'S LETTER
Dear Fellow Shareholder:
With only several months remaining in 1999, the question on
[PHOTO OF many of your minds may be, "How will the year 2000 computer
Charles T. issue affect AIM and my investments?" We would like you to
Bauer, feel comfortable.
Chairman of During March and April, AIM participated in an
the Board of industrywide test that gave us a chance to see how our
THE FUND technology systems might be affected by the changeover to
APPEARS HERE] the year 2000 (Y2K). Everything went as well as we had
hoped; in general, the industry sailed through the testing
process with flying colors. The financial industry has been
seen as a leader in planning for year 2000 concerns. Thus,
it was no surprise to most participants that the test was an
overwhelming success.
The general purpose of the process was to test
electronic interfaces among financial industry members in
the United States and to follow transactions through a
typical trading cycle--from order entry to the settlement process. Investment
banks, broker-dealers, custodian banks and mutual fund companies all worked
together to make this possible. Approximately 400 firms were involved in the
testing; AIM was one of 70 asset managers.
TEST RESULTS EXCELLENT
During the testing process, thousands of transactions were submitted and
approximately 260,000 steps were tested. Of those, only a handful experienced
minor glitches--just 0.02% of the total number of transactions. All problems
were worked through quickly before the hypothetical trades were settled. Of
course, AIM will keep testing and planning throughout 1999 as a precaution.
AIM'S INTERNAL EFFORTS CONTINUE
As you know from our previous communications to you, AIM has been addressing the
year 2000 issue for several years. During 1998, we made substantial progress on
our preparations. We are now in the final phases of the project, continually
testing internal applications and our interfaces with outside parties. On the
investment side, our portfolio management staff is evaluating the Y2K
preparedness of the companies in which we invest.
We feel that our preparations for 2000 are very comprehensive, and the
industrywide testing showed that our colleagues in the financial industry are
also working hard to be ready for the new year. We do not think shareholders
need to take any extraordinary measures with their investments to prepare for
2000. However, if you have any lingering concerns, it may reassure you to know
that AIM is finalizing contingency plans that will be ready if there are
unexpected problems. Our plans will give AIM employees guidelines to follow for
a wide variety of situations.
For a more comprehensive discussion of our Y2K efforts and for periodic
updates, please visit our Web site, www.aimfunds.com.
We are pleased to send you this report covering your fund's performance
during the six months ended April 30, 1999. If you have any questions or
comments, please contact our Client Services department at 800-659-1005.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
PLEASE NOTE THAT THE INFORMATION ABOUT THE YEAR 2000 IN THIS LETTER IS DEEMED
AIM'S YEAR 2000 READINESS DISCLOSURE.
-------------------------------------
THE FINANCIAL INDUSTRY
HAS BEEN SEEN AS A
LEADER IN PLANNING FOR
YEAR 2000 CONCERNS.
-------------------------------------
<PAGE> 4
AIM CHARTER FUND
For shareholders who seek growth and income by investing primarily in stocks of
large-cap, well-run companies with a history of stable and improving earnings
and generally increasing dividend payouts.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Charter Fund performance figures are historical and reflect reinvestment
of all distributions and changes in net asset value.
o The fund's investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The unmanaged Lipper Growth & Income Funds Index represents an average of
the performance of the 30 largest growth-and-income mutual funds.
o The unmanaged Standard & Poor's Composite Index of 500 Stocks (S&P 500) is
widely regarded by investors as representative of the stock market in
general.
o The Dow Jones Industrial Average (the Dow) is a price-weighted average of 30
actively traded primarily industrial stocks.
o An investment cannot be made in any index listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect
sales charges.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER GOVERNMENT AGENCY. THERE IS A RISK THAT YOU COULD
LOSE SOME OR ALL OF YOUR MONEY.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the fund.
AIM CHARTER FUND
2
<PAGE> 5
SEMIANNUAL REPORT / MANAGERS' OVERVIEW
AIM CHARTER FUND BEATS S&P 500
THE STOCK MARKET SEEMS TO HAVE DONE VERY WELL OVER THE PAST SIX MONTHS. HOW DID
THE AIM CHARTER FUND PERFORM?
The fund's Institutional Class shares turned in an outstanding performance for
the period ending April 30, 1999. The fund gained 27.89%, beating the
performance of the S&P 500, which reported a 22.31% return. It also outperformed
its peer group represented by the Lipper Growth & Income Funds Index, which
gained 17.85%. Net assets climbed from $43.8 million to $59 million over the
six-month reporting period.
WHAT WERE MARKET CONDITIONS LIKE OVER THE REPORTING PERIOD?
In late 1998, the Federal Reserve Board lowered interest rates and spurred a
market rally. That rally continued through 1999, but not all stocks
participated. The Dow Jones Industrial Average crossed the 10,000 threshold
during the reporting period, but its performance reflected the strength of a
small number of major American corporations. The rest of the market did not
perform as well as leading large-company stocks. In April, the market broadened
as earnings improved across a wider spectrum of companies.
================================================================================
GROWTH OF NET ASSETS
- --------------------------------------------------------------------------------
10/31/98 $43.8 million
4/30/99 $59 million
================================================================================
WHAT CONTRIBUTED TO THE STRONG PERFORMANCE OF THE FUND?
The fund invests in large, brand-name companies in a market where size matters.
These big companies have large research and development budgets to develop new
products, economies of scale to reduce costs, and access to global markets to
sell products. In response to the narrowness of the market over the past six
months, we reduced the number of holdings in the fund from 145 to 94.
WHAT WERE THE TOP SECTORS FOR THE FUND?
Our main sectors are technology, health care and financial stocks, where
companies continue to show strong earnings growth. Technology now makes up 27.9%
of the portfolio, up from 21% at the end of the fiscal year.
WHY IS TYCO YOUR LARGEST HOLDING?
We like Tyco because it is a diversified corporation with leading positions in a
wide array of businesses. The company has four divisions, and each exhibits
strength and stability -- health-care products, fire and security systems,
flow-control technology (pipes, pipe fittings and tubing) and electrical
components. Some of the products made by its subsidiaries include Curity
bandages, fire extinguishers, and undersea fiber-optic cable.
The Bermuda-based company has grown through acquisitions, buying nearly 100
companies and growing its earnings 26% over the past six years. Its most recent
acquisitions include an $11 billion purchase of AMP, an electronics equipment
maker, and a $3.27 billion deal for Raychem, a telecommunications cable company.
Tyco embodies much of what we look for in a growth stock: leading
market-share positions in leading growth industries both in the United States
and in international markets, which recently have begun to show signs of
improving growth prospects.
DOES THE FUND OWN ANY INTERNET STOCKS?
Yes. The leading Internet holding for AIM Charter Fund is America Online. The
No. 1 online Internet service provider has about 17 million subscribers
worldwide and recently announced quarterly earnings that beat Wall Street
estimates. The company successfully closed its $10.2 billion acquisition of
Netscape, a major Internet browser system.
The fund also participated in a large convertible bond offering for
Amazon.com, an online bookseller. Although Amazon.com has yet to make a profit,
the company's revenue has risen 236% in the most recent quarter. Amazon.com has
expanded its niche to offer music, videos, gifts and auctions online.
Many of the fund's Internet investments aren't involved with online access
or e-commerce. A major Internet player is MCI WorldCom, the world's
second-largest long-distance company. In its most recent quarterly report, MCI
WorldCom's sales from its Internet business jumped 60%, while its voice lines
grew by 7%.
Another of our core holdings, Microsoft, is a key Internet player. In a deal
announced shortly after the close of the reporting period, Microsoft is
investing $5 billion for a small stake in AT&T. With its set-top boxes, AT&T
will offer digital
-------------------------------------
TYCO EMBODIES MUCH OF WHAT WE
LOOK FOR IN A GROWTH STOCK: LEADING
MARKET-SHARE POSITIONS IN LEADING
GROWTH INDUSTRIES BOTH IN THE UNITED
STATES AND IN INTERNATIONAL MARKETS,
WHICH RECENTLY HAVE BEGUN TO SHOW
SIGNS OF IMPROVING GROWTH PROSPECTS.
-------------------------------------
AIM CHARTER FUND
3
<PAGE> 6
PORTFOLIO COMPOSITION
As of 4/30/99, based on total net assets
TOTAL NUMBER OF HOLDINGS: 94
<TABLE>
<CAPTION>
====================================================================================================================================
TOP 10 HOLDINGS TOP 10 INDUSTRIES PERCENTAGE OF HOLDINGS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. Tyco International Ltd. 5.42% 1. Computer (Software & Services) 9.16% Common Stock 88.15%
2. Microsoft Corp. 3.62 2. Manufacturing (Diversified) 6.18 Convertible Bonds 4.64
3. MCI/Worldcom, Inc. 2.86 3. Financial (Diversified) 6.00 Convertible Preferred Stock 2.56
4. America Online Inc. 2.86 4. Health Care (Diversified) 5.88 Cash & Cash Equivalents 4.19
5. Chase Manhattan Corp. (The) 2.76 5. Computers (Hardware) 5.54 U.S. Government Bonds 0.89
6. American International Group Inc. 2.70 6. Telecommunications (Long Distance) 5.49
7. International Business Machines Corp. 2.48 7. Retail (General Merchandise) 4.53
8. General Electric Co. 2.35 8. Health Care (Drugs -Major 4.36
Pharmaceuticals)
9. Cisco Systems Inc. 2.11 9. Communications Equipment 3.82
10. Wal-Mart Stores Inc. 2.05 10. Computers (Networking) 3.12
The fund's portfolio is subject to change, and there is no assurance the fund will continue to hold any particular security.
====================================================================================================================================
</TABLE>
cable services using the Microsoft Windows operating system. Microsoft has cut
other deals to steer telecommunications business its way. As cable and phone
companies build networks to provide voice, video and data over the same
pipeline, Microsoft hopes to attract more users for its multimedia
communications software.
WHAT TYPE OF HEALTH-CARE COMPANIES DO YOU FAVOR?
The fund's health-care holdings make up about 14% of the portfolio and are split
between diversified health-care companies such as Bristol-Myers Squibb and major
pharmaceuticals such as Pfizer. Our investment in this sector has been driven by
long-term demographic trends. The population is aging and requires more health
care. Worldwide drug sales are rising at a rate of 8% to 10% a year.
We're seeing a continuation of the "size matters" theme with major drug
companies. Bringing a new drug to market can cost about $1 billion, so major
pharmaceuticals such as Pfizer have a clear advantage over their smaller
competitors.
WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
Strong economic growth in the United States continues to buoy the stock market.
The main question is interest rates. Inflation rose unexpectedly in April,
prompting the Fed to shift to a bias of raising interest rates at its May
meeting. If the Fed actually does tighten monetary policy, it could have a
negative effect on stock performance.
We believe earnings will continue to drive the market. The fund's investment
discipline can benefit shareholders in this type of environment, and we're
confident that the fund is well-positioned to continue its strong performance.
================================================================================
AIM CHARTER FUND vs. INDEXES
SIX-MONTH TOTAL RETURNS AS OF 4/30/99
Institutional Class shares 27.89%
S&P 500 22.31%
Lipper Growth & Income 17.85%
================================================================================
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
AS OF 4/30/99
Inception (7/30/91) 17.45%
5 years 23.19
1 year 25.03
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS OF AN
INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
SHOWN.
================================================================================
AIM CHARTER FUND
4
<PAGE> 7
SCHEDULE OF INVESTMENTS
April 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-88.15%
AUTOMOBILES-1.38%
Ford Motor Co. 1,450,000 $ 92,709,375
- ---------------------------------------------------------------
BANKS (MAJOR REGIONAL)-0.36%
BankBoston Corp. 500,000 24,500,000
- ---------------------------------------------------------------
BANKS (MONEY CENTER)-2.76%
Chase Manhattan Corp. (The) 2,250,000 186,187,500
- ---------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE)-1.37%
Broadcast.com, Inc.(a) 250,000 32,062,500
- ---------------------------------------------------------------
Comcast Corp.-Class A 500,000 32,843,750
- ---------------------------------------------------------------
Infinity Broadcasting
Corp.-Class A(a) 1,000,000 27,687,500
- ---------------------------------------------------------------
92,593,750
- ---------------------------------------------------------------
CHEMICALS (DIVERSIFIED)-1.51%
Monsanto Co. 2,250,000 101,812,500
- ---------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-3.82%
Corning Inc. 800,000 45,800,000
- ---------------------------------------------------------------
Lucent Technologies, Inc. 700,000 42,087,500
- ---------------------------------------------------------------
Motorola, Inc. 850,000 68,106,250
- ---------------------------------------------------------------
Nokia Oyj A.B.-Class A-ADR 900,000 66,768,750
- ---------------------------------------------------------------
QUALCOMM, Inc.(a) 175,000 35,000,000
- ---------------------------------------------------------------
257,762,500
- ---------------------------------------------------------------
COMPUTERS (HARDWARE)-5.21%
Dell Computer Corp.(a) 2,000,000 82,375,000
- ---------------------------------------------------------------
International Business Machines
Corp. 800,000 167,350,000
- ---------------------------------------------------------------
Sun Microsystems, Inc.(a) 1,700,000 101,681,250
- ---------------------------------------------------------------
351,406,250
- ---------------------------------------------------------------
COMPUTERS (NETWORKING)-3.12%
Ascend Communications, Inc.(a) 700,000 67,637,500
- ---------------------------------------------------------------
Cisco Systems, Inc.(a) 1,250,000 142,578,125
- ---------------------------------------------------------------
210,215,625
- ---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-1.75%
EMC Corp.(a) 800,000 87,150,034
- ---------------------------------------------------------------
Lexmark International Group, Inc.(a) 250,000 30,875,000
- ---------------------------------------------------------------
118,025,034
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-8.81%
America Online, Inc.(a) 1,350,000 192,712,500
- ---------------------------------------------------------------
GeoCities(a) 53,100 6,186,150
- ---------------------------------------------------------------
Microsoft Corp.(a) 3,000,000 243,937,500
- ---------------------------------------------------------------
Novell, Inc.(a) 5,387,100 119,862,975
- ---------------------------------------------------------------
Unisys Corp.(a) 1,000,000 31,437,500
- ---------------------------------------------------------------
594,136,625
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
CONSUMER FINANCE-0.86%
Providian Financial Corp. 450,000 $ 58,078,125
- ---------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-0.53%
Cardinal Health, Inc. 600,000 35,887,500
- ---------------------------------------------------------------
ELECTRICAL EQUIPMENT-2.35%
General Electric Co. 1,500,000 158,250,000
- ---------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-1.11%
Linear Technology Corp. 600,000 34,125,000
- ---------------------------------------------------------------
Texas Instruments, Inc. 400,000 40,850,000
- ---------------------------------------------------------------
74,975,000
- ---------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR)-1.08%
Applied Materials, Inc.(a) 700,000 37,537,500
- ---------------------------------------------------------------
Teradyne, Inc.(a) 750,000 35,390,625
- ---------------------------------------------------------------
72,928,125
- ---------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-6.00%
American Express Co. 800,000 104,550,000
- ---------------------------------------------------------------
Citigroup Inc. 1,000,000 75,250,000
- ---------------------------------------------------------------
Fannie Mae 1,400,000 99,312,500
- ---------------------------------------------------------------
Freddie Mac 2,000,000 125,500,000
- ---------------------------------------------------------------
404,612,500
- ---------------------------------------------------------------
FOOTWEAR-0.17%
Nike, Inc.-Class B 183,200 11,392,750
- ---------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-5.88%
Abbott Laboratories 1,350,000 65,390,625
- ---------------------------------------------------------------
American Home Products Corp. 1,000,000 61,000,000
- ---------------------------------------------------------------
Bristol-Myers Squibb Co. 1,500,000 95,343,750
- ---------------------------------------------------------------
Johnson & Johnson 400,000 39,000,000
- ---------------------------------------------------------------
Warner-Lambert Co. 2,000,000 135,875,000
- ---------------------------------------------------------------
396,609,375
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)-4.36%
Lilly (Eli) & Co. 700,000 51,537,500
- ---------------------------------------------------------------
Merck & Co., Inc. 140,600 9,877,150
- ---------------------------------------------------------------
Pfizer, Inc. 1,150,000 132,321,875
- ---------------------------------------------------------------
Pharmacia & Upjohn, Inc. 1,356,000 75,936,000
- ---------------------------------------------------------------
Schering-Plough Corp. 500,000 24,156,250
- ---------------------------------------------------------------
293,828,775
- ---------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT)-0.37%
Columbia/HCA Healthcare Corp. 1,000,000 24,687,500
- ---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-1.86%
Guidant Corp. 1,000,000 53,687,500
- ---------------------------------------------------------------
</TABLE>
AIM CHARTER FUND 5
<PAGE> 8
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-(CONTINUED)
Medtronic, Inc. 1,000,000 $ 71,937,500
- ---------------------------------------------------------------
125,625,000
- ---------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES)-0.73%
Omnicare, Inc. 2,037,900 49,036,969
- ---------------------------------------------------------------
HOUSEHOLD FURNITURE & APPLIANCES-0.41%
Maytag Corp. 400,000 27,350,000
- ---------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES)-1.05%
Clorox Co. 300,000 34,612,500
- ---------------------------------------------------------------
Colgate-Palmolive Co. 350,000 35,853,125
- ---------------------------------------------------------------
70,465,625
- ---------------------------------------------------------------
INSURANCE (MULTI-LINE)-2.70%
American International Group,
Inc. 1,550,000 182,028,125
- ---------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE-2.84%
Merrill Lynch & Co., Inc. 600,000 50,362,500
- ---------------------------------------------------------------
Morgan Stanley, Dean Witter,
Discover & Co. 650,000 64,471,875
- ---------------------------------------------------------------
Schwab (Charles) Corp. 700,000 76,825,000
- ---------------------------------------------------------------
191,659,375
- ---------------------------------------------------------------
LODGING-HOTELS-0.49%
Carnival Corp. 800,000 33,000,000
- ---------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-6.17%
Tyco International Ltd. 4,500,000 365,625,000
- ---------------------------------------------------------------
United Technologies Corp. 350,000 50,706,250
- ---------------------------------------------------------------
416,331,250
- ---------------------------------------------------------------
NATURAL GAS-0.56%
Enron Corp. 500,000 37,625,000
- ---------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-0.98%
Halliburton Co. 800,000 34,100,000
- ---------------------------------------------------------------
Schlumberger Ltd. 500,000 31,937,500
- ---------------------------------------------------------------
66,037,500
- ---------------------------------------------------------------
OIL (INTERNATIONAL INTEGRATED)-1.55%
Mobil Corp. 1,000,000 104,750,000
- ---------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.27%
Georgia Pacific Corp. 200,000 18,500,000
- ---------------------------------------------------------------
PERSONAL CARE-0.58%
Gillette Co. 750,000 39,140,626
- ---------------------------------------------------------------
RAILROADS-0.53%
Kansas City Southern Industries,
Inc. 600,000 35,737,500
- ---------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-0.51%
Lowe's Companies, Inc. 650,000 34,287,500
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (DEPARTMENT STORES)-0.30%
Kohl's Corp.(a) 300,000 $ 19,931,250
- ---------------------------------------------------------------
RETAIL (DRUG STORES)-0.26%
Walgreen Co. 650,000 17,468,750
- ---------------------------------------------------------------
RETAIL (FOOD CHAINS)-1.00%
Kroger Co.(a) 600,000 32,587,500
- ---------------------------------------------------------------
Safeway, Inc.(a) 650,000 35,059,375
- ---------------------------------------------------------------
67,646,875
- ---------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE)-4.52%
Costco Companies, Inc.(a) 400,000 32,375,000
- ---------------------------------------------------------------
Dayton Hudson Corp. 2,000,000 134,625,000
- ---------------------------------------------------------------
Wal-Mart Stores, Inc. 3,000,000 138,000,000
- ---------------------------------------------------------------
305,000,000
- ---------------------------------------------------------------
SERVICES (DATA PROCESSING)-1.17%
First Data Corp. 1,200,000 50,925,000
- ---------------------------------------------------------------
Paychex, Inc. 550,000 28,084,375
- ---------------------------------------------------------------
79,009,375
- ---------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-4.01%
AT&T Corp. 1,000,000 50,500,000
- ---------------------------------------------------------------
Global TeleSystems Group, Inc.(a) 400,000 26,450,000
- ---------------------------------------------------------------
MCI WorldCom, Inc.(a) 2,350,000 193,140,625
- ---------------------------------------------------------------
270,090,625
- ---------------------------------------------------------------
TELEPHONE-1.04%
SBC Communications, Inc. 1,250,000 70,000,000
- ---------------------------------------------------------------
TOBACCO-1.82%
Philip Morris Companies, Inc. 3,500,000 122,718,750
- ---------------------------------------------------------------
Total Common Stocks (Cost
$4,088,054,762) 5,944,038,904
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
CONVERTIBLE CORPORATE BONDS &
NOTES-4.64%
COMPUTERS (HARDWARE)-0.33%
Candescent Technology Corp.,
Conv. Sr. Sub. Deb., 7.00%,
05/01/03(b) (Acquired
04/17/98-11/30/98; Cost
$27,971,827) $ 28,300,000 $ 22,074,000
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-0.34%
Veritas Software Corp., Conv.
Sub. Notes, 5.25%, 11/01/04 12,500,000 23,109,375
- ---------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-0.58%
Home Depot, Inc., Conv. Sub
Notes, 3.25%, 10/01/01 15,000,000 39,037,500
- ---------------------------------------------------------------
RETAIL (SPECIALTY)-1.90%
Amazon.com Inc., Conv. Sub.
Deb., 4.75%, 02/01/09(b)
(Acquired 01/29/99-04/29/99;
Cost $110,132,690) 100,000,000 127,937,500
- ---------------------------------------------------------------
</TABLE>
6 AIM CHARTER FUND
<PAGE> 9
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
TELECOMMUNICATIONS (LONG DISTANCE)-1.49%
Global TeleSystems Group, Inc.,
Conv. Sr. Unsec. Sub. Notes,
8.75%, 06/30/00(b) (Acquired
02/05/98; Cost $13,002,080) $ 10,000,000 $ 33,287,500
- ---------------------------------------------------------------
Global TeleSystems Group, Inc.,
Conv. Sr. Sub. Deb., 5.75%,
07/01/10 50,000,000 66,875,000
- ---------------------------------------------------------------
100,162,500
- ---------------------------------------------------------------
Total Convertible Corporate
Bonds & Notes (Cost
$240,831,428) 312,320,875
- ---------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS-2.56%
BROADCASTING (TELEVISION, RADIO & CABLE)-1.07%
Mediaone Group, Inc.-$2.25
Series D Conv. Pfd. 450,000 72,450,000
- ---------------------------------------------------------------
ENTERTAINMENT-1.49%
Reliant Energy, Inc.-$3.22 Conv.
Pfd. 850,000 100,300,000
- ---------------------------------------------------------------
Total Convertible Preferred
Stocks (Cost $112,602,801) 172,750,000
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
U.S. TREASURY NOTES-0.89%
9.125%, 05/15/99 (Cost
$61,726,172) $ 60,000,000 $ 60,097,800
- ---------------------------------------------------------------
REPURCHASE AGREEMENTS-4.19%(c)
Chase Securities, Inc.
4.94%, 05/03/99(d) 80,000,000 80,000,000
- ---------------------------------------------------------------
SBC Warburg Dillon Read, Inc.
4.93%, 05/03/1999(e) 160,854,829 160,854,829
- ---------------------------------------------------------------
4.94%, 05/03/1999(f) 41,510,885 41,510,885
- ---------------------------------------------------------------
Total Repurchase Agreements
(Cost $282,365,714) 282,365,714
- ---------------------------------------------------------------
TOTAL INVESTMENTS-100.43% 6,771,573,293
- ---------------------------------------------------------------
LIABILITIES LESS OTHER ASSETS-(0.43%) (28,924,273)
- ---------------------------------------------------------------
NET ASSETS-100.00% $6,742,649,020
===============================================================
</TABLE>
Notes to Schedule of Investments
(a) Non-income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with the procedures established by the Board of Directors. The
aggregate market value of these securities at 04/30/99 was $183,299,000,
which represented 2.72% of the Fund's net assets.
(c) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value is at least 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 for its affiliates.
(d) Joint repurchase agreement entered into 04/30/99 with a maturing value of
$200,082,333. Collateralized by $204,362,012 U.S. Government obligations, 0%
to 9.50% due 02/01/02 to 06/01/37 with an aggregate market value at 04/30/99
of $204,003,573.
(e) Joint repurchase agreement entered into 04/30/99 with a maturing value of
$500,205,417. Collateralized by $657,973,000 U.S. Government obligations, 0%
to 10.35% due 05/18/99 to 01/15/30 with an aggregate market value at
04/30/99 of $510,002,651.
(f) Joint repurchase agreement entered into 04/30/99 with a maturing value of
$250,102,917. Collateralized by $249,736,152 U.S. Government obligations,
6.00% to 10.50% due 03/15/01 to 01/15/33 with an aggregate market value at
04/30/99 of $255,819,341.
Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
Deb. - Debentures
Pfd. - Preferred
Sr. - Senior
Sub. - Subordinated
Unsec. - Unsecured
See Notes to Financial Statements.
AIM CHARTER FUND 7
<PAGE> 10
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$4,785,580,877) $6,771,573,293
- ------------------------------------------------------------
Cash 380,972
- ------------------------------------------------------------
Receivables for:
Investments sold 132,982,122
- ------------------------------------------------------------
Capital stock sold 16,787,862
- ------------------------------------------------------------
Dividends and interest 11,006,924
- ------------------------------------------------------------
Investment for deferred compensation plan 69,365
- ------------------------------------------------------------
Other assets 232,138
- ------------------------------------------------------------
Total assets 6,933,032,676
- ------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 173,299,670
- ------------------------------------------------------------
Capital stock reacquired 9,420,270
- ------------------------------------------------------------
Deferred compensation 69,365
- ------------------------------------------------------------
Accrued advisory fees 3,408,501
- ------------------------------------------------------------
Accrued administrative services fees 15,982
- ------------------------------------------------------------
Accrued directors' fees 18,200
- ------------------------------------------------------------
Accrued distribution fees 3,327,736
- ------------------------------------------------------------
Accrued transfer agent fees 524,200
- ------------------------------------------------------------
Accrued operating expenses 299,732
- ------------------------------------------------------------
Total liabilities 190,383,656
- ------------------------------------------------------------
Net assets applicable to shares outstanding $6,742,649,020
- ------------------------------------------------------------
NET ASSETS:
Class A $4,680,937,706
============================================================
Class B $1,920,528,266
============================================================
Class C $ 82,155,706
============================================================
Institutional Class $ 59,027,342
============================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Class A:
Authorized 750,000,000
- ------------------------------------------------------------
Outstanding 286,251,175
============================================================
Class B:
Authorized 750,000,000
- ------------------------------------------------------------
Outstanding 118,322,530
============================================================
Class C:
Authorized 750,000,000
- ------------------------------------------------------------
Outstanding 5,048,163
============================================================
Institutional Class:
Authorized 200,000,000
- ------------------------------------------------------------
Outstanding 3,583,129
============================================================
Class A:
Net asset value and redemption price per
share $ 16.35
- ------------------------------------------------------------
Offering price per share:
(Net asset value of $16.35 divided
by 94.50%) $ 17.30
============================================================
Class B:
Net asset value and offering price per
share $ 16.23
============================================================
Class C:
Net asset value and offering price per
share $ 16.27
============================================================
Institutional Class:
Net asset value, offering and redemption
price per share $ 16.47
============================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1999
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $178,340 foreign
withholding tax) $ 27,691,770
- ------------------------------------------------------------
Interest 15,327,232
- ------------------------------------------------------------
Total investment income 43,019,002
- ------------------------------------------------------------
EXPENSES:
Advisory fees 18,998,755
- ------------------------------------------------------------
Administrative services fees 92,412
- ------------------------------------------------------------
Custodian fees 163,248
- ------------------------------------------------------------
Directors' fees 29,205
- ------------------------------------------------------------
Distribution fees-Class A 6,378,547
- ------------------------------------------------------------
Distribution fees-Class B 8,400,680
- ------------------------------------------------------------
Distribution fees-Class C 270,044
- ------------------------------------------------------------
Transfer agent fees-Class A 2,336,290
- ------------------------------------------------------------
Transfer agent fees-Class B 1,374,142
- ------------------------------------------------------------
Transfer agent fees-Class C 50,623
- ------------------------------------------------------------
Transfer agent fees-Institutional Class 2,579
- ------------------------------------------------------------
Other 506,527
- ------------------------------------------------------------
Total expenses 38,603,052
- ------------------------------------------------------------
Less: Fees waived by advisor (506,799)
- ------------------------------------------------------------
Expenses paid indirectly (92,598)
- ------------------------------------------------------------
Net expenses 38,003,655
- ------------------------------------------------------------
Net investment income $ 5,015,347
- ------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES
AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities 612,487,365
- ------------------------------------------------------------
Foreign currencies (1,105,968)
- ------------------------------------------------------------
Option contracts written (9,533,983)
- ------------------------------------------------------------
601,847,414
- ------------------------------------------------------------
Net unrealized appreciation (depreciation)
of:
Investment securities 820,803,380
- ------------------------------------------------------------
Foreign currencies (48,017)
- ------------------------------------------------------------
Option contracts written 388,911
- ------------------------------------------------------------
821,144,274
- ------------------------------------------------------------
Net gain from investment securities,
foreign currencies and option contracts 1,422,991,688
- ------------------------------------------------------------
Net increase in net assets resulting from
operations $1,428,007,035
============================================================
</TABLE>
See Notes to Financial Statements.
8 AIM CHARTER FUND
<PAGE> 11
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED APRIL 30, 1999 AND THE YEAR ENDED OCTOBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
1999 1998
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 5,015,347 $ 37,825,223
- ----------------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies, futures and option contracts 601,847,414 206,268,933
- ----------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities,
foreign currencies, futures and option contracts 821,144,274 254,914,824
- ----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 1,428,007,035 499,008,980
- ----------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (11,677,825) (28,039,987)
- ----------------------------------------------------------------------------------------------
Class B (536,374) (3,013,337)
- ----------------------------------------------------------------------------------------------
Class C (14,809) (47,378)
- ----------------------------------------------------------------------------------------------
Institutional Class (247,665) (445,449)
- ----------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A (145,635,667) (346,531,949)
- ----------------------------------------------------------------------------------------------
Class B (56,570,251) (108,856,197)
- ----------------------------------------------------------------------------------------------
Class C (1,569,913) (819,962)
- ----------------------------------------------------------------------------------------------
Institutional Class (1,712,180) (3,989,466)
- ----------------------------------------------------------------------------------------------
Share transactions-net:
Class A 116,760,777 235,195,827
- ----------------------------------------------------------------------------------------------
Class B 179,208,076 350,425,592
- ----------------------------------------------------------------------------------------------
Class C 34,445,580 32,069,085
- ----------------------------------------------------------------------------------------------
Institutional Class 4,905,802 3,464,509
- ----------------------------------------------------------------------------------------------
Net increase in net assets 1,545,362,586 628,420,268
- ----------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 5,197,286,434 4,568,866,166
- ----------------------------------------------------------------------------------------------
End of period $6,742,649,020 $5,197,286,434
==============================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $4,157,224,204 $3,821,903,969
- ----------------------------------------------------------------------------------------------
Undistributed net investment income 1,830,531 9,291,857
- ----------------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies, futures and option
contracts 597,609,975 201,250,572
- ----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies, futures and option contracts 1,985,984,310 1,164,840,036
- ----------------------------------------------------------------------------------------------
$6,742,649,020 $5,197,286,434
==============================================================================================
</TABLE>
See Notes to Financial Statements.
AIM CHARTER FUND 9
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999
(UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Charter Fund (the "Fund") is a series portfolio of AIM Equity Funds, Inc.
(the "Company"). The Company is a Maryland corporation registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of nine separate portfolios. 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 provide growth of capital, with
current income as a secondary objective.
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 closing bid price 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 closing bid price. 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 prices are not provided by any of the
above methods are valued at the last bid price based upon quotes furnished
by independent sources. Securities for which market quotations are not
readily available or are questionable are valued at fair value as determined
in good faith by or under the supervision of the Company's officers in a
manner specifically authorized by the Board of Directors of the Company.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value. Generally, trading in
foreign securities is substantially completed each day at various times
prior to the close of the New York Stock Exchange. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the New York Stock Exchange.
Occasionally, events affecting the values of such securities and such
exchange rates may occur between the times at which they are determined and
the close of the New York Stock Exchange which will not be reflected in the
computation of the Fund's net asset value. If events materially affecting
the value of such securities occur during such period, then these securities
will be valued at their fair value as determined in good faith by or under
the supervision of the Board of Directors.
B. Bond Premiums-It is the policy of the Fund not to amortize market premiums
on bonds for financial reporting purposes.
C. Securities Transactions, Investment Income and Distributions-Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date
and is recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date and are paid annually.
D. 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.
E. Expenses-Distribution and transfer agency expenses directly attributable to
a class of shares are charged to that class' operations. All other expenses
are allocated among the classes.
F. Foreign Currency Translations-Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are translated
into U.S. dollar amounts on the respective dates of such transactions. The
Fund does not separately account for that portion of the results of
operations resulting from changes in foreign exchange rates on investments
and the fluctuations arising from changes in market prices of securities
held. Such fluctuations are included with the net realized and unrealized
gain or loss from investments.
G. 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 to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. 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.
10 AIM CHARTER FUND
<PAGE> 13
H. Stock Index Futures Contracts-The Fund may purchase or sell stock index
futures contracts as a hedge against changes in market conditions. Initial
margin deposits required upon entering into futures contracts are satisfied
by the segregation of specific securities as collateral for the account of
the broker (the Fund's agent in acquiring the futures position). During the
period the futures contracts are open, changes in the value of the contracts
are recognized as unrealized gains or losses by "marking to market" on a
daily basis to reflect the market value of the contracts at the end of each
day's trading. Variation margin payments are made or received depending upon
whether unrealized gains or losses are incurred. When the contracts are
closed, the Fund recognizes a realized gain or loss equal to the difference
between the proceeds from, or cost of, the closing transaction and the
Fund's basis in the contract. Risks include the possibility of an illiquid
market and that a change in the value of the contracts may not correlate
with changes in the value of the securities being hedged.
I. Covered Call Options-The fund may write call options, but only on a covered
basis; that is, the Fund will own the underlying security. Options written
by the Fund normally will have expiration dates between three and nine
months from the date written. The exercise price of a call option may be
below, equal to, or above the current market value of the underlying
security at the time the option is written. When the Fund writes a covered
call option, an amount equal to the premium received by the Fund is recorded
as an asset and an equivalent liability. The amount of the liability is
subsequently "marked-to-market" to reflect the current market value of the
option written. The current market value of a written option is the mean
between the last bid and asked prices on that day. If a written call option
expires on the stipulated expiration date, or if the Fund enters into a
closing purchase transaction, the Fund realizes a gain (or a loss if the
closing purchase transaction exceeds the premium received when the option
was written) without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is extinguished. If a
written option is exercised, the Fund realizes a gain or a loss from the
sale of the underlying security and the proceeds of the sale are increased
by the premium originally received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the
call option at any time during the option period. During the option period,
in return for the premium paid by the purchaser of the 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.
J. 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 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.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 1.0% of
the first $30 million of the Fund's average daily net assets, plus 0.75% of the
Fund's average daily net assets in excess of $30 million to and including $150
million, plus 0.625% of the Fund's average daily net assets in excess of $150
million. AIM has contractually agreed to waive a portion of its advisory fees
paid by the Fund to AIM to the extent necessary to reduce the fees paid by the
Fund at net asset levels higher than those currently incorporated in the present
advisory fee schedule. Under the contractual waiver, AIM will receive a fee
calculated at the annual rate of 1.0% of the first $30 million of the Fund's
average daily net assets, plus 0.75% of the Fund's average daily net assets in
excess of $30 million to and including $150 million, plus 0.625% of the Fund's
average daily net assets in excess of $150 million to and including $2 billion,
plus 0.60% of the Fund's average daily net assets in excess of $2 billion. The
waiver is contractual and may not be terminated without approval of the Board of
Directors. During the six months ended April 30, 1999, AIM waived fees of
$506,799. 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, 1999, AIM
was reimbursed $92,412 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. During the six months ended April 30, 1999,
AFS was paid $2,259,697 with respect to the Class A, Class B, Class C and
Institutional Class shares.
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
AIM CHARTER FUND 11
<PAGE> 14
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 of the
Class B shares. Of these amounts, the Fund may pay a service fee of 0.25% of the
average daily net assets of 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. During the six months ended April 30, 1999, the Class A, Class B and
Class C shares paid AIM Distributors $6,378,547, $8,400,680, and $270,044,
respectively, as compensation under the Plans.
AIM Distributors received commissions of $898,342 from sales of Class A shares
of the Fund during the six months ended April 30, 1999. 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,
1999, AIM Distributors received commissions of $54,352 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, 1999, the Fund paid legal fees of $5,369
for services rendered by Kramer, Levin, Naftalis & Frankel LLP 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, 1999, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian
fees of $39,540 and $53,058, respectively, under expense offset arrangements.
The effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $92,598 during the six months ended April 30, 1999.
NOTE 4-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 5-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) $1,000,000,000 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. During the six
months ended April 30, 1999, 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.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the six months ended April 30, 1999 was
$4,369,860,119 and $4,334,376,218, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of April 30, 1999, on a tax basis, is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $1,996,840,459
- --------------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (27,642,398)
- --------------------------------------------------------------
Net unrealized appreciation of investment
securities $1,969,198,061
==============================================================
Cost of investments for tax purposes is $4,802,375,232.
</TABLE>
NOTE 7-OPTION CONTRACTS WRITTEN
Transactions in call options written during the six months ended April 30, 1999
are summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION CONTRACTS
--------------------------
NUMBER
OF PREMIUMS
CONTRACTS RECEIVED
--------- ------------
<S> <C> <C>
Beginning of Period 31,202 $ 8,091,351
- ---------------------------------------------------------------
Written 40,092 14,577,537
- ---------------------------------------------------------------
Closed (54,607) (18,452,622)
- ---------------------------------------------------------------
Exercised (14,921) (4,076,635)
- ---------------------------------------------------------------
Expired (1,766) (139,631)
- ---------------------------------------------------------------
End of period 0 $ 0
===============================================================
</TABLE>
NOTE 8-CAPITAL STOCK
Changes in the capital stock outstanding during the six months ended April 30,
1999 and the year ended October 31, 1998 were as follows:
<TABLE>
<CAPTION>
APRIL 30, 1999 OCTOBER 31, 1998
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold
Class A 29,915,028 $ 457,014,973 65,753,775 $ 868,543,898
- --------------------------------------------------------------------------------
Class B 16,636,975 254,772,037 32,991,364 431,938,545
- --------------------------------------------------------------------------------
Class C* 2,764,108 43,154,162 2,736,777 36,139,093
- --------------------------------------------------------------------------------
Institutional Class 367,416 5,788,239 568,334 7,594,968
- --------------------------------------------------------------------------------
Issued as
reinvestment of
dividends:
Class A 10,448,868 148,018,497 29,328,588 355,378,824
- --------------------------------------------------------------------------------
Class B 3,859,466 54,290,360 8,807,895 105,930,618
- --------------------------------------------------------------------------------
Class C* 106,186 1,498,498 67,166 810,828
- --------------------------------------------------------------------------------
Institutional Class 133,502 1,911,399 351,483 4,295,496
- --------------------------------------------------------------------------------
Reacquired:
Class A (32,368,241) (488,272,693) (75,327,509) (988,726,895)
- --------------------------------------------------------------------------------
Class B (8,550,619) (129,854,321) (14,417,738) (187,443,571)
- --------------------------------------------------------------------------------
Class C* (673,199) (10,207,080) (376,288) (4,880,836)
- --------------------------------------------------------------------------------
Institutional Class (182,932) (2,793,836) (636,014) (8,425,955)
- --------------------------------------------------------------------------------
22,456,558 $ 335,320,235 49,847,833 $ 621,155,013
================================================================================
</TABLE>
* Class C commenced sales on August 4, 1997.
12 AIM CHARTER FUND
<PAGE> 15
NOTE 9-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Institutional Class
capital stock outstanding during the six months ended April 30, 1999 and each of
the years in the five-year period ended October 31, 1998.
<TABLE>
<CAPTION>
OCTOBER 31,
APRIL 30, ---------------------------------------------------
1999 1998 1997 1996 1995 1994
--------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 13.42 $ 13.48 $ 11.24 $ 10.66 $ 8.93 $ 9.48
- ------------------------------------------------------------ ------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income 0.06 0.18 0.16 0.24 0.23 0.25
- ------------------------------------------------------------ ------- ------- ------- ------- ------- -------
Net gains (losses) on securities (both realized and
unrealized) 3.59 1.24 2.91 1.44 2.07 (0.44)
- ------------------------------------------------------------ ------- ------- ------- ------- ------- -------
Total from investment operations 3.65 1.42 3.07 1.68 2.30 (0.19)
- ------------------------------------------------------------ ------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income (0.07) (0.14) (0.16) (0.20) (0.24) (0.20)
- ------------------------------------------------------------ ------- ------- ------- ------- ------- -------
Distributions from net realized gains (0.53) (1.34) (0.67) (0.90) (0.33) (0.16)
- ------------------------------------------------------------ ------- ------- ------- ------- ------- -------
Total distributions (0.60) (1.48) (0.83) (1.10) (0.57) (0.36)
- ------------------------------------------------------------ ------- ------- ------- ------- ------- -------
Net asset value, end of period $ 16.47 $ 13.42 $ 13.48 $ 11.24 $ 10.66 $ 8.93
============================================================ ======= ======= ======= ======= ======= =======
Total return 27.89% 11.69% 29.05% 17.29% 27.45% (2.02)%
============================================================ ======= ======= ======= ======= ======= =======
Net assets, end of period (000s omitted) $59,027 $43,815 $40,191 $29,591 $25,538 $21,840
============================================================ ======= ======= ======= ======= ======= =======
Ratio of expenses (exclusive of interest) to average net
assets(a) 0.65%(b) 0.66% 0.67% 0.69% 0.74% 0.73%
============================================================ ======= ======= ======= ======= ======= =======
Ratio of net investment income to average net assets(c) 0.78%(b) 1.37% 1.21% 2.24% 1.98% 2.76%
============================================================ ======= ======= ======= ======= ======= =======
Portfolio turnover rate 73% 154% 170% 164% 161% 126%
============================================================ ======= ======= ======= ======= ======= =======
</TABLE>
(a) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
0.67% (annualized), 0.67%, 0.68% and 0.70% for 1999-1996.
(b) Ratios are annualized and based on average net assets of $51,863,230.
(c) After fee waivers and/or expense reimbursements. Ratios of net investment
income prior to fee waivers and/or expense reimbursements were 0.76%
(annualized), 1.36%, 1.20% and 2.23% for 1999-1996.
(d) Averages computed on a daily basis.
AIM CHARTER FUND 13
<PAGE> 16
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; Carol F. Relihan A I M Advisors, Inc.
Formerly Director, President, and Senior Vice President and Secretary 11 Greenway Plaza
Chief Executive Officer Suite 100
COMSAT Corporation Gary T. Crum Houston, TX 77046
Senior Vice President
Owen Daly II SUB-ADVISOR
Director Edgar M. Larsen
Cortland Trust Inc. Senior Vice President A I M Capital Management, Inc.
11 Greenway Plaza
Edward K. Dunn Jr. Dana R. Sutton Suite 100
Chairman, Mercantile Mortgage Corp.; Vice President and Treasurer Houston, TX 77046
Formerly Vice Chairman and President,
Mercantile-Safe Deposit & Trust Co.; and Melville B. Cox TRANSFER AGENT
President, Mercantile Bankshares Vice President
A I M Fund Services, Inc.
Jack Fields Mary J. Benson P.O. Box 4739
Chief Executive Officer Assistant Vice President Houston, TX 77210-4739
Texana Global, Inc.; and Assistant Treasurer
Formerly Member CUSTODIAN
of the U.S. House of Representatives Sheri Morris
Assistant Vice President State Street Bank and Trust Company
Carl Frischling and Assistant Treasurer 225 Franklin Street
Partner Boston, MA 02110
Kramer, Levin, Naftalis & Frankel LLP Renee A. Friedli
Assistant Secretary COUNSEL TO THE FUND
Robert H. Graham
President and Chief Executive Officer P. Michelle Grace Ballard Spahr
A I M Management Group Inc. Assistant Secretary Andrews & Ingersoll, LLP
1735 Market Street
Prema Mathai-Davis Jeffrey H. Kupor Philadelphia, PA 19103
Chief Executive Officer, YWCA of the U.S.A.; Assistant Secretary
Commissioner, New York City Dept. for the COUNSEL TO THE DIRECTORS
Aging; and member of the Board of Directors, Nancy L. Martin
Metropolitan Transportation Authority of Assistant Secretary Kramer, Levin, Naftalis & Frankel LLP
New York State 919 Third Avenue
Ofelia M. Mayo New York, NY 10022
Lewis F. Pennock Assistant Secretary
Attorney DISTRIBUTOR
Lisa A. Moss
Louis S. Sklar Assistant Secretary Fund Management Company
Executive Vice President 11 Greenway Plaza
Hines Interests Kathleen J. Pflueger Suite 100
Limited Partnership Assistant Secretary Houston, TX 77002
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
</TABLE>
14 AIM CHARTER FUND
<PAGE> 17
AIM CONSTELLATION FUND
For shareholders who seek growth of capital through investments principally in
common stocks of medium- and small-sized companies.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Constellation Fund performance figures are historical and reflect
reinvestment of all distributions and changes in net asset value.
o The fund's investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o 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. Results shown assume the reinvestment of
dividends.
o The Standard & Poor's MidCap 400 Index (S&P 400) is an unmanaged index
comprising common stocks of approximately 400 midcapitalization companies.
o The Dow Jones Industrial Average is a price-weighted average of 30 actively
traded primarily industrial stocks.
o An investment cannot be made in any index listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect
sales charges.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF A BANK AND IS NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY. THERE IS A
RISK THAT YOU COULD LOSE SOME OR ALL OF YOUR MONEY.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the fund.
AIM CONSTELLATION FUND
15
<PAGE> 18
SEMIANNUAL REPORT / MANAGERS' OVERVIEW
FUND'S SIX-MONTH RETURNS IMPRESSIVE
HOW DID AIM CONSTELLATION FUND PERFORM DURING THE SIX MONTHS ENDED APRIL 30,
1999?
The fund's Institutional Class produced an impressive 21.47%% cumulative total
return, outpacing the 18.86% total return of the Standard & Poor's MidCap 400
Index during the same period. Net assets under management grew from $189.0
million to $212.2 million during the six-month reporting period.
WHAT WERE MARKETS LIKE DURING THE REPORTING PERIOD?
The six-month period started well, as midsize-company stocks benefited from rate
cuts by the Federal Reserve Board last fall. Historically, midcapitalization
stocks have done well when interest rates are falling.
Early in 1999, the market environment was not so hospitable to midcap
stocks. The technology sector in particular was badly bruised after turning in a
sterling performance during 1998. Investors began to worry about a bubble
developing, especially in high-flying Internet stocks--the ".com" universe. A
sell-off in the technology area affected the fund because of our significant
holdings in technology industries. But the markets rebounded when first-quarter
1999 earnings reports came in quite strong. For instance, portfolio holding EMC
Corp., a maker of information storage and retrieval systems, reported a 51%
rise in earnings for the first quarter of 1999, its eighth consecutive quarter
of revenue and earnings growth in excess of 30%.
DID THE FUND REMAIN HEAVILY INVESTED IN TECHNOLOGY?
Yes. The tech sector represents more than a third of net assets. Because of our
earnings-driven investment discipline, we did not participate in the huge run-up
in Internet stocks during 1998. Many of these companies simply have no earnings
to report. Our technology holdings tend to be the companies that make the
Internet possible. An example is PMC-Sierra Inc., which develops semiconductor
components for the broadband and high-bandwidth communications network
industries.
Some holdings that are very Internet and technology related aren't
officially part of the technology sector. A good example is Charles Schwab, the
discount broker that now has a huge presence in on-line trading. The rising
value of Schwab stock made an important contribution to the fund's solid
performance during the period covered by this report.
WERE THERE INDUSTRIES WHERE YOU REDUCED YOUR HOLDINGS?
Health care, which represented about 15% of holdings six months ago, was down to
less than 10% by the close of the reporting period. The stocks of health-care
service providers continue to perform poorly. Medicare reimbursement policy has
eroded hospitals' earnings, and stiff competition is preventing HMOs from
raising client fees.
Nevertheless, there are opportunities in health care. Our largest holding as
a percent of net assets is Guidant, maker of stents and other devices used in
cardiac care. A company seems to need that kind of market niche to prosper in
health care now.
This is a sector where negative sentiment is taking down good stocks along
with the bad. Omnicare, for example, dispenses drugs for nursing homes and
provides computerized record keeping and third-party billing for patients in its
clients' facilities. Its stock took a beating early in 1999 despite the fact
that the company has an excellent long-term performance record and saw
double-digit sales and earnings growth during 1998. We kept the stock in our
portfolio despite market pressure on it because we are confident about its
long-term growth potential.
WHERE ELSE DID YOU FIND OPPORTUNITIES?
Certain restaurant stocks have become attractive recently. There was serious
overbuilding in the restaurant industry a few years back, but that seems to have
stopped. Outback Steakhouse saw earnings grow 50% last year. We also own Brinker
International, owner of the Chili's chain; Brinker's strong earnings growth met
our investment criteria.
A newcomer to our top 10 list is Omnicom Group, which operates advertising
agencies worldwide; for first quarter 1999, both revenue and earnings rose 28%
over first quarter 1998. Another new name
================================================================================
TOTAL RETURNS
Six months ended 4/30/99
Fund Institutional Class 21.47%
S&P 400 18.86%
================================================================================
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 4/30/99
Inception (7/30/91) 17.97%
5 years 17.70
3 years 12.93
1 year 7.01
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS OF AN
INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
SHOWN.
================================================================================
-------------------------------------
OUR TECHNOLOGY HOLDINGS TEND
TO BE THE COMPANIES THAT MAKE
THE INTERNET POSSIBLE.
-------------------------------------
AIM CONSTELLATION FUND
16
<PAGE> 19
SEMIANNUAL REPORT / FOR CONSIDERATION
PORTFOLIO COMPOSITION
As of 4/30/99, based on total net assets
TOTAL NUMBER OF HOLDINGS: 232
<TABLE>
<CAPTION>
================================================================================================================
TOP 10 HOLDINGS TOP 10 INDUSTRIES
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Schwab (Charles) Corp. 2.27% 1. Computers (Software & Services) 8.16%
2. Ascend Communications, Inc. 1.55 2. Electronics (Semiconductors) 5.48
3. Guidant Corp. 1.37 3. Services (Data Processing) 5.02
4. Providian Financial Corp. 1.33 4. Communications Equipment 4.67
5. EMC Corp. 1.31 5. Banks (Regional) 3.17
6. Nokia Oyj A.B.-Class A-ADR 1.28 6. Broadcasting (Television, Radio & Cable) 3.17
7. Corning, Inc. 1.26 7. Health Care (Medical Products & Supplies) 3.09
8. Omnicom Group, Inc. 1.25 8. Retail (Specialty) 2.95
9. Staples, Inc. 1.24 9. Investment Banking/Brokerage 2.90
10. BMC Software, Inc. 1.04 10. Consumer Finance 2.78
The fund's portfolio is subject to change, and there is no assurance the fund will continue to hold any
particular security.
================================================================================================================
</TABLE>
on that list is Providian Financial, which extends credit to marginal customers
by issuing secured credit cards tied to the borrowers' savings accounts with the
company. Providian reported record earnings for the first quarter of 1999,
citing a combination of strong account growth and an improved credit loss rate.
THE DOW JONES INDUSTRIAL AVERAGE CROSSED THE 10,000 MARK DURING THE REPORTING
PERIOD. WHY HAS FUND PERFORMANCE NOT TRACKED THE DOW?
The fund invests mainly in medium-sized companies. The Dow reflects the
performance of just 30 companies, all of them very large, including Exxon,
General Electric, and Coca-Cola, none of which are portfolio holdings. People
see the Dow in five-digit territory and wonder why some of their investments
aren't performing the same way. The Dow was up 18.15% during 1998. Remarkably,
it rose exactly the same percentage, 18.15%, between the opening of 1999 and the
close of the reporting period on April 30. Shortly after the reporting period
closed, it passed the 11,000 mark. Many people don't realize that the strength
of one company, IBM, which is not a portfolio holding, explains a lot of Dow
performance. A fund that specializes in midcap stocks, as AIM Constellation Fund
does, will not behave the way the Dow does.
The Dow is a great barometer of American big business, but it is of little
use as a benchmark for a mutual fund. Most equity funds are much more
diversified than the Dow.
WHAT IS YOUR OUTLOOK?
Toward the close of the reporting period, markets started to pay more attention
to midcap stocks. During April, the S&P MidCap 400 Index rose 7.88% while the
large-cap S&P 500 rose 3.87%. It's too early to tell if this will be a long-term
change in market sentiment. Of course, we hope it is. We have repeatedly stated
our belief that the time is ripe for a rally in midcap stocks. Midsize companies
have been reporting much better earnings than their large-cap counterparts while
the valuations of midcap stocks remain relatively low.
We will continue to seek out the best-performing companies in the midcap
sector; the fund should be well positioned for an ongoing rally in midcap
stocks.
-------------------------------------
WE HAVE REPEATEDLY STATED OUR
BELIEF THAT THE TIME IS RIPE FOR A
RALLY IN MIDCAP STOCKS.
-------------------------------------
AIM CONSTELLATION FUND
17
<PAGE> 20
SCHEDULE OF INVESTMENTS
April 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-93.00%
AEROSPACE/DEFENSE-0.13%
Gulfstream Aerospace Corp.(a) 400,000 $ 19,500,000
- ---------------------------------------------------------------
AIR FREIGHT-0.33%
Airborne Freight Corp. 1,500,000 48,000,000
- ---------------------------------------------------------------
AIRLINES-0.34%
Southwest Airlines Co. 1,500,000 48,843,750
- ---------------------------------------------------------------
AUTO PARTS & EQUIPMENT-0.80%
Danaher Corp. 1,250,000 83,046,875
- ---------------------------------------------------------------
SPX Corp.(a) 500,000 32,656,250
- ---------------------------------------------------------------
115,703,125
- ---------------------------------------------------------------
BANKS (MAJOR REGIONAL)-0.32%
Northern Trust Corp. 500,000 46,562,500
- ---------------------------------------------------------------
BANKS (REGIONAL)-3.17%
AmSouth Bancorporation 750,000 35,671,875
- ---------------------------------------------------------------
Bank United Corp.-Class A 500,000 20,187,500
- ---------------------------------------------------------------
First Tennessee National Corp. 1,250,000 53,906,250
- ---------------------------------------------------------------
Firstar Corp. 4,725,000 142,045,313
- ---------------------------------------------------------------
Golden State Bancorp, Inc.(a) 1,600,000 39,300,000
- ---------------------------------------------------------------
Mercantile Bankshares Corp. 500,000 18,500,000
- ---------------------------------------------------------------
North Fork Bancorporation, Inc. 2,500,000 56,250,000
- ---------------------------------------------------------------
Old Kent Financial Corp. 478,500 22,609,125
- ---------------------------------------------------------------
TCF Financial Corp. 1,000,000 29,000,000
- ---------------------------------------------------------------
Zions Bancorp 650,000 43,346,875
- ---------------------------------------------------------------
460,816,938
- ---------------------------------------------------------------
BIOTECHNOLOGY-0.65%
Biogen, Inc.(a) 1,000,000 95,062,500
- ---------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO
& CABLE)-3.17%
AT&T Corp.-Liberty Media Group(a) 1,500,000 95,812,500
- ---------------------------------------------------------------
Chancellor Media Corp.(a) 1,430,002 78,471,359
- ---------------------------------------------------------------
Comcast Corp.-Class A 1,000,000 65,687,500
- ---------------------------------------------------------------
Cox Communications, Inc.-Class A(a) 500,000 39,687,500
- ---------------------------------------------------------------
Heftel Broadcasting Corp.(a) 843,300 45,854,437
- ---------------------------------------------------------------
Univision Communications Inc.(a) 1,465,400 84,810,025
- ---------------------------------------------------------------
USA Networks, Inc.(a) 1,317,800 49,252,775
- ---------------------------------------------------------------
459,576,096
- ---------------------------------------------------------------
BUILDING MATERIALS-0.20%
Masco Corp. 1,000,000 29,375,000
- ---------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-4.67%
ADC Telecommunications, Inc.(a) 1,115,600 53,339,625
- ---------------------------------------------------------------
Comverse Technology, Inc.(a) 1,500,000 96,187,500
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMUNICATIONS EQUIPMENT-(CONTINUED)
Corning Inc. 3,186,600 $ 182,432,850
- ---------------------------------------------------------------
General Instrument Corp.(a) 1,750,000 63,875,000
- ---------------------------------------------------------------
QUALCOMM, Inc.(a) 635,200 127,040,000
- ---------------------------------------------------------------
Scientific-Atlanta, Inc. 2,000,000 63,500,000
- ---------------------------------------------------------------
Uniphase Corp.(a) 750,000 91,031,250
- ---------------------------------------------------------------
677,406,225
- ---------------------------------------------------------------
COMPUTERS (HARDWARE)-1.33%
Apple Computer, Inc.(a) 750,000 34,500,000
- ---------------------------------------------------------------
Comdisco, Inc. 4,462,600 117,422,163
- ---------------------------------------------------------------
NCR Corp.(a) 1,000,000 41,000,000
- ---------------------------------------------------------------
192,922,163
- ---------------------------------------------------------------
COMPUTERS (NETWORKING)-1.55%
Ascend Communications, Inc.(a) 2,332,800 225,406,800
- ---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-2.50%
Adaptec, Inc.(a) 2,000,000 48,125,000
- ---------------------------------------------------------------
EMC Corp.(a) 1,750,000 190,640,625
- ---------------------------------------------------------------
Lexmark International Group,
Inc.(a) 1,000,000 123,500,000
- ---------------------------------------------------------------
362,265,625
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-8.16%
America Online, Inc. 1,000,000 142,750,000
- ---------------------------------------------------------------
BMC Software, Inc.(a) 3,500,000 150,718,750
- ---------------------------------------------------------------
Citrix Systems, Inc.(a) 3,000,000 127,500,000
- ---------------------------------------------------------------
Compuware Corp.(a) 5,000,000 121,875,000
- ---------------------------------------------------------------
Electronic Arts, Inc.(a) 500,000 25,406,250
- ---------------------------------------------------------------
Electronics for Imaging, Inc.(a) 1,750,000 82,796,875
- ---------------------------------------------------------------
Intuit, Inc.(a) 725,000 62,440,625
- ---------------------------------------------------------------
Learning Company, Inc. (The)(a) 1,000,000 31,000,000
- ---------------------------------------------------------------
Lycos, Inc.(a) 650,000 64,796,875
- ---------------------------------------------------------------
Microsoft Corp.(a) 500,000 40,656,250
- ---------------------------------------------------------------
Novell, Inc.(a) 2,000,000 44,500,000
- ---------------------------------------------------------------
Siebel Systems, Inc.(a) 600,000 23,062,500
- ---------------------------------------------------------------
Sterling Commerce, Inc.(a) 500,000 15,656,250
- ---------------------------------------------------------------
Sterling Software, Inc.(a) 1,250,000 25,859,375
- ---------------------------------------------------------------
Synopsys, Inc.(a) 1,500,000 70,687,500
- ---------------------------------------------------------------
USWeb Corp.(a) 1,500,000 33,656,250
- ---------------------------------------------------------------
Verio Inc.(a) 600,000 42,600,000
- ---------------------------------------------------------------
Veritas Software Corp.(a) 1,109,700 78,788,700
- ---------------------------------------------------------------
1,184,751,200
- ---------------------------------------------------------------
CONSUMER FINANCE-2.78%
Capital One Financial Corp. 800,000 138,950,000
- ---------------------------------------------------------------
Countrywide Credit Industries, Inc. 636,900 28,859,531
- ---------------------------------------------------------------
Providian Financial Corp. 1,500,000 193,593,750
- ---------------------------------------------------------------
</TABLE>
18 AIM CONSTELLATION FUND
<PAGE> 21
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
CONSUMER FINANCE-(CONTINUED)
SLM Holding Corp. 1,000,000 $ 42,687,500
- ---------------------------------------------------------------
404,090,781
- ---------------------------------------------------------------
CONSUMER (JEWELRY, NOVELTIES & GIFTS)-0.12%
Action Performance Companies, Inc.(a) 00,000 16,937,500
- ---------------------------------------------------------------
CONTAINERS (METAL & GLASS)-0.10%
Ball Corp. 266,200 14,624,362
- ---------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-0.53%
Cardinal Health, Inc. 468,167 28,002,239
- ---------------------------------------------------------------
JP Foodservice, Inc.(a) 750,000 31,546,875
- ---------------------------------------------------------------
Patterson Dental Co.(a) 500,000 18,031,250
- ---------------------------------------------------------------
77,580,364
- ---------------------------------------------------------------
ELECTRICAL EQUIPMENT-2.61%
American Power Conversion Corp.(a) 2,500,000 82,500,000
- ---------------------------------------------------------------
Conexant Systems, Inc.(a) 433,300 17,656,975
- ---------------------------------------------------------------
Sanmina Corp.(a) 750,000 49,781,250
- ---------------------------------------------------------------
Solectron Corp.(a) 3,000,000 145,500,000
- ---------------------------------------------------------------
Symbol Technologies, Inc. 1,750,000 83,562,500
- ---------------------------------------------------------------
379,000,725
- ---------------------------------------------------------------
ELECTRONICS (COMPONENT DISTRIBUTORS)-0.06%
Arrow Electronics, Inc.(a) 500,000 9,093,750
- ---------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION)-0.83%
Perkin-Elmer Corp. 676,300 73,124,937
- ---------------------------------------------------------------
Waters Corp.(a) 450,000 47,306,250
- ---------------------------------------------------------------
120,431,187
- ---------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-5.48%
Altera Corp.(a) 1,321,400 95,471,150
- ---------------------------------------------------------------
Analog Devices, Inc.(a) 2,500,000 87,812,500
- ---------------------------------------------------------------
Atmel Corp.(a) 1,704,700 31,110,775
- ---------------------------------------------------------------
Linear Technology Corp. 2,000,000 113,750,000
- ---------------------------------------------------------------
LSI Logic Corp.(a) 2,000,000 68,000,000
- ---------------------------------------------------------------
Maxim Integrated Products, Inc.(a) 1,500,000 84,000,000
- ---------------------------------------------------------------
Microchip Technology, Inc.(a) 1,338,375 46,843,125
- ---------------------------------------------------------------
National Semiconductor Corp.(a) 1,500,000 18,750,000
- ---------------------------------------------------------------
PMC-Sierra, Inc.(a) 1,250,000 119,843,750
- ---------------------------------------------------------------
Vitesse Semiconductor Corp.(a) 835,800 38,707,987
- ---------------------------------------------------------------
Xilinx, Inc.(a) 2,000,000 91,250,000
- ---------------------------------------------------------------
795,539,287
- ---------------------------------------------------------------
ENTERTAINMENT-0.20%
SFX Entertainment, Inc.-Class A(a) 470,000 29,022,500
- ---------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR)-1.44%
Applied Materials, Inc.(a) 1,250,000 67,031,250
- ---------------------------------------------------------------
KLA-Tencor Corp.(a) 1,200,000 59,550,000
- ---------------------------------------------------------------
Novellus Systems, Inc.(a) 500,000 23,625,000
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
EQUIPMENT (SEMICONDUCTOR)-(CONTINUED)
Teradyne, Inc.(a) 1,250,000 $ 58,984,375
- ---------------------------------------------------------------
209,190,625
- ---------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-0.69%
FINOVA Group, Inc. 1,065,800 51,491,462
- ---------------------------------------------------------------
MGIC Investment Corp. 1,000,000 48,562,500
- ---------------------------------------------------------------
100,053,962
- ---------------------------------------------------------------
FOODS-0.30%
Flowers Industries, Inc. 1,000,000 21,250,000
- ---------------------------------------------------------------
Keebler Foods Co.(a) 679,400 21,825,725
- ---------------------------------------------------------------
43,075,725
- ---------------------------------------------------------------
FOOTWEAR-0.54%
Nike, Inc.-Class B 1,250,000 77,734,375
- ---------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL COMPANIES-0.65%
Circus Circus Enterprises(a) 2,031,000 42,777,937
- ---------------------------------------------------------------
MGM Grand, Inc.(a) 1,160,300 51,053,200
- ---------------------------------------------------------------
93,831,137
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-1.71%
Alpharma, Inc.-Class A 754,967 22,271,526
- ---------------------------------------------------------------
Forest Laboratories, Inc.(a) 500,000 22,250,000
- ---------------------------------------------------------------
Jones Medical Industries, Inc.(b) 2,350,850 75,521,056
- ---------------------------------------------------------------
Medicis Pharmaceutical-Class A(a) 1,253,100 30,465,994
- ---------------------------------------------------------------
Mylan Laboratories, Inc. 2,500,000 56,718,750
- ---------------------------------------------------------------
Watson Pharmaceuticals, Inc.(a) 1,000,000 40,500,000
- ---------------------------------------------------------------
247,727,326
- ---------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT)-0.84%
Health Management Associates,
Inc.-Class A(a) 2,000,000 31,250,000
- ---------------------------------------------------------------
Universal Health Services,
Inc.-Class B(a)(b) 1,750,000 90,671,875
- ---------------------------------------------------------------
121,921,875
- ---------------------------------------------------------------
HEALTH CARE (MANAGED CARE)-0.87%
Express Scripts, Inc.-Class A(a) 1,400,000 103,075,000
- ---------------------------------------------------------------
Trigon Healthcare, Inc.(a) 750,000 23,812,500
- ---------------------------------------------------------------
126,887,500
- ---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-3.09%
Bausch & Lomb Inc. 1,000,000 75,000,000
- ---------------------------------------------------------------
Biomet, Inc. 2,000,000 82,000,000
- ---------------------------------------------------------------
Guidant Corp. 3,717,000 199,556,437
- ---------------------------------------------------------------
Henry Schein, Inc.(a) 1,000,000 26,187,500
- ---------------------------------------------------------------
Stryker Corp. 500,000 30,593,750
- ---------------------------------------------------------------
</TABLE>
AIM CONSTELLATION FUND 19
<PAGE> 22
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-(CONTINUED)
Sybron International Corp.(a) 1,250,000 $ 34,609,375
- ---------------------------------------------------------------
447,947,062
- ---------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES)-0.75%
Covance, Inc.(a) 473,700 10,391,794
- ---------------------------------------------------------------
Omnicare, Inc. 3,000,000 72,187,500
- ---------------------------------------------------------------
Orthodontic Centers of America,
Inc.(a) 524,200 6,486,975
- ---------------------------------------------------------------
Quintiles Transnational
Corp.(a) 500,000 20,281,250
- ---------------------------------------------------------------
109,347,519
- ---------------------------------------------------------------
HOMEBUILDING-0.53%
Clayton Homes, Inc. 3,862,500 42,970,313
- ---------------------------------------------------------------
Fleetwood Enterprises, Inc. 750,000 18,515,625
- ---------------------------------------------------------------
Kaufman and Broad Home
Corporation 616,900 14,998,381
- ---------------------------------------------------------------
76,484,319
- ---------------------------------------------------------------
HOUSEHOLD FURNISHINGS & APPLIANCES-0.74%
Leggett & Platt, Inc. 2,000,000 46,125,000
- ---------------------------------------------------------------
Maytag Corp. 900,000 61,537,500
- ---------------------------------------------------------------
107,662,500
- ---------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES)-0.77%
Clorox Co. 600,000 69,225,000
- ---------------------------------------------------------------
Dial Corp. (The) 1,250,000 42,500,000
- ---------------------------------------------------------------
111,725,000
- ---------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-1.27%
AFLAC Inc. 925,000 50,181,250
- ---------------------------------------------------------------
Provident Companies, Inc. 1,500,000 59,062,500
- ---------------------------------------------------------------
ReliaStar Financial Corp. 1,502,500 55,216,875
- ---------------------------------------------------------------
Torchmark Corp. 600,000 20,512,500
- ---------------------------------------------------------------
184,973,125
- ---------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE-2.90%
Bear Stearns Cos., Inc. 1,250,000 58,281,250
- ---------------------------------------------------------------
Lehman Brothers Holdings, Inc. 600,000 33,337,500
- ---------------------------------------------------------------
Schwab (Charles) Corp. 3,000,000 329,250,000
- ---------------------------------------------------------------
420,868,750
- ---------------------------------------------------------------
INVESTMENT MANAGEMENT-0.79%
Federated Investors, Inc.-Class B 2,064,000 33,153,000
- ---------------------------------------------------------------
T. Rowe Price Associates, Inc. 2,158,600 81,352,238
- ---------------------------------------------------------------
114,505,238
- ---------------------------------------------------------------
LEISURE TIME (PRODUCTS)-1.75%
Callaway Golf Co. 2,864,000 43,139,000
- ---------------------------------------------------------------
Harley-Davidson, Inc. 2,350,000 140,118,750
- ---------------------------------------------------------------
Hasbro, Inc. 823,200 28,091,700
- ---------------------------------------------------------------
Mattel, Inc. 1,000,000 25,875,000
- ---------------------------------------------------------------
Speedway Motorsports, Inc.(a) 400,000 17,350,000
- ---------------------------------------------------------------
254,574,450
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MACHINERY (DIVERSIFIED)-0.02%
Applied Power, Inc.-Class A 95,000 $ 2,998,438
- ---------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-0.25%
Crane Co. 464,550 13,442,916
- ---------------------------------------------------------------
Pentair, Inc. 500,000 23,500,000
- ---------------------------------------------------------------
36,942,916
- ---------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-0.04%
Diebold, Inc. 238,700 5,743,719
- ---------------------------------------------------------------
NATURAL GAS-0.38%
El Paso Energy Corp. 1,500,000 55,125,000
- ---------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-2.72%
Baker Hughes, Inc. 2,000,000 59,750,000
- ---------------------------------------------------------------
BJ Services Co.(a) 1,500,000 40,125,000
- ---------------------------------------------------------------
Cooper Cameron Corp.(a) 2,000,000 77,250,000
- ---------------------------------------------------------------
Diamond Offshore Drilling, Inc. 1,000,000 33,062,500
- ---------------------------------------------------------------
Global Industries Ltd.(a) 2,450,000 30,165,625
- ---------------------------------------------------------------
Rowan Companies, Inc.(a) 2,000,000 32,000,000
- ---------------------------------------------------------------
Smith International, Inc.(a) 1,250,000 56,093,750
- ---------------------------------------------------------------
Transocean Offshore Inc. 1,000,000 29,687,500
- ---------------------------------------------------------------
Varco International, Inc.(a) 3,225,000 36,482,813
- ---------------------------------------------------------------
394,617,188
- ---------------------------------------------------------------
OIL & GAS (EXPLORATION &
PRODUCTION)-0.43%
Apache Corp. 1,500,000 46,031,250
- ---------------------------------------------------------------
Santa Fe Energy Resources,
Inc.(a) 1,750,000 15,750,000
- ---------------------------------------------------------------
61,781,250
- ---------------------------------------------------------------
PUBLISHING-0.73%
McGraw-Hill Companies, Inc.
(The) 1,100,000 60,775,000
- ---------------------------------------------------------------
Readers Digest Association,
Inc.-Class A 1,250,000 44,453,125
- ---------------------------------------------------------------
105,228,125
- ---------------------------------------------------------------
RAILROADS-0.69%
Kansas City Southern
Industries, Inc. 1,676,600 99,862,488
- ---------------------------------------------------------------
RESTAURANTS-1.60%
Brinker International, Inc.(a) 2,000,000 55,250,000
- ---------------------------------------------------------------
Outback Steakhouse, Inc.(a) 2,000,000 71,625,000
- ---------------------------------------------------------------
Papa John's International,
Inc.(a) 750,000 30,140,625
- ---------------------------------------------------------------
Starbucks Corp.(a) 2,018,600 74,562,038
- ---------------------------------------------------------------
231,577,663
- ---------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-0.36%
Lowe's Companies, Inc. 1,000,000 52,750,000
- ---------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS)-1.26%
Best Buy Co., Inc.(a) 1,000,000 47,750,000
- ---------------------------------------------------------------
CDW Computer Centers, Inc.(a) 1,000,000 89,500,000
- ---------------------------------------------------------------
Circuit City Stores-Circuit
City Group 750,000 46,125,000
- ---------------------------------------------------------------
183,375,000
- ---------------------------------------------------------------
</TABLE>
20 AIM CONSTELLATION FUND
<PAGE> 23
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (DEPARTMENT STORES)-0.57%
Kohl's Corp.(a) 1,250,000 $ 83,046,875
- ---------------------------------------------------------------
RETAIL (DISCOUNTERS)-1.80%
Consolidated Stores Corp.(a) 2,000,000 68,750,000
- ---------------------------------------------------------------
Dollar General Corp. 1,000,000 35,062,500
- ---------------------------------------------------------------
Dollar Tree Stores, Inc.(a) 1,810,600 66,086,900
- ---------------------------------------------------------------
Family Dollar Stores, Inc. 2,850,000 68,756,250
- ---------------------------------------------------------------
Ross Stores, Inc. 500,000 22,968,750
- ---------------------------------------------------------------
261,624,400
- ---------------------------------------------------------------
RETAIL (FOOD CHAINS)-0.75%
Kroger Co.(a) 2,000,000 108,625,000
- ---------------------------------------------------------------
RETAIL (SPECIALTY)-2.95%
Bed Bath & Beyond, Inc.(a) 2,750,100 98,144,194
- ---------------------------------------------------------------
Linens 'N Things, Inc.(a) 285,300 13,052,475
- ---------------------------------------------------------------
Office Depot, Inc.(a) 4,500,000 99,000,000
- ---------------------------------------------------------------
Payless ShoeSource, Inc.(a) 500,000 24,218,750
- ---------------------------------------------------------------
Staples, Inc.(a) 6,000,000 180,000,000
- ---------------------------------------------------------------
Williams-Sonoma, Inc.(a) 486,900 14,120,100
- ---------------------------------------------------------------
428,535,519
- ---------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-2.41%
Abercrombie & Fitch Co.-Class
A(a) 795,000 75,624,375
- ---------------------------------------------------------------
Gap, Inc. (The) 750,000 49,921,875
- ---------------------------------------------------------------
Intimate Brands, Inc. 1,209,100 60,455,000
- ---------------------------------------------------------------
Men's Wearhouse, Inc.
(The)(a)(b) 2,310,075 63,238,303
- ---------------------------------------------------------------
TJX Companies, Inc. 3,000,000 99,937,500
- ---------------------------------------------------------------
349,177,053
- ---------------------------------------------------------------
SAVINGS & LOAN COMPANIES-1.11%
Astoria Financial Corp. 1,000,000 50,125,000
- ---------------------------------------------------------------
Dime Bancorp, Inc. 2,541,500 58,613,344
- ---------------------------------------------------------------
GreenPoint Financial Corp. 1,500,000 52,500,000
- ---------------------------------------------------------------
161,238,344
- ---------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING)-2.52%
Interpublic Group of Companies,
Inc. 500,000 38,781,250
- ---------------------------------------------------------------
Lamar Advertising Co.(a) 1,450,000 48,756,250
- ---------------------------------------------------------------
Omnicom Group, Inc. 2,500,000 181,250,000
- ---------------------------------------------------------------
Outdoor Systems, Inc.(a) 1,500,000 37,781,250
- ---------------------------------------------------------------
Snyder Communications, Inc.(a) 2,000,000 58,750,000
- ---------------------------------------------------------------
365,318,750
- ---------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-2.31%
Apollo Group, Inc.(a) 1,500,000 37,125,000
- ---------------------------------------------------------------
ChoicePoint, Inc.(a) 617,300 36,652,188
- ---------------------------------------------------------------
Cintas Corp. 1,500,000 103,125,000
- ---------------------------------------------------------------
Convergys Corp.(a) 1,000,000 18,625,000
- ---------------------------------------------------------------
G & K Services, Inc.-Class A 350,000 16,362,500
- ---------------------------------------------------------------
IMS Health Inc. 810,000 24,300,000
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SERVICES (COMMERCIAL &
CONSUMER)-(CONTINUED)
Stewart Enterprises, Inc.-Class
A 2,600,000 $ 51,675,000
- ---------------------------------------------------------------
Viad Corp. 1,450,000 47,940,625
- ---------------------------------------------------------------
335,805,313
- ---------------------------------------------------------------
SERVICES (COMPUTER
SYSTEMS)-1.02%
Ciber, Inc.(a) 707,500 13,354,063
- ---------------------------------------------------------------
Keane, Inc.(a) 1,900,000 47,143,750
- ---------------------------------------------------------------
Policy Management Systems
Corp.(a) 750,000 23,578,125
- ---------------------------------------------------------------
SunGard Data Systems Inc.(a) 2,000,000 63,875,000
- ---------------------------------------------------------------
147,950,938
- ---------------------------------------------------------------
SERVICES (DATA
PROCESSING)-5.02%
Affiliated Computer Services,
Inc.(a) 1,000,000 38,250,000
- ---------------------------------------------------------------
Ceridian Corp.(a) 2,000,000 73,250,000
- ---------------------------------------------------------------
Concord EFS, Inc.(a) 4,500,000 150,187,500
- ---------------------------------------------------------------
CSG Systems International,
Inc.(a) 1,806,200 69,764,475
- ---------------------------------------------------------------
DST Systems, Inc.(a) 750,000 43,687,500
- ---------------------------------------------------------------
Equifax, Inc. 1,000,000 35,937,500
- ---------------------------------------------------------------
Fiserv, Inc.(a) 2,500,000 146,406,250
- ---------------------------------------------------------------
National Data Corp. 1,000,200 46,134,225
- ---------------------------------------------------------------
NOVA Corp.(a) 1,000,000 26,000,000
- ---------------------------------------------------------------
Paychex, Inc. 1,947,700 99,454,431
- ---------------------------------------------------------------
729,071,881
- ---------------------------------------------------------------
SPECIALTY PRINTING-0.29%
Valassis Communications,
Inc.(a) 750,000 42,000,000
- ---------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/
WIRELESS)-0.58%
Metromedia Fiber Network,
Inc.(a) 1,000,000 84,250,000
- ---------------------------------------------------------------
TELECOMMUNICATIONS (LONG
DISTANCE)-0.68%
Global TeleSystems Group,
Inc.(a) 1,500,000 99,187,500
- ---------------------------------------------------------------
TELEPHONE-0.78%
Century Telephone Enterprises,
Inc. 2,249,925 90,559,481
- ---------------------------------------------------------------
Cincinnati Bell, Inc. 1,000,000 22,625,000
- ---------------------------------------------------------------
113,184,481
- ---------------------------------------------------------------
TEXTILES (APPAREL)-0.67%
Jones Apparel Group, Inc.(a) 1,363,800 45,005,400
- ---------------------------------------------------------------
Tommy Hilfiger Corp.(a) 750,000 52,406,250
- ---------------------------------------------------------------
97,411,650
- ---------------------------------------------------------------
TEXTILES (HOME
FURNISHINGS)-0.22%
Shaw Industries, Inc.(a) 1,750,000 31,718,750
- ---------------------------------------------------------------
WASTE MANAGEMENT-1.18%
Allied Waste Industries,
Inc.(a) 2,693,230 47,636,506
- ---------------------------------------------------------------
Republic Services, Inc.(a) 1,225,000 25,189,062
- ---------------------------------------------------------------
</TABLE>
AIM CONSTELLATION FUND 21
<PAGE> 24
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
WASTE MANAGEMENT-(CONTINUED)
Waste Management, Inc. 1,750,000 $ 98,875,000
- ---------------------------------------------------------------
171,700,568
- ---------------------------------------------------------------
Total Domestic Common
Stocks (Cost
$8,761,596,201) 13,500,871,675
- ---------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-2.19%
FINLAND-1.28%
Nokia Oyj A.B.-Class A-ADR
(Communications Equipment) 2,500,000 185,468,750
- ---------------------------------------------------------------
FRANCE-0.07%
Coflexip S.A.-ADR
(Manufacturing-Specialized) 239,500 10,657,750
- ---------------------------------------------------------------
ISRAEL-0.16%
Check Point Software
Technologies Ltd.
(Computers-Software &
Services)(a) 650,000 22,912,500
- ---------------------------------------------------------------
NETHERLANDS-0.27%
ASM Lithography Holding N.V.
(Electronics-Semiconductors)(a) 650,000 25,350,000
- ---------------------------------------------------------------
Core Laboratories N.V. (Oil &
Gas-Drilling & Equipment)(a) 800,000 14,400,000
- ---------------------------------------------------------------
39,750,000
- ---------------------------------------------------------------
UNITED KINGDOM-0.41%
NTL Inc. (Telephone)(a) 500,000 38,125,000
- ---------------------------------------------------------------
Stolt Comex Seaway, S.A. (Oil &
Gas-Exploration &
Production)(a)(b) 1,150,000 14,375,000
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
UNITED KINGDOM-(CONTINUED)
Stolt Comex Seaway, S.A.-ADR
(Oil & Gas-Exploration &
Production)(a) 575,000 $ 6,325,000
- ---------------------------------------------------------------
58,825,000
- ---------------------------------------------------------------
Total Foreign Stocks &
Other Equity Interests
(Cost $180,451,831) 317,614,000
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
REPURCHASE AGREEMENTS-3.84%(C)
Barclays Securities Inc.,
4.93%, 05/03/99(d) $ 85,530,118 $ 85,530,118
- ---------------------------------------------------------------
Credit Suisse First Boston
Corp., 4.93%, 05/03/99(e) 77,928,557 77,928,557
- ---------------------------------------------------------------
Goldman, Sachs & Co., 4.94%,
05/03/99(f) 52,755,131 52,755,131
- ---------------------------------------------------------------
SBC Warburg Dillon Read, Inc.,
4.89%, 05/03/99(g) 208,288,219 208,288,219
- ---------------------------------------------------------------
SBC Warburg Dillon Read, Inc.,
4.94%, 05/03/99(h) 132,154,348 132,154,348
- ---------------------------------------------------------------
Total Repurchase Agreements
(Cost $556,656,373) 556,656,373
- ---------------------------------------------------------------
TIME DEPOSIT-0.75%
Dresdner Kleinwort, Benson,
North America LLC, 4.97%,
05/03/99 (Cost $109,489,463) 109,489,463 109,489,463
- ---------------------------------------------------------------
TOTAL INVESTMENTS-99.78% 14,484,631,511
- ---------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-0.22% 31,350,564
- ---------------------------------------------------------------
NET ASSETS-100.00% $14,515,982,075
===============================================================
</TABLE>
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Affiliated issuers are those in which the Fund's holdings of an issuer
represent 5% or more of the outstanding voting securities of the issuer. The
Fund has never owned enough of the outstanding voting securities of any
issuer to have control (as defined in the Investment Company Act of 1940) of
that issuer. The aggregate market value of these securities as of 04/30/99
was $243,806,234 which represented 1.68% of the Fund's net assets.
(c) Collateral on repurchase agreements, include the Fund's pro-rata interest in
joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value as being 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(d) Joint repurchase agreement entered into 04/30/99 with a maturing value of
$99,224,689. Collateralized by $102,129,000 U.S. Government obligations, 0%
to 5.875% due 05/17/99 to 10/15/08 with an aggregate market value at
04/30/99 of $101,170,834.
(e) Joint repurchase agreement entered into 04/30/99 with a maturing value of
$500,205,417. Collateralized by $527,642,000 U.S. Government obligations,
4.60% to 9.05% due 05/03/99 to 04/28/14 with an aggregate market value at
04/30/99 of $531,179,320.
(f) Joint repurchase agreement entered into 04/30/99 with a maturing value of
$400,164,667. Collateralized by $407,564,858 U.S. Government obligations,
5.00% to 8.00% due 07/01/03 to 05/01/29 with an aggregate market value at
04/30/99 of $408,000,001.
(g) Joint repurchase agreement entered into 04/30/99 with a maturing value of
$750,305,625. Collateralized by $746,070,000 U.S. Government obligations,
5.625% to 9.125% due 09/30/01 to 05/15/20 with an aggregate market value at
04/30/99 of $765,004,938.
(h) Joint repurchase agreement entered into 04/30/99 with a maturing value of
$250,102,917. Collateralized by $249,736,152 U.S. Government obligations,
6.00% to 10.50% due 03/15/01 to 01/15/33 with an aggregate market value at
04/30/99 of $255,819,341.
Abbreviations:
ADR - American Depositary Receipt
See Notes to Financial Statements.
22 AIM CONSTELLATION FUND
<PAGE> 25
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$9,608,193,868) $14,484,631,511
- ------------------------------------------------------------
Receivables for:
Investments sold 91,379,765
- ------------------------------------------------------------
Capital stock sold 15,911,111
- ------------------------------------------------------------
Dividends and interest 2,247,193
- ------------------------------------------------------------
Investment for deferred compensation plan 158,102
- ------------------------------------------------------------
Other assets 64,314
- ------------------------------------------------------------
Total assets 14,594,391,996
- ------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 20,358,560
- ------------------------------------------------------------
Capital stock reacquired 41,402,282
- ------------------------------------------------------------
Deferred compensation 158,102
- ------------------------------------------------------------
Accrued advisory fees 7,203,398
- ------------------------------------------------------------
Accrued administrative services fees 28,301
- ------------------------------------------------------------
Accrued directors' fees 24,000
- ------------------------------------------------------------
Accrued distribution fees 5,077,788
- ------------------------------------------------------------
Accrued transfer agent fees 3,579,767
- ------------------------------------------------------------
Accrued operating expenses 577,723
- ------------------------------------------------------------
Total liabilities 78,409,921
- ------------------------------------------------------------
Net assets applicable to shares outstanding $14,515,982,075
- ------------------------------------------------------------
NET ASSETS:
Class A $13,738,864,041
============================================================
Class B $ 445,079,605
============================================================
Class C $ 119,795,895
============================================================
Institutional Class $ 212,242,534
============================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Class A:
Authorized 1,000,000,000
- ------------------------------------------------------------
Outstanding 441,244,219
============================================================
Class B:
Authorized 1,000,000,000
- ------------------------------------------------------------
Outstanding 14,501,110
============================================================
Class C:
Authorized 750,000,000
- ------------------------------------------------------------
Outstanding 3,904,524
============================================================
Institutional Class:
Authorized 200,000,000
- ------------------------------------------------------------
Outstanding 6,573,823
============================================================
Class A:
Net asset value and redemption price per
share $ 31.14
- ------------------------------------------------------------
Offering price per share:
(Net asset value of $31.14
divided by 94.50%) $ 32.95
============================================================
Class B:
Net asset value and offering price per
share $ 30.69
============================================================
Class C:
Net asset value and offering price per
share $ 30.68
============================================================
Institutional Class:
Net asset value, offering and redemption
price per share $ 32.29
============================================================
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended April 30, 1999
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $216,987 foreign
withholding tax) $ 23,110,838
- ------------------------------------------------------------
Interest 22,993,859
- ------------------------------------------------------------
Total investment income 46,104,697
- ------------------------------------------------------------
EXPENSES:
Advisory fees 44,095,525
- ------------------------------------------------------------
Administrative services fees 165,842
- ------------------------------------------------------------
Custodian fees 225,557
- ------------------------------------------------------------
Directors' fees 52,065
- ------------------------------------------------------------
Distribution fees-Class A 20,106,290
- ------------------------------------------------------------
Distribution fees-Class B 1,803,794
- ------------------------------------------------------------
Distribution fees-Class C 482,063
- ------------------------------------------------------------
Transfer agent fees-Class A 12,389,375
- ------------------------------------------------------------
Transfer agent fees-Class B 648,828
- ------------------------------------------------------------
Transfer agent fees-Class C 154,737
- ------------------------------------------------------------
Transfer agent fees-Institutional Class 9,330
- ------------------------------------------------------------
Other 1,087,203
- ------------------------------------------------------------
Total expenses 81,220,609
- ------------------------------------------------------------
Less: Fees waived by advisor (1,510,669)
- ------------------------------------------------------------
Expenses paid indirectly (110,121)
- ------------------------------------------------------------
Net expenses 79,599,819
- ------------------------------------------------------------
Net investment income (loss) (33,495,122)
============================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN CURRENCIES,
AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities 1,160,822,873
- ------------------------------------------------------------
Option contracts written 1,494,286
- ------------------------------------------------------------
1,162,317,159
- ------------------------------------------------------------
Net unrealized appreciation (depreciation)
of:
Investment securities 1,538,568,508
- ------------------------------------------------------------
Foreign currencies (728)
- ------------------------------------------------------------
Option contracts written (146,707)
- ------------------------------------------------------------
1,538,421,073
- ------------------------------------------------------------
Net gain from investment securities,
foreign currencies, and option
contracts 2,700,738,232
- ------------------------------------------------------------
Net increase in net assets resulting from
operations $2,667,243,110
============================================================
</TABLE>
See Notes to Financial Statements.
AIM CONSTELLATION FUND 23
<PAGE> 26
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 1999 and the year ended October 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
1999 1998
---------------- ---------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (33,495,122) $ (68,697,946)
- --------------------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies, and option contracts 1,162,317,159 459,324,772
- --------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities, foreign currencies, and option contracts 1,538,421,073 (647,916,119)
- --------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 2,667,243,110 (257,289,293)
- --------------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A (337,205,925) (1,023,550,465)
- --------------------------------------------------------------------------------------------------
Class B (8,290,208) (2,750,431)
- --------------------------------------------------------------------------------------------------
Class C (2,228,983) (2,040,204)
- --------------------------------------------------------------------------------------------------
Institutional Class (5,075,579) (13,510,099)
- --------------------------------------------------------------------------------------------------
Share transactions-net:
Class A (863,136,201) (667,156,467)
- --------------------------------------------------------------------------------------------------
Class B 114,996,411 292,437,630
- --------------------------------------------------------------------------------------------------
Class C 28,584,239 60,444,760
- --------------------------------------------------------------------------------------------------
Institutional Class (11,985,404) 17,436,212
- --------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 1,582,901,460 (1,595,978,357)
- --------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 12,933,080,615 14,529,058,972
- --------------------------------------------------------------------------------------------------
End of period $ 14,515,982,075 $12,933,080,615
==================================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $ 8,425,307,197 $ 9,156,848,152
- --------------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (34,489,836) (994,714)
- --------------------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies, and option contracts 1,248,727,001 439,210,537
- --------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies, and option contracts 4,876,437,713 3,338,016,640
- --------------------------------------------------------------------------------------------------
$ 14,515,982,075 $12,933,080,615
==================================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
April 30, 1999
(Unaudited)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Constellation Fund (the "Fund") is a series portfolio of AIM Equity Funds,
Inc. (the "Company"). The Company is a Maryland corporation registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of nine separate portfolios. The
Fund currently offers four different classes of shares: Class A shares, Class B
shares, Class C shares and the Institutional Class. Class B shares commenced
sales on November 3, 1997. Class A shares are sold with a front-end sales
charge. Class B shares and Class C shares are sold with a contingent deferred
sales charge. Matters affecting each portfolio or class will be voted on
exclusively by the shareholders of such portfolio or class. The assets,
liabilities and operations of each portfolio are accounted for separately.
Information presented in these financial statements pertains only to the Fund.
The Fund's investment objective is to seek capital appreciation.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates. The following is a summary of the significant accounting policies
followed by the Fund in the preparation of its financial statements.
A. Security Valuations--A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price on the exchange where
the security is principally traded, or lacking any sales on a particular
day, the security is valued at the closing bid price 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 closing bid
24 AIM CONSTELLATION FUND
<PAGE> 27
price. Debt obligations (including convertible bonds) are valued on the
basis of prices provided by an independent pricing service. Prices provided
by the pricing service may be determined without exclusive reliance on
quoted prices, and may reflect appropriate factors such as yield, type of
issue, coupon rate and maturity date. Securities for which market quotations
are not readily available or are questionable are valued at fair value as
determined in good faith by or under the supervision of the Company's
officers in a manner specifically authorized by the Board of Directors of
the Company. Short-term obligations having 60 days or less to maturity are
valued at amortized cost which approximates market value. Generally, trading
in foreign securities is substantially completed each day at various times
prior to the close of the New York Stock Exchange. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the New York Stock Exchange.
Occasionally, events affecting the values of such securities and such
exchange rates may occur between the times at which they are determined and
the close of the New York Stock Exchange which would not be reflected in the
computation of the Fund's net asset value. If events materially affecting
the value of such securities occur during such period, then these securities
will be valued at their fair market value as determined in good faith by or
under the supervision of the Board of Directors.
B. Securities Transactions, Investment Income and Distributions--Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date
and is recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date and are paid annually.
C. Federal Income Taxes--The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
D. Expenses--Distribution and transfer agency expenses directly attributable to
a class of shares are charged to that class' operations. All other expenses
which are attributable to more than one class are allocated among the
classes.
E. Foreign Currency Translations--Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are translated
into U.S. dollar amounts on the respective dates of such transactions. The
Fund does not separately account for that portion of the results of
operations resulting from changes in foreign exchange rates on investments
and the fluctuations arising from changes in market prices of securities
held. Such fluctuations are included with the net realized and unrealized
gain or loss from investments.
F. Foreign Currency Contracts--A foreign currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may enter into a foreign currency contract for
the purchase or sale of a security denominated in a foreign currency in
order to "lock in" the U.S. dollar price of that security. The Fund could be
exposed to risk if counterparties to the contracts are unable to meet the
terms of their contracts.
G. Stock Index Futures Contracts--The Fund may purchase or sell stock index
futures contracts as a hedge against changes in market conditions. Initial
margin deposits required upon entering into futures contracts are satisfied
by the segregation of specific securities or cash, and/or by securing a
standby letter of credit from a major commercial bank, as collateral, for
the account of the broker (the Fund's agent in acquiring the futures
position). During the period the futures contracts are open, changes in the
value of the contracts are recognized as unrealized gains or losses by
"marking to market" on a daily basis to reflect the market value of the
contracts at the end of each day's trading. Variation margin payments are
made or received depending upon whether unrealized gains or losses are
incurred. When the contracts are closed, the Fund recognizes a realized gain
or loss equal to the difference between the proceeds from, or cost of, the
closing transaction and the Fund's basis in the contract. Risks include the
possibility of an illiquid market and the change in the value of the
contracts may not correlate with changes in the value of the securities
being hedged.
H. Covered Call Options -- The Fund may write call options, but only on a
covered basis; that is, the Fund will own the underlying security. Options
written by the Fund normally will have expiration dates between three and
nine months from the date written. The exercise price of a call option may
be below, equal to, or above the current market value of the underlying
security at the time the option is written. When the Fund writes a covered
call option, an amount equal to the premium received by the Fund is recorded
as an asset and an equivalent liability. The amount of the liability is
subsequently "marked-to-market" to reflect the current market value of the
option written. The current market value of a written option is the mean
between the last bid and asked prices on that day. If a written call option
expires on the stipulated expiration date, or if the Fund enters into a
closing purchase transaction, the Fund realizes a gain (or a loss if the
closing purchase transaction exceeds the premium received when the option
was written) without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is extinguished. If a
written option is exercised, the Fund realizes a gain or a loss from the
sale of the underlying security and the proceeds of the sale are increased
by the premium originally received.
A call option gives the purchaser of such option the right to buy, and
the writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to
AIM CONSTELLATION FUND 25
<PAGE> 28
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.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment agreement with A I M Advisors,
Inc. ("AIM"). Under the terms of the master investment advisory agreement, the
Fund pays an advisory fee to AIM at the annual rate of 1.0% of the first $30
million of the Fund's average daily net assets, plus 0.75% of the Fund's average
daily net assets in excess of $30 million to and including $150 million, plus
0.625% of the Fund's average daily net assets in excess of $150 million. AIM has
agreed to contractually waive a portion of its advisory fees paid by the Fund to
AIM to the extent necessary to reduce the fees paid by the Fund at net asset
levels higher than those currently incorporated in the present advisory fee
schedule. Under the contractual waiver, AIM will receive a fee calculated at the
annual rate of 1.0% of the first $30 million of the Fund's average daily net
assets, plus 0.75% of the Fund's average daily net assets in excess of $30
million to and including $150 million, plus 0.625% of the Fund's average daily
net assets in excess of $150 million to and including $2 billion, plus 0.60% of
the Fund's average daily net assets in excess of $2 billion. During the six
months ended April 30, 1999, AIM waived fees of $1,510,669. The waiver is
contractual and may not be terminated without approval of the Board of
Directors. 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, 1999, AIM
was reimbursed $165,842 for such services.
The Fund, pursuant to a transfer agent and shareholder service agreement, has
agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer
agency and shareholder services to the Fund. During the six months ended April
30, 1999, AFS was paid $5,805,957 with respect to the Fund.
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 of 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. During the six months ended
April 30, 1999, the Class A shares, Class B shares and Class C shares paid AIM
Distributors $20,106,290, $1,803,794, and $482,063, respectively as compensation
under the Plans.
AIM Distributors received commissions of $1,761,150 from sales of the Class A
shares of the Fund during the six months ended April 30, 1999. 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,
1999, AIM Distributors received commissions of $392,190 in contingent deferred
sales charges imposed on the redemptions of Fund shares. Certain officers and
directors of the Company are officers and directors of AIM, AIM Capital, AIM
Distributors, AFS, and FMC.
During the six months ended April 30, 1999, the Fund paid legal fees of
$12,502 for services rendered by Kramer, Levin, Naftalis & Frankel LLP 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, 1999, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian
fees of $91,215 and $18,906, respectively, under expense offset arrangements.
The effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $110,121 during the six months ended April 30, 1999.
NOTE 4-DIRECTOR'S FEES
Director's fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $1,000,000,000 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. During the six
months ended April 30, 1999, 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
26 AIM CONSTELLATION FUND
<PAGE> 29
the committed line. The commitment fee is allocated among the funds based on
their respective average net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the six months ended April 30, 1999 was
$3,855,654,600 and $4,937,353,460, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of April 30, 1999, on a tax basis, is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $5,190,578,084
- ----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (334,298,334)
- ----------------------------------------------------------
Net unrealized appreciation of investment
securities $4,856,279,750
==========================================================
</TABLE>
Cost of investments for tax purposes is $9,628,351,761.
NOTE 7-CAPITAL STOCK
Changes in the capital stock outstanding during the six months ended April 30,
and the year ended October 31, 1998 were as follows:
<TABLE>
<CAPTION>
APRIL 30, 1999 OCTOBER 31, 1998
------------------------------ ------------------------------
SHARES AMOUNT SHARES AMOUNT
------------ --------------- ------------ ---------------
<S> <C> <C> <C> <C>
Sold:
Class A 69,640,745 $ 2,049,295,548 271,511,337 $ 7,555,171,888
- --------------------------------------------------------------------------------------
Class B* 5,888,567 172,459,725 12,877,388 356,713,527
- --------------------------------------------------------------------------------------
Class C 2,544,647 74,620,746 2,960,570 81,123,332
- --------------------------------------------------------------------------------------
Institutional Class 910,982 28,162,634 2,149,830 60,442,629
- --------------------------------------------------------------------------------------
Issued as
reinvestment of
dividends:
Class A 11,320,388 318,893,281 38,633,795 977,878,833
- --------------------------------------------------------------------------------------
Class B* 286,888 7,992,643 104,498 2,643,686
- --------------------------------------------------------------------------------------
Class C 75,940 2,114,909 76,723 1,938,518
- --------------------------------------------------------------------------------------
Institutional Class 170,003 4,957,282 494,582 12,886,955
- --------------------------------------------------------------------------------------
Reacquired:
Class A (109,723,989) (3,231,325,030) (330,045,727) (9,200,207,188)
- --------------------------------------------------------------------------------------
Class B* (2,232,453) (65,455,957) (2,423,778) (66,919,583)
- --------------------------------------------------------------------------------------
Class C (1,647,673) (48,151,416) (842,846) (22,617,090)
- --------------------------------------------------------------------------------------
Institutional Class (1,443,930) (45,105,320) (1,977,243) (55,893,372)
- --------------------------------------------------------------------------------------
(24,209,885) $ (731,540,955) (6,480,871) $ (296,837,865)
======================================================================================
</TABLE>
*Class B shares commenced sales on November 3, 1997.
NOTE 8-OPTION CONTRACTS WRITTEN
Transactions in call options written during the six months ended April 30, 1999
are summarized as follows:
<TABLE>
<CAPTION>
OPTION CONTRACTS
-----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- -----------
<S> <C> <C>
Beginning of period 1,875 $ 357,644
- ----------------------------------- ------- -----------
Written 11,320 1,432,816
- ----------------------------------- ------- -----------
Closed (9,375) (1,252,814)
- ----------------------------------- ------- -----------
Expired (3,820) (537,646)
- ----------------------------------- ------- -----------
End of Period 0 $ 0
=================================== ======= ===========
</TABLE>
AIM CONSTELLATION FUND 27
<PAGE> 30
NOTE 9-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Institutional Class
capital stock outstanding during the six months ended April 30, 1999 and each of
the years in the five-year period ended October 31, 1998.
<TABLE>
<CAPTION>
OCTOBER 31,
APRIL 30, ------------------------------------------------------------
1999 1998 1997 1996 1995 1994
--------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 27.25 $ 30.00 $ 26.01 $ 24.05 $ 18.49 $ 17.13
- ---------------------------------------------------- -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income -- -- 0.02 0.04 0.02 0.03
- ---------------------------------------------------- -------- -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized
and unrealized) 5.77 (0.65) 4.86 2.67 6.06 1.33
- ---------------------------------------------------- -------- -------- -------- -------- -------- --------
Total from investment operations 5.77 (0.65) 4.88 2.71 6.08 1.36
- ---------------------------------------------------- -------- -------- -------- -------- -------- --------
Less distributions:
Distributions from net realized gains (0.73) (2.10) (0.89) (0.75) (0.52) --
- ---------------------------------------------------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 32.29 $ 27.25 $ 30.00 $ 26.01 $ 24.05 $ 18.49
==================================================== ======== ======== ======== ======== ======== ========
Total return 21.47% (1.85)% 19.42% 11.81% 34.09% 7.94%
==================================================== ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $212,243 $189,039 $188,109 $293,035 $138,918 $ 39,847
==================================================== ======== ======== ======== ======== ======== ========
Ratio of expenses to average net assets(a) 0.64%(b) 0.63% 0.65% 0.66% 0.66% 0.69%
==================================================== ======== ======== ======== ======== ======== ========
Ratio of net investment income (loss) to average net
assets(c) 0.02%(b) (0.01)% 0.06% 0.21% 0.18% 0.36%
==================================================== ======== ======== ======== ======== ======== ========
Portfolio turnover rate 59% 76% 67% 58% 45% 79%
==================================================== ======== ======== ======== ======== ======== ========
</TABLE>
(a) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
0.66% (annualized), 0.65%, 0.67%, 0.67%, 0.68% and 0.70% for 1999-1994.
(b) Ratios are annualized and based on average net assets of
$209,268,339.
(c) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) prior to fee waivers and/or expense reimbursements were 0.00%
(annualized), (0.03)%, 0.04%, 0.20%, 0.16% and 0.35% for 1999-1994.
28 AIM CONSTELLATION FUND
<PAGE> 31
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; Carol F. Relihan A I M Advisors, Inc.
Formerly Director, President, and Senior Vice President and Secretary 11 Greenway Plaza
Chief Executive Officer Suite 100
COMSAT Corporation Gary T. Crum Houston, TX 77046
Senior Vice President
Owen Daly II SUB-ADVISOR
Director Edgar M. Larsen
Cortland Trust Inc. Senior Vice President A I M Capital Management, Inc.
11 Greenway Plaza
Edward K. Dunn Jr. Dana R. Sutton Suite 100
Chairman, Mercantile Mortgage Corp.; Vice President and Treasurer Houston, TX 77046
Formerly Vice Chairman and President,
Mercantile-Safe Deposit & Trust Co.; and Melville B. Cox TRANSFER AGENT
President, Mercantile Bankshares Vice President
A I M Fund Services, Inc.
Jack Fields Mary J. Benson P.O. Box 4739
Chief Executive Officer Assistant Vice President Houston, TX 77210-4739
Texana Global, Inc.; and Assistant Treasurer
Formerly Member CUSTODIAN
of the U.S. House of Representatives Sheri Morris
Assistant Vice President State Street Bank and Trust Company
Carl Frischling and Assistant Treasurer 225 Franklin Street
Partner Boston, MA 02110
Kramer, Levin, Naftalis & Frankel LLP Renee A. Friedli
Assistant Secretary COUNSEL TO THE FUND
Robert H. Graham
President and Chief Executive Officer P. Michelle Grace Ballard Spahr
A I M Management Group Inc. Assistant Secretary Andrews & Ingersoll, LLP
1735 Market Street
Prema Mathai-Davis Jeffrey H. Kupor Philadelphia, PA 19103
Chief Executive Officer, YWCA of the U.S.A.; Assistant Secretary
Commissioner, New York City Dept. for the COUNSEL TO THE DIRECTORS
Aging; and member of the Board of Directors, Nancy L. Martin
Metropolitan Transportation Authority of Assistant Secretary Kramer, Levin, Naftalis & Frankel LLP
New York State 919 Third Avenue
Ofelia M. Mayo New York, NY 10022
Lewis F. Pennock Assistant Secretary
Attorney DISTRIBUTOR
Lisa A. Moss
Louis S. Sklar Assistant Secretary Fund Management Company
Executive Vice President 11 Greenway Plaza
Hines Interests Kathleen J. Pflueger Suite 100
Limited Partnership Assistant Secretary Houston, TX 77002
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
</TABLE>
AIM CONSTELLATION FUND 29
<PAGE> 32
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 Institutional Class performance figures are historical
and reflect reinvestment of all distributions and changes in net asset value.
o The fund's investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The Dow Jones Industrial Average (the Dow) is a price-weighted average of 30
actively traded primarily industrial stocks.
o The unmanaged Lipper Growth Funds Index represents an average of the
performance of the 30 largest growth funds charted by Lipper, Inc., an
independent mutual fund performance monitor.
o 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.
o An investment cannot be made in any index listed. Unless otherwise indicated,
index results include reinvested dividends and do not reflect sales charges.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
OR ANY OTHER GOVERNMENT AGENCY. THERE IS A RISK THAT
YOU COULD LOSE SOME OR ALL OF YOUR MONEY.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the fund.
AIM WEINGARTEN FUND
30
<PAGE> 33
AIM WEINGARTEN FUND OUTPACES
BENCHMARK INDEXES
HOW DID THE FUND PERFORM DURING THE REPORTING PERIOD?
For the six-month reporting period ended April 30, 1999, total return for the
Institutional Class was an impressive 29.78%. Fund performance far outpaced the
gains of benchmark indexes. For the same period, the S&P 500 posted a 22.31%
gain, while the Lipper Growth Funds Index returned 23.71%. Net assets under
management increased by 41% during the last six months for a total of $103.2
million at the reporting period's close.
WHAT WERE THE MAJOR TRENDS IN THE FINANCIAL MARKETS DURING THE REPORTING PERIOD?
At the beginning of the reporting period, fund performance benefited from the
"flight to quality" during last fall's market downturn. Increasing narrowness in
the U.S. financial markets through early 1999 continued the dominance by
large-cap stocks. The Dow closed above 10,000 on March 29, 1999, and surpassed
several other milestones in April.
The beginning of 1999 was not so hospitable for the technology sector. After
the sector's sterling performance in 1998, many investors began to worry about a
bubble developing, especially in high-flying Internet stocks, the so-called
".com" universe. A sell-off in the technology arena ensued, but the markets
rebounded after first-quarter 1999 earnings reports came in quite strong.
WHAT CONTRIBUTED TO THE FUND'S STRONG GAINS?
We believe that several factors drove the fund's stellar performance. One is
scarcity of earnings in the financial markets. In an environment of moderate or
slightly decelerating economic growth, investors put a premium on growth
companies, and growth stocks tend to outperform other types of stocks. Our
overweight in large-cap stocks, which represented 87% of net assets at the end
of the reporting period, also contributed to the fund's strong showing. In
addition, since last October, we have reduced the fund's total holdings to
approximately 90 names, down from 124. Early in 1998, the fund had the lion's
share of its assets in fast-pace momentum names. However, when the economy
slowed and earnings cooled at mid-year, we culled approximately a third of our
holdings and began to focus on stable core stocks in traditional growth sectors,
such as technology and health care.
WHAT ARE THE DIFFERENCES BETWEEN A CORE HOLDING AND A MOMENTUM HOLDING?
A company may qualify for the fund's portfolio in one of two ways: as a core
holding or as a momentum holding. A core holding is a company that has a very
stable and profitable business model projected to grow by at least 12% over the
next five years. A core holding is expected to outperform over the long term. On
the other hand, a momentum company is one currently enjoying a dramatic surge in
earnings that while probably not sustainable over the long term, exceeds of the
market's near-term growth rate. The fund combines high-quality core companies
with potentially more explosive momentum stocks in a barbell strategy.
WHAT TYPE OF TECHNOLOGY COMPANIES DOES THE FUND OWN?
At the reporting period's close, technology holdings accounted for approximately
36% of net assets. The majority of the fund's technology holdings are
high-quality, dominant brand-name firms. Companies such as AOL and Cisco Systems
continued to do well due to their large size, which has become a strategic
weapon for companies in this sector. Larger technology companies have more money
to spend on research and development, which in turn drives further technological
advancement. In this sector, being small or midcap may not necessarily be an
advantage. Having money to spend on research and development and the ability to
provide global reach to customers have become the main thrusts behind a
technology business's success.
WHAT TYPE OF HEALTH-CARE COMPANIES DO YOU FAVOR?
Our health-care holdings, which accounted for 18.4% of net assets on April 30,
were split among diversified health-care companies, major pharmaceuticals and
medical-equipment makers. Our investment in this sector has been driven by
long-term demographic trends. The aging population needs more and more health
================================================================================
GROWTH OF NET ASSETS
10/31/98 $72.9 million
4/30/99 $103.2 million
================================================================================
-------------------------------------
THE FUND COMBINES HIGH-QUALITY
CORE COMPANIES WITH POTENTIAL-
LY MORE EXPLOSIVE MOMENTUM
STOCKS IN A BARBELL STRATEGY
-------------------------------------
AIM WEINGARTEN FUND
31
<PAGE> 34
PORTFOLIO COMPOSITION
As of 4/30/99, based on total net assets
TOTAL NUMBER OF HOLDINGS: 93
<TABLE>
<CAPTION>
=============================================================================================================
TOP 10 INDUSTRIES TOP 10 HOLDINGS
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Computers (Software & Services) 11.00% 1. America Online, Inc. 4.66%
2. Health Care (Diversified) 7.37 2. MCI WorldCom, Inc. 4.45
3. Communications Equipment 6.51 3. Freddie Mac 2.45
4. Health Care (Medical Products & Supplies) 6.17 4. International Business Machines Corp. 2.34
5. Broadcasting (Television, Radio & Cable) 6.06 5. Tyco International Ltd. 2.22
6. Financial (Diversified) 5.32 6. Warner-Lambert Co. 2.02
7. Telecommunications (Long Distance) 4.45 7. Fannie Mae 1.98
8. Computer (Hardware) 4.17 8. Abbott Laboratories 1.97
9. Health Care (Drugs-Major Pharmaceuticals) 3.91 9. Time Warner, Inc. 1.95
10. Retail (Specialty) 3.83 10. Cisco Systems, Inc. 1.92
The fund's portfolio is subject to change, and there is no assurance the fund will continue to hold any
particular security.
=============================================================================================================
</TABLE>
care. Worldwide drug sales are rising at a rate of 8% to 10% a year and
medical-device sales at 7% annually. In the health-care arena, we are seeing a
continuation of the "size matters" theme. The costs to bring a new drug to
market total in the neighborhood of $1 billion. So bigger firms, such as
Warner-Lambert and Abbott Laboratories, have a clear advantage over their
smaller counterparts. In addition, these larger companies already have a
foothold in the consumer products markets. We believe very strongly in this
sector as a long-term growth vehicle.
WHAT IS YOUR OUTLOOK FOR THE FUTURE?
Four months into 1999, fears of a recession in the United States have faded. In
fact, most economists are betting on continued steady growth, with low inflation
and high employment. International markets have stabilized as countries slowly
get a grip on their economies, leading analysts to believe that the worst is
over. Domestically, interest rates, another key factor supporting a bullish
outlook, are likely to remain quite steady, thanks to the Federal Reserve
Board's watchful guard. To the extent that these factors remain in place, the
investing environment for the fund continues to be favorable.
================================================================================
TOTAL RETURNS
6 months ended 4/30/99
Fund Institutional Class 29.78%
S&P 500 22.31%
Lipper Growth Fund Index 23.71%
================================================================================
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
For periods ended 4/30/99
Inception (10/8/91) 17.65%
5 Years 23.92
3 Years 25.32
1 Year 23.80
MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE. RESULTS OF AN
INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
SHOWN.
================================================================================
AIM WEINGARTEN FUND
32
<PAGE> 35
SCHEDULE OF INVESTMENTS
April 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-90.83%
BANKS (MONEY CENTER)-0.92%
Chase Manhattan Corp. (The) 1,000,000 $ 82,750,000
- ---------------------------------------------------------------
BANKS (REGIONAL)-0.28%
North Fork Bancorporation, Inc. 1,121,600 25,236,000
- ---------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE)-6.06%
AT&T Corp.-Liberty Media
Group(a) 857,300 54,760,038
- ---------------------------------------------------------------
Clear Channel Communications,
Inc.(a) 950,460 66,056,970
- ---------------------------------------------------------------
Comcast Corp.-Class A 1,687,700 110,860,794
- ---------------------------------------------------------------
Cox Communications, Inc.-Class
A(a) 1,141,500 90,606,563
- ---------------------------------------------------------------
Infinity Broadcasting
Corp.-Class A(a) 3,357,000 92,946,937
- ---------------------------------------------------------------
Jacor Communications, Inc.(a) 925,000 74,231,250
- ---------------------------------------------------------------
MediaOne Group, Inc.(a) 650,000 53,015,625
- ---------------------------------------------------------------
542,478,177
- ---------------------------------------------------------------
CHEMICALS (DIVERSIFIED)-0.15%
Monsanto Co. 296,800 13,430,200
- ---------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-3.77%
General Instrument Corp.(a) 578,900 21,129,850
- ---------------------------------------------------------------
Lucent Technologies, Inc. 1,802,500 108,375,313
- ---------------------------------------------------------------
Motorola, Inc. 2,038,500 163,334,812
- ---------------------------------------------------------------
QUALCOMM, Inc.(a) 222,500 44,500,000
- ---------------------------------------------------------------
337,339,975
- ---------------------------------------------------------------
COMPUTERS (HARDWARE)-4.17%
International Business Machines
Corp. 1,000,000 209,187,500
- ---------------------------------------------------------------
Sun Microsystems, Inc.(a) 2,750,000 164,484,375
- ---------------------------------------------------------------
373,671,875
- ---------------------------------------------------------------
COMPUTERS (NETWORKING)-3.39%
Ascend Communications, Inc.(a) 1,369,000 132,279,625
- ---------------------------------------------------------------
Cisco Systems, Inc.(a) 1,504,900 171,652,656
- ---------------------------------------------------------------
303,932,281
- ---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-1.42%
EMC Corp.(a) 600,000 65,362,500
- ---------------------------------------------------------------
Lexmark International Group,
Inc.(a) 500,000 61,750,000
- ---------------------------------------------------------------
127,112,500
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-11.00%
America Online, Inc. 2,925,000 417,543,750
- ---------------------------------------------------------------
Citrix Systems, Inc.(a) 1,303,200 55,386,000
- ---------------------------------------------------------------
Compuware Corp.(a) 2,000,000 48,750,000
- ---------------------------------------------------------------
Microsoft Corp.(a) 1,700,000 138,231,250
- ---------------------------------------------------------------
Oracle Corp.(a) 2,001,500 54,165,594
- ---------------------------------------------------------------
Unisys Corp.(a) 5,000,000 157,187,500
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
COMPUTERS (SOFTWARE & SERVICES)-(CONTINUED)
MARKET
SHARES VALUE
<S> <C> <C>
Yahoo! Inc.(a) 650,000 $ 113,546,875
- ---------------------------------------------------------------
984,810,969
- ---------------------------------------------------------------
CONSUMER FINANCE-0.91%
Capital One Financial Corp. 169,200 29,387,925
- ---------------------------------------------------------------
Providian Financial Corp. 400,000 51,625,000
- ---------------------------------------------------------------
81,012,925
- ---------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-0.44%
AmeriSource Health Corp.-Class
A(a) 1,433,800 39,698,337
- ---------------------------------------------------------------
ELECTRICAL EQUIPMENT-1.15%
Sanmina Corp.(a) 1,063,000 70,556,625
- ---------------------------------------------------------------
Symbol Technologies, Inc. 678,300 32,388,825
- ---------------------------------------------------------------
102,945,450
- ---------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-3.23%
Analog Devices, Inc.(a) 1,350,000 47,418,750
- ---------------------------------------------------------------
Intel Corp. 750,000 45,890,625
- ---------------------------------------------------------------
LSI Logic Corp.(a) 382,900 13,018,600
- ---------------------------------------------------------------
Texas Instruments, Inc. 900,000 91,912,500
- ---------------------------------------------------------------
Xilinx, Inc.(a) 2,000,000 91,250,000
- ---------------------------------------------------------------
289,490,475
- ---------------------------------------------------------------
ENTERTAINMENT-1.95%
Time Warner, Inc. 2,500,000 175,000,000
- ---------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR)-0.30%
Teradyne, Inc.(a) 571,900 26,986,531
- ---------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-5.32%
American Express Co. 610,500 79,784,719
- ---------------------------------------------------------------
Fannie Mae 2,500,000 177,343,750
- ---------------------------------------------------------------
Freddie Mac 3,500,000 219,625,000
- ---------------------------------------------------------------
476,753,469
- ---------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-7.37%
Abbott Laboratories 3,650,000 176,796,875
- ---------------------------------------------------------------
American Home Products Corp. 1,322,300 80,660,300
- ---------------------------------------------------------------
Bristol-Myers Squibb Co. 1,248,600 79,364,137
- ---------------------------------------------------------------
Johnson & Johnson 1,461,900 142,535,250
- ---------------------------------------------------------------
Warner-Lambert Co. 2,661,000 180,781,687
- ---------------------------------------------------------------
660,138,249
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-0.32%
Watson Pharmaceuticals, Inc.(a) 700,000 28,350,000
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)-3.91%
Lilly (Eli) & Co. 1,600,000 117,800,000
- ---------------------------------------------------------------
Pfizer, Inc. 525,000 60,407,813
- ---------------------------------------------------------------
Pharmacia & Upjohn, Inc. 2,042,700 114,391,200
- ---------------------------------------------------------------
</TABLE>
AIM WEINGARTEN FUND 33
<PAGE> 36
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)-(CONTINUED)
Schering-Plough Corp. 1,200,000 $ 57,975,000
- ---------------------------------------------------------------
350,574,013
- ---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-6.17%
Bausch & Lomb, Inc. 933,100 69,982,500
- ---------------------------------------------------------------
Baxter International, Inc. 925,000 58,275,000
- ---------------------------------------------------------------
Becton, Dickinson & Co. 3,525,000 131,085,938
- ---------------------------------------------------------------
Boston Scientific Corp.(a) 1,075,500 45,775,969
- ---------------------------------------------------------------
Guidant Corp. 1,924,100 103,300,119
- ---------------------------------------------------------------
Medtronic, Inc. 2,000,000 143,875,000
- ---------------------------------------------------------------
552,294,526
- ---------------------------------------------------------------
INSURANCE (MULTI-LINE)-1.75%
American International Group,
Inc. 1,334,625 156,735,023
- ---------------------------------------------------------------
LODGING-HOTELS-0.88%
Carnival Corp. 1,902,800 78,490,500
- ---------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-3.31%
Tyco International Ltd. 2,442,830 198,479,938
- ---------------------------------------------------------------
United Technologies Corp. 675,000 97,790,625
- ---------------------------------------------------------------
296,270,563
- ---------------------------------------------------------------
NATURAL GAS-0.50%
Enron Corp. 600,000 45,150,000
- ---------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-2.89%
Home Depot, Inc. (The) 1,900,000 113,881,250
- ---------------------------------------------------------------
Lowe's Companies, Inc. 2,750,000 145,062,500
- ---------------------------------------------------------------
258,943,750
- ---------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS)-1.32%
Best Buy Co., Inc.(a) 1,340,000 63,985,000
- ---------------------------------------------------------------
Tandy Corp. 750,000 54,328,125
- ---------------------------------------------------------------
118,313,125
- ---------------------------------------------------------------
RETAIL (DISCOUNTERS)-0.60%
Dollar Tree Stores, Inc.(a) 1,465,000 53,472,500
- ---------------------------------------------------------------
RETAIL (FOOD CHAINS)-1.50%
Kroger Co.(a) 1,727,500 93,824,844
- ---------------------------------------------------------------
Safeway, Inc.(a) 750,000 40,453,125
- ---------------------------------------------------------------
134,277,969
- ---------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE)-1.63%
Dayton Hudson Corp. 1,000,000 67,312,500
- ---------------------------------------------------------------
Fred Meyer, Inc.(a) 272,500 14,749,063
- ---------------------------------------------------------------
Wal-Mart Stores, Inc. 1,396,800 64,252,800
- ---------------------------------------------------------------
146,314,363
- ---------------------------------------------------------------
RETAIL (SPECIALTY)-3.83%
Amazon.com, Inc.(a) 498,600 85,790,363
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RETAIL (SPECIALTY)-(CONTINUED)
MARKET
SHARES VALUE
<S> <C> <C>
Office Depot, Inc.(a) 6,370,050 $ 140,141,100
- ---------------------------------------------------------------
Staples, Inc.(a) 2,965,400 88,962,000
- ---------------------------------------------------------------
Tiffany & Co. 329,500 27,678,000
- ---------------------------------------------------------------
342,571,463
- ---------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-1.88%
Abercrombie & Fitch Co.-Class
A(a) 701,700 66,749,212
- ---------------------------------------------------------------
Gap, Inc. (The) 446,050 29,690,203
- ---------------------------------------------------------------
Intimate Brands, Inc. 1,436,400 71,820,000
- ---------------------------------------------------------------
168,259,415
- ---------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING)-1.36%
Outdoor Systems, Inc.(a) 4,821,525 121,442,161
- ---------------------------------------------------------------
SERVICES (DATA PROCESSING)-2.70%
Affiliated Computer Services,
Inc.(a) 896,100 34,275,825
- ---------------------------------------------------------------
Ceridian Corp.(a) 1,290,000 47,246,250
- ---------------------------------------------------------------
CSG Systems International,
Inc.(a) 1,455,800 56,230,275
- ---------------------------------------------------------------
First Data Corp. 1,500,000 63,656,250
- ---------------------------------------------------------------
Fiserv, Inc.(a) 690,600 40,443,263
- ---------------------------------------------------------------
241,851,863
- ---------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-4.45%
MCI WorldCom, Inc.(a) 4,849,800 398,592,937
- ---------------------------------------------------------------
Total Domestic Common
Stocks (Cost
$5,571,719,342) 8,134,691,584
- ---------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY INTERESTS-5.11%
CANADA-1.30%
Northern Telecom Ltd.-ADR
(Communications Equipment) 1,700,000 115,918,750
- ---------------------------------------------------------------
FINLAND-1.44%
Nokia Oyj (Communications
Equipment) 324,800 25,034,064
- ---------------------------------------------------------------
Nokia Oyj A.B.-Class A-ADR
(Communications Equipment) 1,400,000 103,862,500
- ---------------------------------------------------------------
128,896,564
- ---------------------------------------------------------------
IRELAND-0.60%
Elan Corp. PLC-ADR (Health
Care-Drugs-Generic &
Other)(a) 1,043,300 53,729,950
- ---------------------------------------------------------------
NETHERLANDS-1.77%
Koninklijke (Royal) Philips
Electronics N.V. (Electrical
Equipment) 769,000 65,653,375
- ---------------------------------------------------------------
Philips Electronics N.V.
(Household Furniture &
Appliances) 1,081,000 93,083,639
- ---------------------------------------------------------------
158,737,014
- ---------------------------------------------------------------
Total Foreign Stocks &
Other Equity Interests
(Cost $400,758,187) 457,282,278
- ---------------------------------------------------------------
</TABLE>
34 AIM WEINGARTEN FUND
<PAGE> 37
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
REPURCHASE AGREEMENT-3.88%(b)
Goldman, Sachs & Co., 4.94%,
05/03/99 (Cost
$347,244,869)(c) $347,244,869 $ 347,244,869
- ---------------------------------------------------------------
TOTAL INVESTMENTS-99.82% 8,939,218,731
- ---------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-0.18% 16,464,806
- ---------------------------------------------------------------
TOTAL NET ASSETS-100.00% $8,955,683,537
===============================================================
</TABLE>
Abbreviation:
ADR - American Depositary Receipt
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) 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 is at least 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.
(c) Joint repurchase agreement entered into 04/30/99 with a maturing value of
$400,164,667. Collateralized by $407,564,858 U.S. Government obligations,
5.00% to 8.00% due 07/01/03 to 05/01/29 with an aggregate market value at
04/30/99 of $408,000,001.
See Notes to Financial Statements.
AIM WEINGARTEN FUND 35
<PAGE> 38
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$6,319,722,398) $8,939,218,731
- --------------------------------------------------------
Receivables for:
Investments sold 180,240,937
- --------------------------------------------------------
Capital stock sold 15,917,032
- --------------------------------------------------------
Dividends and interest 4,648,237
- --------------------------------------------------------
Investment for deferred compensation
plan 115,648
- --------------------------------------------------------
Other assets 198,706
- --------------------------------------------------------
Total assets 9,140,339,291
- --------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 162,360,014
- --------------------------------------------------------
Capital stock reacquired 12,268,301
- --------------------------------------------------------
Deferred compensation 115,648
- --------------------------------------------------------
Accrued advisory fees 4,327,628
- --------------------------------------------------------
Accrued administrative services fees 19,288
- --------------------------------------------------------
Accrued directors' fees 13,350
- --------------------------------------------------------
Accrued distribution fees 3,727,923
- --------------------------------------------------------
Accrued transfer agent fees 800,535
- --------------------------------------------------------
Accrued operating expenses 1,023,067
- --------------------------------------------------------
Total liabilities 184,655,754
- --------------------------------------------------------
Net assets applicable to shares
outstanding $8,955,683,537
- --------------------------------------------------------
NET ASSETS:
Class A $7,717,881,519
========================================================
Class B $1,072,717,717
========================================================
Class C $ 61,899,473
========================================================
Institutional Class $ 103,184,828
========================================================
CAPITAL STOCK, $0.001 PAR VALUE PER SHARE:
Class A:
Authorized 750,000,000
- --------------------------------------------------------
Outstanding 291,850,405
========================================================
Class B:
Authorized 750,000,000
- --------------------------------------------------------
Outstanding 41,915,873
========================================================
Class C:
Authorized 750,000,000
- --------------------------------------------------------
Outstanding 2,417,284
========================================================
Institutional Class:
Authorized 200,000,000
- --------------------------------------------------------
Outstanding 3,821,833
========================================================
Class A:
Net asset value and redemption price
per share $ 26.44
- --------------------------------------------------------
Offering price per share:
(Net asset value of
$26.44 divided by 94.50%) $ 27.98
========================================================
Class B:
Net asset value and offering price per
share $ 25.59
========================================================
Class C:
Net asset value and offering price per
share $ 25.61
========================================================
Institutional Class:
Net asset value, offering and
redemption price per share $ 27.00
========================================================
</TABLE>
See Notes to Financial Statements.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1999
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $538,610 foreign
withholding tax) $ 19,684,424
- ----------------------------------------------------------
Interest 10,253,425
- ----------------------------------------------------------
Total investment income 29,937,849
- ----------------------------------------------------------
EXPENSES:
Advisory fees 25,796,512
- ----------------------------------------------------------
Administrative services fees 109,744
- ----------------------------------------------------------
Custodian fees 290,748
- ----------------------------------------------------------
Directors' fees 33,673
- ----------------------------------------------------------
Distribution fees-Class A 10,721,830
- ----------------------------------------------------------
Distribution fees-Class B 4,489,959
- ----------------------------------------------------------
Distribution fees-Class C 185,840
- ----------------------------------------------------------
Transfer agent fees-Class A 4,027,404
- ----------------------------------------------------------
Transfer agent fees-Class B 894,615
- ----------------------------------------------------------
Transfer agent fees-Class C 46,974
- ----------------------------------------------------------
Transfer agent fees-Institutional Class 4,664
- ----------------------------------------------------------
Other 1,278,205
- ----------------------------------------------------------
Total expenses 47,880,168
- ----------------------------------------------------------
Less: Fees waived by advisor (1,949,330)
- ----------------------------------------------------------
Expenses paid indirectly (74,354)
- ----------------------------------------------------------
Net expenses 45,856,484
- ----------------------------------------------------------
Net investment income (loss) (15,918,635)
- ----------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES, FOREIGN
CURRENCIES, FUTURES AND OPTION CONTRACTS:
Net realized gain (loss) from:
Investment securities 1,160,662,484
- ----------------------------------------------------------
Foreign currencies (4,495,922)
- ----------------------------------------------------------
Futures contracts 10,089,965
- ----------------------------------------------------------
Option contracts purchased (3,914,290)
- ----------------------------------------------------------
Option contracts written (29,103,796)
- ----------------------------------------------------------
1,133,238,441
- ----------------------------------------------------------
Net unrealized appreciation (depreciation) of:
Investment securities 911,257,020
- ----------------------------------------------------------
Foreign currencies (12,453)
- ----------------------------------------------------------
Futures contracts (6,756,866)
- ----------------------------------------------------------
Option contracts purchased (3,182,585)
- ----------------------------------------------------------
Option contracts written (7,126,569)
- ----------------------------------------------------------
894,178,547
- ----------------------------------------------------------
Net gain from investment securities,
foreign currencies, futures and option
contracts 2,027,416,988
- ----------------------------------------------------------
Net increase in net assets resulting from
operations $2,011,498,353
==========================================================
</TABLE>
36 AIM WEINGARTEN FUND
<PAGE> 39
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 1999 and the year ended October 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
1999 1998
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (15,918,635) $ 89,216
- ----------------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign
currencies, futures and option contracts 1,133,238,441 514,276,104
- ----------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities,
foreign currencies, futures and option contracts 894,178,547 255,708,695
- ----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 2,011,498,353 770,074,015
- ----------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Class A (3,891,948) --
- ----------------------------------------------------------------------------------------------
Institutional Class (345,675) --
- ----------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains:
Class A (405,150,816) (864,947,763)
- ----------------------------------------------------------------------------------------------
Class B (49,729,963) (76,736,323)
- ----------------------------------------------------------------------------------------------
Class C (1,700,579) (626,936)
- ----------------------------------------------------------------------------------------------
Institutional Class (4,840,109) (9,231,714)
- ----------------------------------------------------------------------------------------------
Share transactions-net:
Class A 260,991,725 442,079,076
- ----------------------------------------------------------------------------------------------
Class B 206,395,649 240,674,117
- ----------------------------------------------------------------------------------------------
Class C 33,103,395 21,194,188
- ----------------------------------------------------------------------------------------------
Institutional Class 13,434,732 12,302,794
- ----------------------------------------------------------------------------------------------
Net increase in net assets 2,059,764,764 534,781,454
- ----------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 6,895,918,773 6,361,137,319
- ----------------------------------------------------------------------------------------------
End of period $8,955,683,537 $6,895,918,773
==============================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $5,196,302,992 $4,682,377,491
- ----------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (16,121,519) 4,034,739
- ----------------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies, futures and option
contracts 1,156,055,229 484,238,255
- ----------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign
currencies, futures and option contracts 2,619,446,835 1,725,268,288
- ----------------------------------------------------------------------------------------------
$8,955,683,537 $6,895,918,773
==============================================================================================
</TABLE>
See Notes to Financial Statements.
AIM WEINGARTEN FUND 37
<PAGE> 40
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999
(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 nine separate portfolios. 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 closing bid price 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 closing bid price. 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. The
Fund does not separately account for that portion of the results of
operations resulting from changes in foreign exchange rates on investments
and the fluctuations arising from changes in market prices of securities
held. Such fluctuations are included with the net realized and unrealized
gain or loss from investments.
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 to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. 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-market" to reflect the current market value of the
option
38 AIM WEINGARTEN FUND
<PAGE> 41
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 and are paid annually.
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.
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 contractually 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 contractual and may not be
terminated without approval by the Board of Directors of the Company. During the
six months ended April 30, 1999, AIM waived fees of $1,949,330. 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,
1999, AIM was reimbursed $109,744 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. During the six months ended April 30, 1999,
AFS was paid $2,719,811 for such services.
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 of 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. During the six months ended
April 30, 1999,
AIM WEINGARTEN FUND 39
<PAGE> 42
the Class A, Class B and Class C shares paid AIM Distributors $10,721,830,
$4,489,959, and $185,840, respectively, as compensation under the Plans.
AIM Distributors received commissions of $1,081,813 from sales of the Class A
shares of the Fund during the six months ended April 30, 1999. 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,
1999, AIM Distributors received commissions of $118,545 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, 1999, the Fund paid legal fees of $7,269
for services rendered by Kramer, Levin, Naftalis & Frankel LLP 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, 1999, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) and reductions in custodian
fees of $53,442 and $20,912, respectively, under expense offset arrangements.
The effect of the above arrangements resulted in a reduction of the Fund's total
expenses of $74,354 during the six months ended April 30, 1999.
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) $1,000,000,000 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. During the six
months ended April 30, 1999, 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.
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, 1999 was $5,976,000,039
and $5,810,462,211, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of April 30, 1999 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $2,631,418,154
- ----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (32,728,604)
- ----------------------------------------------------------
Net unrealized appreciation of investment
securities $2,598,689,550
==========================================================
</TABLE>
Cost of investments for tax purposes is $6,340,529,181.
40 AIM WEINGARTEN FUND
<PAGE> 43
NOTE 7-CALL OPTION CONTRACTS
Transactions in call options written during the six months ended April 30, 1999
are summarized as follows:
<TABLE>
<CAPTION>
CALL OPTION CONTRACTS
-------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ------------
<S> <C> <C>
Beginning of period 79,608 $ 44,508,416
- ---------------------------------------------------------------------------------------
Written 16,655 15,409,447
- ---------------------------------------------------------------------------------------
Closed (42,149) (32,128,190)
- ---------------------------------------------------------------------------------------
Exercised (7,902) (3,522,927)
- ---------------------------------------------------------------------------------------
Expired (46,212) (24,266,746)
- ---------------------------------------------------------------------------------------
End of period 0 $ 0
=======================================================================================
</TABLE>
NOTE 8-PUT OPTIONS PURCHASED
Transactions in put options purchased during the six months ended April 30, 1999
are summarized as follows:
<TABLE>
<CAPTION>
PUT OPTION CONTRACTS
-------------------------
NUMBER OF PREMIUMS
CONTRACTS PAID
--------- ------------
<S> <C> <C>
Beginning of period 9,625 $ 3,914,290
- ---------------------------------------------------------------------------------------
Expired (9,625) (3,914,290)
- ---------------------------------------------------------------------------------------
End of period 0 $ 0
=======================================================================================
</TABLE>
NOTE 9-CAPITAL STOCK
Changes in the capital stock outstanding during six months ended April 30, 1999
and the year ended October 31, 1998 were as follows:
<TABLE>
<CAPTION>
APRIL 30, 1999 OCTOBER 31, 1998
---------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- ---------------
<S> <C> <C> <C> <C>
Sold:
Class A 26,149,014 $ 655,880,167 62,788,326 $ 1,368,867,407
- ----------------------------------------------------------------------------------------------------------------------------
Class B 9,565,647 236,334,175 12,056,594 257,385,548
- ----------------------------------------------------------------------------------------------------------------------------
Class C 1,596,692 39,831,471 1,204,025 25,772,311
- ----------------------------------------------------------------------------------------------------------------------------
Institutional Class 524,593 13,566,195 593,328 13,533,791
- ----------------------------------------------------------------------------------------------------------------------------
Issued as a reinvestment of dividends:
Class A 16,540,579 383,079,336 41,795,514 813,441,370
- ----------------------------------------------------------------------------------------------------------------------------
Class B 2,102,818 47,272,428 3,831,332 73,061,374
- ----------------------------------------------------------------------------------------------------------------------------
Class C 71,202 1,602,038 31,251 600,022
- ----------------------------------------------------------------------------------------------------------------------------
Institutional Class 217,868 5,146,039 456,144 9,035,386
- ----------------------------------------------------------------------------------------------------------------------------
Reacquired:
Class A (31,482,870) (777,967,778) (79,734,776) (1,740,229,701)
- ----------------------------------------------------------------------------------------------------------------------------
Class B (3,168,749) (77,210,954) (4,228,997) (89,772,805)
- ----------------------------------------------------------------------------------------------------------------------------
Class C (343,916) (8,330,114) (246,074) (5,178,145)
- ----------------------------------------------------------------------------------------------------------------------------
Institutional Class (206,548) (5,277,502) (458,838) (10,266,383)
- ----------------------------------------------------------------------------------------------------------------------------
21,566,330 $ 513,925,501 38,087,829 $ 716,250,175
============================================================================================================================
</TABLE>
AIM WEINGARTEN FUND 41
<PAGE> 44
NOTE 10-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Institutional Class
capital stock outstanding during the six months ended April 30, 1999 and each of
the years in the five-year period ended October 31, 1998.
<TABLE>
<CAPTION>
OCTOBER 31,
APRIL 30, -------------------------------------------------------
1999 1998 1997 1996 1995 1994
--------- ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 22.18 $ 23.05 $ 20.46 $ 20.48 $ 17.94 $ 17.69
- -------------------------------- -------- ------- ------- -------- -------- --------
Income from investment
operations:
Net investment income 0.02 0.10 0.08 0.17 0.10 0.17
- -------------------------------- -------- ------- ------- -------- -------- --------
Net gains on securities (both
realized and unrealized) 6.36 2.43 4.90 2.52 4.35 0.58
- -------------------------------- -------- ------- ------- -------- -------- --------
Total from investment
operations 6.38 2.53 4.98 2.69 4.45 0.75
- -------------------------------- -------- ------- ------- -------- -------- --------
Less distributions:
Dividends from net investment
income (0.10) -- (0.15) -- (0.13) (0.17)
- -------------------------------- -------- ------- ------- -------- -------- --------
Distributions from net
realized gains (1.46) (3.40) (2.24) (2.71) (1.78) (0.33)
- -------------------------------- -------- ------- ------- -------- -------- --------
Total distributions (1.56) (3.40) (2.39) (2.71) (1.91) (0.50)
- -------------------------------- -------- ------- ------- -------- -------- --------
Net asset value, end of period $ 27.00 $ 22.18 $ 23.05 $ 20.46 $ 20.48 $ 17.94
================================ ======== ======= ======= ======== ======== ========
Total return 29.78% 12.79% 27.37% 15.34% 28.69% 4.37%
================================ ======== ======= ======= ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $103,185 $72,884 $62,124 $ 60,483 $ 54,332 $ 40,486
================================ ======== ======= ======= ======== ======== ========
Ratio of expenses to average net
assets(a) 0.63%(b) 0.62% 0.64% 0.65% 0.70% 0.65%
================================ ======== ======= ======= ======== ======== ========
Ratio of net investment income
to average net assets(c) 0.10%(b) 0.49% 0.50% 0.80% 0.45% 1.00%
================================ ======== ======= ======= ======== ======== ========
Portfolio turnover rate 75% 125% 128% 159% 139% 136%
================================ ======== ======= ======= ======== ======== ========
</TABLE>
(a) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
0.68% (annualized), 0.67%, 0.68%, 0.68%, 0.72% and 0.68% for 1999-1994.
(b) Ratios are annualized and based on average net assets of $91,261,287.
(c) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 0.05% (annualized), 0.44%, 0.46%, 0.77%, 0.43% and 0.98%
for 1999-1994.
42 AIM WEINGARTEN FUND
<PAGE> 45
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; Carol F. Relihan A I M Advisors, Inc.
Formerly Director, President, and Senior Vice President and Secretary 11 Greenway Plaza
Chief Executive Officer Suite 100
COMSAT Corporation Gary T. Crum Houston, TX 77046
Senior Vice President
Owen Daly II SUB-ADVISOR
Director Edgar M. Larsen
Cortland Trust Inc. Senior Vice President A I M Capital Management, Inc.
11 Greenway Plaza
Edward K. Dunn Jr. Dana R. Sutton Suite 100
Chairman, Mercantile Mortgage Corp.; Vice President and Treasurer Houston, TX 77046
Formerly Vice Chairman and President,
Mercantile-Safe Deposit & Trust Co.; and Melville B. Cox TRANSFER AGENT
President, Mercantile Bankshares Vice President
A I M Fund Services, Inc.
Jack Fields Mary J. Benson P.O. Box 4739
Chief Executive Officer Assistant Vice President Houston, TX 77210-4739
Texana Global, Inc.; and Assistant Treasurer
Formerly Member CUSTODIAN
of the U.S. House of Representatives Sheri Morris
Assistant Vice President State Street Bank and Trust Company
Carl Frischling and Assistant Treasurer 225 Franklin Street
Partner Boston, MA 02110
Kramer, Levin, Naftalis & Frankel LLP Renee A. Friedli
Assistant Secretary COUNSEL TO THE FUND
Robert H. Graham
President and Chief Executive Officer P. Michelle Grace Ballard Spahr
A I M Management Group Inc. Assistant Secretary Andrews & Ingersoll, LLP
1735 Market Street
Prema Mathai-Davis Jeffrey H. Kupor Philadelphia, PA 19103
Chief Executive Officer, YWCA of the U.S.A.; Assistant Secretary
Commissioner, New York City Dept. for the COUNSEL TO THE DIRECTORS
Aging; and member of the Board of Directors, Nancy L. Martin
Metropolitan Transportation Authority of Assistant Secretary Kramer, Levin, Naftalis & Frankel LLP
New York State 919 Third Avenue
Ofelia M. Mayo New York, NY 10022
Lewis F. Pennock Assistant Secretary
Attorney DISTRIBUTOR
Lisa A. Moss
Louis S. Sklar Assistant Secretary Fund Management Company
Executive Vice President 11 Greenway Plaza
Hines Interests Kathleen J. Pflueger Suite 100
Limited Partnership Assistant Secretary Houston, TX 77002
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
</TABLE>
AIM WEINGARTEN FUND 43
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44
<PAGE> 47
[AIM LOGO APPEARS HERE]
Fund Management Company
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1188
