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[COVER IMAGE]
AIM
CONSTELLATION FUND
[AIM LOGO APPEARS HERE] SEMIANNUAL REPORT APRIL 30 1999
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[COVER IMAGE]
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STARRY NIGHT OVER THE RHONE BY VINCENT VAN GOGH
STARS, PARTICULARLY CONSTELLATIONS, HAVE LONG BEEN USED AS
SIGNS BY WHICH FARMERS PLANTED AND HARVESTED THEIR CROPS AND
SAILORS NAVIGATED THE SEAS. ALTHOUGH DIFFERENT CONSTELLATIONS
ARE VISIBLE AT DIFFERENT TIMES OF THE YEAR, THEIR CONSTANCY IN
THE SKY MAKES THEM RELIABLE FOR MEASURING THE PASSAGE OF TIME
AND DISTANCE. AIM CONSTELLATION FUND SEEKS OUT THE STARS OF
THE MID-CAPITALIZATION STOCK UNIVERSE.
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AIM Constellation Fund is 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 When sales charges are included in performance figures, Class A share
performance reflects the maximum 5.50% sales charge, and Class B and Class C
share performance reflects the applicable contingent deferred sales charge
(CDSC) for the period involved. The CDSC on Class B shares declines from 5%
beginning at the time of purchase to 0% at the beginning of the seventh
year. The CDSC on Class C shares is 1% for the first year after purchase.
The performance of the fund's Class B and Class C shares will differ from
that of Class A shares due to differences in sales charge structure and
expenses.
o The fund's investment return and principal value will fluctuate, so 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 Russell Midcap Index is a subset of the large-capitalization Russell 1000
Index. It measures the performance of the 800 smallest securities in the
Russell 1000 Index. These 800 securities represent approximately 35% of the
total market capitalization of the Russell 1000. The Russell Midcap Index
was developed with a base value of 200 on August 31, 1997.
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 mid-capitalization companies.
o The Nasdaq (National Association of Securities Dealers Automated Quotation
system) Composite Index is a group of more than 4,500 unmanaged
over-the-counter securities widely regarded by investors to be
representative of the small- and medium-sized company stock universe.
o The 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
<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
over the last six months. If you have any questions or comments, please contact
our Client Services department at 800-959-4246, or e-mail your inquiry to us at
[email protected]. You can access information about your account through our
AIM Investor Line at 800-246-5463 or at our Web site.
Thank you for your continued participation in The AIM Family of
Funds--Registered Trademark--. We appreciate your business.
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.
-------------------------------------
AIM CONSTELLATION FUND
<PAGE> 4
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 produced an impressive 21.15% cumulative total return for Class A
shares and a 20.63% total return for Class B and Class C shares. These returns
are at net asset value, without a sales charge.
Fund returns outpaced the 18.86% total return of the Standard &
Poor's MidCap 400 Index during the same period. They also outperformed the
Russell Midcap Index, whose six-month total return was 18.51%. Net assets closed
the period at $14.5 billion, up from $12.9 billion six months earlier.
WHAT WERE MARKETS LIKE DURING THE REPORTING PERIOD?
The six-month period started well, as stocks of mid-sized companies benefited
from rate cuts by the Federal Reserve Board last fall. Historically,
mid-capitalization stocks have done well when interest rates are falling.
Early in 1999, the market environment was not so hospitable to mid-cap
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, 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 IN WHICH 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.
In this sector, negative sentiment is taking down good stocks along with
bad. Omnicare, for example, dispenses drugs for nursing homes and provides
computerized recordkeeping 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 advertis-
===============================================================================
TOTAL RETURNS
- -------------------------------------------------------------------------------
Six months ended 4/30/99, excluding sales charges
- -------------------------------------------------------------------------------
Fund Class A 21.15%
Fund Class B and C 20.63%
S&P 400 18.86%
Russell Midcap 18.51%
===============================================================================
-----------------------------
OUR TECHNOLOGY HOLDINGS TEND
TO BE THE COMPANIES THAT MAKE THE
INTERNET POSSIBLE.
-----------------------------
See important Fund and index disclosures inside front cover.
AIM CONSTELLATION FUND
2
<PAGE> 5
SEMIANNUAL REPORT / MANAGERS' OVERVIEW
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>
ing agencies worldwide; for the first quarter of 1999, both revenue and earnings
rose 28% over first quarter 1998. Another new name 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 mid-cap 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 mid-cap 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 mid-cap stocks. Mid-sized
companies have been reporting much better earnings than their large-cap
counterparts, while the valuations of mid-cap stocks remain relatively low.
We will continue to seek out the best-performing companies in the
mid-cap sector; the fund should be well positioned for an ongoing rally in
mid-cap stocks.
RESULTS OF A $10,000 INVESTMENT
4/30/76-4/30/99, including sales charges
AIM Constellation Fund
Class A Shares $468,414
S&P 500 Index $308,302
NASDAQ Composite Index $282,288
Past performance is no guarantee of comparable future results.
===============================================================================
===============================================================================
AVERAGE ANNUAL TOTAL RETURNS
For periods ended 4/30/99, close of the reporting period, including sales
charges
CLASS A SHARES
Inception (4/30/76) 18.21%
10 Years 18.25
5 Years 15.82
1 Year 0.63*
*6.49% excluding sales charges
CLASS B SHARES
Inception (11/3/97) 6.33%
1 Year 0.58*
*5.58% excluding CDSC
Class C Shares
Inception (8/4/97) 7.01%
1 Year 4.54%*
*5.54% excluding CDSC
For periods ended 3/31/99, most recent calendar quarter-end, including sales
charges
CLASS A SHARES
Inception (4/30/76) 18.10%
10 Years 18.72
5 Years 15.20
1 Year -0.35*
*5.46% excluding sales charges
CLASS B SHARES
Inception (11/3/97) 4.22%
1 Year -0.45*
*4.55% excluding CDSC
CLASS C SHARES
Inception (8/4/97) 5.28%
1 Year 3.51%*
*4.51% excluding CDSC
MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE. RESULTS OF AN
INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
SHOWN.
================================================================================
See important fund and index disclosures inside front cover.
AIM CONSTELLATION FUND
3
<PAGE> 6
SEMIANNUAL REPORT / FOR CONSIDERATION
TECHNOLOGY INVESTMENTS IN AIM FUNDS
You may have noticed that technology stocks have long been a factor in your
fund's holdings. The growth of technology stocks, in particular those of
Internet companies, has been in the forefront of financial news. So, how is AIM
participating in the recent surge of technology stocks?
RISKS, REWARDS, AND THE WILD, WILD WEST
AIM equity portfolio manager Jonathan Schoolar describes AIM's position on
technology investments using the following analogy.
When they opened the American West, there were two ways to get rich. One
was to jump in a covered wagon and head west to stake out a big claim. If you
were right, you wound up with a million acres that your
great-great-grandchildren sold for a fortune. But if you were wrong, you could
lose your shirt. The other way to get rich was to live in St. Louis and sell
pots, pans and shovels to the people who were going West. You probably wouldn't
get quite as rich, but you also wouldn't run the risk of losing everything you
had. So the risk/reward tradeoff was a little better in the second situation. In
addition, you could put a value on your business as opposed to just taking your
chances out there.
THREE WAVES OF TECHNOLOGICAL DEVELOPMENT
The technology sector has gone through three waves of development. The first
wave was the introduction of the microprocessor and computer chip. The second
wave, the development of computer hardware and software, gave rise to the
prevalence of the personal computer. The third wave of technological development
arrived with the improvement of bandwidth.
Bandwidth is a measurement of the volume of information that can be
transmitted over a network at a given time, and increasing bandwidth is
necessary for the evolution of information exchange and Internet commerce. If
you think of a network as a water pipe, the higher the bandwidth (the larger the
diameter of the pipe), the more data (water) can pass over the network (through
the pipe).
With the advancement of the first two waves, bandwidth has become the
current area of growth. This growth is not limited to the Internet, but involves
all the companies that support and build demand for Internet use.
MORE THAN THE INTERNET
Within the category of "Internet stocks," there are many more companies than
just the AOLs of the world. AIM seeks those stocks in the technology sector that
meet the growth potential necessary for AIM funds that follow our disciplined
earnings-momentum style of investing. Like wise, value funds look at undervalued
securities in the technology sector that stand to benefit from the rapid success
of the Internet.
The various kinds of companies that make up the "Internet stock" category
include:
o Companies such as Ascend Communications that build the Internet
infrastructure and are working to provide improvements in bandwidth.
o Network distribution sources for Internet access such as Global TeleSystems
Group.
o Cable distribution sources such as Cox Communications that provide access
through modems.
o Companies such as Lycos that provide portals to the Internet.
o Companies that have a growing percentage of Internet commerce such as
Charles Schwab.
VALUATION
Along with the enthusiasm generated by their explosive growth, Internet-related
stocks have also raised concerns about their valuation. The valuation of a stock
is typically measured by its price-to-earnings (P/E) ratio. A high P/E ratio may
indicate that a particular stock is overvalued. Currently, the high P/Es of many
Internet stocks are based on projections about future earnings or revenue
streams.
AIM portfolio managers evaluate these stocks based on current factors, such
as free cash flow or funds from operations. Concern about overvaluation is one
reason AIM is cautious about buying Internet stocks for certain portfolios. In
balancing risk and reward, AIM tends to hold positions in those stocks that
support the Internet infrastructure and commerce, not necessarily the highly
visible stocks of some Internet companies. In other words, AIM invests in the
companies in St. Louis successfully selling the pots, pans and shovels.
[PHOTO]
AIM CONSTELLATION FUND
4
<PAGE> 7
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
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMUNICATIONS EQUIPMENT-(CONTINUED)
Comverse Technology, Inc.(a) 1,500,000 $ 96,187,500
- ---------------------------------------------------------------
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
- ---------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
CONSUMER FINANCE-(CONTINUED)
Countrywide Credit Industries,
Inc. 636,900 $ 28,859,531
- ---------------------------------------------------------------
Providian Financial Corp. 1,500,000 193,593,750
- ---------------------------------------------------------------
SLM Holding Corp. 1,000,000 42,687,500
- ---------------------------------------------------------------
404,090,781
- ---------------------------------------------------------------
CONSUMER (JEWELRY, NOVELTIES &
GIFTS)-0.12%
Action Performance Companies,
Inc.(a) 500,000 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
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
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
- ---------------------------------------------------------------
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
- ---------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES)-(CONTINUED)
Henry Schein, Inc.(a) 1,000,000 $ 26,187,500
- ---------------------------------------------------------------
Stryker Corp. 500,000 30,593,750
- ---------------------------------------------------------------
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
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
LEISURE TIME
(PRODUCTS)-(CONTINUED)
Mattel, Inc. 1,000,000 $ 25,875,000
- ---------------------------------------------------------------
Speedway Motorsports, Inc.(a) 400,000 17,350,000
- ---------------------------------------------------------------
254,574,450
- ---------------------------------------------------------------
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
- ---------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
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
- ---------------------------------------------------------------
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
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
SERVICES (ADVERTISING/
MARKETING)-(CONTINUED)
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
- ---------------------------------------------------------------
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
- ---------------------------------------------------------------
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
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
- ---------------------------------------------------------------
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
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
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
- ---------------------------------------------------------------
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.
9
<PAGE> 12
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.
10
<PAGE> 13
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
11
<PAGE> 14
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. 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
12
<PAGE> 15
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.
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.
13
<PAGE> 16
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 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>
14
<PAGE> 17
NOTE 9-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A capital stock
outstanding during the six months ended April 30, 1999 and each of the years in
the five-year period ended October 31, 1998, for a share of Class B capital
stock outstanding during the six months ended April 30, 1999 and the period
November 3, 1997 (date sales commenced) through October 31, 1998 and for a share
of Class C capital stock outstanding during the six months ended April 30, 1999
and the year ended October 31, 1998 and the period August 4, 1997 (dates sales
commenced) through October 31, 1997.
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------------------------
OCTOBER 31, 1998
APRIL 30, -----------------------------------------------------------------
1999 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 26.37 $ 29.23 $ 25.48 $ 23.69 $ 18.31 $ 17.04
- --------------------------------------------- ----------- ----------- ----------- ----------- ----------
Income from investment operations:
Net investment income (loss) (0.07) (0.14) (0.11) (0.06) (0.05) (0.02)
- --------------------------------------------- ----------- ----------- ----------- ----------- ---------- ----------
Net gains (losses) on securities (both
realized and unrealized) 5.57 (0.62) 4.75 2.60 5.95 1.29
- --------------------------------------------- ----------- ----------- ----------- ----------- ----------
Total from investment operations 5.50 (0.76) 4.64 2.54 5.90 1.27
- --------------------------------------------- ----------- ----------- ----------- ----------- ---------- ----------
Distributions from net realized gains (0.73) (2.10) (0.89) (0.75) (0.52) --
- --------------------------------------------- ----------- ----------- ----------- ----------- ----------
Net asset value, end of period $ 31.14 $ 26.37 $ 29.23 $ 25.48 $ 23.69 $ 18.31
============================================= =========== =========== =========== =========== ========== ==========
Total return(a) 21.15% (2.30)% 18.86% 11.26% 33.43% 7.45%
============================================= =========== =========== =========== =========== ========== ==========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $13,738,864 $12,391,844 $14,319,441 $11,255,506 $7,000,350 $3,726,029
============================================= =========== =========== =========== =========== ========== ==========
Ratio of expenses to average net assets(b) 1.11%(c) 1.10%(c) 1.11%() 1.14% 1.16% 1.20%
============================================= =========== =========== =========== =========== ========== ==========
Ratio of net investment income (loss) to
average net assets(d) (0.45)%(c) (0.47)%(c) (0.40)%() (0.27)% (0.32)% (0.15)%
============================================= =========== =========== =========== =========== ========== ==========
Portfolio turnover rate 29% 76% 67% 58% 45% 79%
============================================= =========== =========== =========== =========== ========== ==========
</TABLE>
(a) Does not deduct sales charges and is not annualized for periods less than
one year.
(b) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
1.13% (annualized), 1.12%, 1.13%, 1.16%, 1.18% and 1.21% for 1999-1994.
(c) Ratios are annualized and based on average net assets of $13,515,278,069.
(d) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursement were (0.48)% (annualized), (0.50)%, (0.42)%, (0.29)%, (0.34)%
and (0.16)% for 1999-1994.
<TABLE>
<CAPTION>
CLASS B CLASS C
------------------------ -------------------------------
OCTOBER 31,
APRIL 30, OCTOBER 31, APRIL 30, ------------------
1999 1998 1999 1998 1997
--------- ----------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 26.11 $ 30.04 $ 26.10 $ 29.18 $ 30.32
- ------------------------------------------------------------ -------- -------- -------- ------- -------
Income from investment operations:
Net investment income (loss) (0.19)(a) (0.37)(a) (0.19)(a) (0.37)(a) (0.04)
- ------------------------------------------------------------ -------- -------- -------- ------- -------
Net gains (losses) on securities (both realized and
unrealized) 5.50 (1.46) 5.50 (0.61) (1.10)
- ------------------------------------------------------------ -------- -------- -------- ------- -------
Total from investment operations 5.31 (1.83) 5.31 (0.98) (1.14)
- ------------------------------------------------------------ -------- -------- -------- ------- -------
Distributions from net realized gains (0.73) (2.10) (0.73) (2.10) --
- ------------------------------------------------------------ -------- -------- -------- ------- -------
Net asset value, end of period $ 30.69 $ 26.11 $ 30.68 $ 26.10 $ 29.18
============================================================ ======== ======== ======== ======= =======
Total return(b) 20.63% (5.86)% 20.63% (3.12)% (3.76)%
============================================================ ======== ======== ======== ======= =======
Ratios/supplement data:
Net assets, end of period (000s omitted) $445,080 $275,676 $119,796 $76,522 $21,508
============================================================ ======== ======== ======== ======= =======
Ratio of expenses to average net assets(c) 1.99%(d) 1.98%(e) 1.95%(d) 1.97% 1.84%(e)
============================================================ ======== ======== ======== ======= =======
Ratio of net investment income (loss) to average net
assets(f) (1.33)%(d) (1.36)%(e) (1.29)%(d) (1.35)% (1.12)%(e)
============================================================ ======== ======== ======== ======= =======
Portfolio turnover rate 29% 76% 29% 76% 67%
============================================================ ======== ======== ======== ======= =======
</TABLE>
(a) Calculated using average shares outstanding.
(b) Does not deduct contingent deferred sales charges and is not annualized for
periods less than one year.
(c) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
2.01% (annualized), and 2.00% (annualized) for 1999-1998 for Class B and
1.97% (annualized), 1.99% and 1.86% (annualized) for 1999-1997 for Class C.
(d) Ratios are annualized and based on average net assets of $363,748,450 and
$97,211,661 for Class B and Class C, respectively.
(e) Annualized.
(f) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to fee waivers and/or expense
reimbursements were (1.35)% (annualized) and (1.38)% (annualized) for
1999-1998 for Class B and (1.31)% (annualized), (1.37)% and (1.15)%
(annualized) for 1999-1997 for Class C.
15
<PAGE> 18
<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 TRANSFER AGENT
Director Edgar M. Larsen
Cortland Trust Inc. Senior Vice President A I M Fund Services, Inc.
P.O. Box 4739
Edward K. Dunn Jr. Dana R. Sutton Houston, TX 77210-4739
Chairman, Mercantile Mortgage Corp.; Vice President and Treasurer
Formerly Vice Chairman and President, CUSTODIAN
Mercantile-Safe Deposit & Trust Co.; and Melville B. Cox
President, Mercantile Bankshares Vice President State Street Bank and Trust Company
225 Franklin Street
Jack Fields Mary J. Benson Boston, MA 02110
Chief Executive Officer Assistant Vice President and
Texana Global, Inc.; Assistant Treasurer COUNSEL TO THE FUND
Formerly Member
of the U.S. House of Representatives Sheri Morris Ballard Spahr
Assistant Vice President and Andrews & Ingersoll, LLP
Carl Frischling Assistant Treasurer 1735 Market Street
Partner Philadelphia, PA 19103
Kramer, Levin, Naftalis & Frankel LLP Renee A. Friedli
Assistant Secretary COUNSEL TO THE DIRECTORS
Robert H. Graham
President and Chief Executive Officer P. Michelle Grace Kramer, Levin, Naftalis & Frankel LLP
A I M Management Group Inc. Assistant Secretary 919 Third Avenue
New York, NY 10022
Prema Mathai-Davis Jeffrey H. Kupor
Chief Executive Officer, YWCA of the U.S.A.; Assistant Secretary DISTRIBUTOR
Commissioner, New York City Dept. for the
Aging; and member of the Board of Directors, Nancy L. Martin A I M Distributors, Inc.
Metropolitan Transportation Authority of Assistant Secretary 11 Greenway Plaza
New York State Suite 100
Ofelia M. Mayo Houston, TX 77046
Lewis F. Pennock Assistant Secretary
Attorney
Lisa A. Moss
Louis S. Sklar Assistant Secretary
Executive Vice President
Hines Interests Kathleen J. Pflueger
Limited Partnership Assistant Secretary
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
</TABLE>
16
<PAGE> 19
HOW AIM MAKES INVESTING
EASY FOR YOU
o LOW INITIAL INVESTMENT. You can get your investment program started for as
little as $500. Subsequent investments can be made for only $50.
o AUTOMATIC REINVESTMENT OF DIVIDENDS AND/OR CAPITAL GAINS. Distributions may
be received in cash or reinvested in the fund free of charge. Over time, the
power of compounding can significantly increase the value of your assets.
o AUTOMATIC INVESTMENT PLAN. You may build your investment by regularly
purchasing additional shares. Pre-authorized checks for $50 or more can be
drafted monthly from your personal checking account.
o EASY ACCESS TO YOUR MONEY. Your shares may be redeemed at net asset value
any day the New York Stock Exchange is open. The price of shares sold may be
more or less than their original cost, depending on market conditions.
o SYSTEMATIC WITHDRAWAL PLAN. You may elect to receive checks of at least $50
monthly or quarterly through a systematic withdrawal plan.
o EXCHANGE PRIVILEGE. As your goals change, you may exchange all or part of
your assets for those of other funds within the same share class of The AIM
Family of funds--Registered Trademark. The exchange privilege may be
modified or discontinued for any of the AIM funds. Certain restrictions
apply.
o RETIREMENT PLANS. You may purchase shares of an AIM fund for your Individual
Retirement Account (IRA), Roth IRA, or any other type of retirement plan,
and earn tax-deferred dollars for your retirement.
o TOLL-FREE ACCESS. Current shareholders can call our AIM Investor Line at
800-246-5463 for 24-hour-a-day account information. Or, of course, you may
contact your financial consultant for assistance.
o www.aimfunds.com. As a current shareholder, you can check account balances
24 hours a day over the Internet. State-of-the-art encryption lets you send
us questions that include confidential information without the fear of
eavesdropping, tampering or forgery.
---------------------------
CURRENT SHAREHOLDERS
CAN CALL OUR
AIM INVESTOR LINE AT
800-246-5463
FOR 24-HOUR-A-DAY
ACCOUNT INFORMATION.
---------------------------
<PAGE> 20
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<S> <C> <C>
GROWTH FUNDS MONEY MARKET FUNDS A I M Management Group Inc. has provided
AIM Aggressive Growth Fund(1) AIM Money Market Fund leadership in the mutual-fund industry
AIM Blue Chip Fund AIM Tax-Exempt Cash Fund since 1976 and managed approximately $112
AIM Capital Development Fund billion in assets for more than 6.3 million
AIM Constellation Fund INTERNATIONAL GROWTH FUNDS shareholders, including individual investors,
AIM Dent Demographic Trends Fund AIM Advisor International Value Fund corporate clients and financial institutions
AIM Large Cap Growth Fund AIM Asian Growth Fund as of March 31, 1999.
AIM Mid Cap Equity Fund(2),(A) AIM Developing Markets Fund(2) The AIM Family of Funds--Registered Trademark--
AIM Select Growth Fund(3) AIM Europe Growth Fund(2) is distributed nationwide, and AIM today is the
AIM Small Cap Growth Fund(2),(B) AIM European Development Fund 10th-largest mutual-fund complex in the United
AIM Small Cap Opportunities Fund AIM International Equity Fund States in assets under management, according to
AIM Value Fund AIM Japan Growth Fund(2) Strategic Insight, an independent mutual-fund
AIM Weingarten Fund AIM Latin American Growth Fund(2) monitor.
AIM New Pacific Growth Fund(2)
GROWTH & INCOME FUNDS
AIM Advisor Flex Fund GLOBAL GROWTH FUNDS
AIM Advisor Large Cap Value Fund AIM Global Aggressive Growth Fund
AIM Advisor Real Estate Fund AIM Global Growth Fund
AIM Balanced Fund
AIM Basic Value Fund(2),(C) GLOBAL GROWTH & INCOME FUNDS
AIM Charter Fund AIM Global Growth & Income Fund(2)
AIM Global Utilities Fund
INCOME FUNDS
AIM Floating Rate Fund(2) GLOBAL INCOME FUNDS
AIM High Yield Fund AIM Emerging Markets Debt Fund(2),(D)
AIM High Yield Fund II AIM Global Government Income Fund(2)
AIM Income Fund AIM Global Income Fund
AIM Intermediate Government Fund AIM Strategic Income Fund(2)
AIM Limited Maturity Treasury Fund
THEME FUNDS
TAX-FREE INCOME FUNDS AIM Global Consumer Products and Services Fund(2)
AIM High Income Municipal Fund AIM Global Financial Services Fund(2)
AIM Municipal Bond Fund AIM Global Health Care Fund(2)
AIM Tax-Exempt Bond Fund of Connecticut AIM Global Infrastructure Fund(2)
AIM Tax-Free Intermediate Fund AIM Global Resources Fund(2)
AIM Global Telecommunications and Technology Fund(2),(E)
AIM Global Trends Fund(2),(F)
</TABLE>
(1) AIM Aggressive Growth Fund reopened to new investors November 16, 1998. (2)
Effective May 29, 1998, A I M Advisors, Inc. became advisor to the former GT
Global Funds. (3) On May 1, 1998, AIM Growth Fund was renamed AIM Select Growth
Fund. (A) On September 8, 1998, AIM Mid Cap Growth Fund was renamed AIM Mid Cap
Equity Fund. (B) On September 8, 1998, AIM Small Cap Equity Fund was renamed AIM
Small Cap Growth Fund. (C) On September 8, 1998, AIM America Value Fund was
renamed AIM Basic Value Fund. (D) On September 8, 1998, AIM Global High Income
Fund was renamed AIM Emerging Markets Debt Fund. (E) On June 1, 1999, AIM Global
Telecommunications Fund was renamed AIM Global Telecommunications and Technology
Fund. (F) On September 8, 1998, AIM New Dimension Fund was renamed AIM Global
Trends Fund. For more complete information about any AIM Fund(s), including
sales charges and expenses, ask your financial consultant or securities dealer
for a free prospectus(es). Please read the prospectus(es) carefully before you
invest or send money.
[AIM LOGO APPEARS HERE]
INVEST WITH DISCIPLINE--Registered Trademark--
