<PAGE> 1
[AIM LOGO APPEARS HERE]
AIM
SUMMIT
FUND, INC.
ANNUAL REPORT
OCTOBER 31, 1996
<PAGE> 2
------------------------
AIM Summit Fund, Inc.
For shareholders who seek
capital growth through
systematic investments.
------------------------
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o Unless otherwise indicated, Fund results were computed without a sales
charge. When sales charges are included in performance figures, those
figures reflect deduction of the Fund's 8.50% maximum sales charge. The
8.50% sales charge is attributable to the 15-year investment plan.
o During the year ended October 31, 1996, the Fund paid distributions of
$0.875 per share.
o AIM Summit Fund's performance figures are historical and reflect
reinvestment of all distributions and changes in net asset value.
o The Fund's investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
o The Fund's portfolio is subject to change and there is no guarantee it
will continue to hold any particular security.
o Dollar-cost averaging does not assure a profit and does not protect
against loss in declining markets. And since dollar-cost averaging
involves continuous investing regardless of fluctuating securities prices,
investors should consider their ability to continue purchases over an
extended period of time.
o Past performance cannot guarantee comparable future results.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The Dow Jones Industrial Average is a price-weighted average of 30
actively traded primarily industrial stocks.
o Lipper Analytical Services, Inc. an independent mutual fund performance
monitor. The unmanaged Lipper Growth Fund Index represents an average of
the performance of the 30 largest growth funds tracked by Lipper.
o The Standard & Poor's Composite Index of 500 Stocks (S&P 500) is a group
of unmanaged securities widely regarded by investors to be representative
of the stock market in general.
o An investment cannot be made in any index listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect
sales charges.
MUTUAL FUNDS, ANNUITIES, AND OTHER INVESTMENTS ARE NOT INSURED BY THE
FDIC OR ANY OTHER GOVERNMENT AGENCY; ARE NOT DEPOSITS OR OTHER
OBLIGATIONS OF, OR GUARANTEED BY, ANY BANK OR ANY AFFILIATE;
AND ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS
OF PRINCIPAL AMOUNT INVESTED.
This report may be distributed only to current shareholders or to persons
who have received a current propectus of the Fund.
<PAGE> 3
The Chairman's Letter
Dear Shareholder:
As you may have heard in the financial news, A I M
Management Group Inc. recently announced a significant
event in our company's history--an agreement to merge with
INVESCO PLC, one of the world's largest independent
[PHOTO of investment management groups.
Charles T. AIM has long been known for its strategic planning and
Bauer, forward thinking. In seeking this merger, AIM had specific
Chairman of goals in choosing a partner: to better AIM's position to
the Board of succeed in an increasingly competitive financial services
the Fund, environment, both in the U.S. and globally; to ensure the
APPEARS HERE] continuation of AIM's independent culture, investment
philosophy, and dedication to our shareholders; and to
offer the broadest range of products and services to our
shareholders.
A "MERGER OF EQUALS" THAT PRESERVES INDEPENDENCE
When the merger is completed, AIM and INVESCO will be combined under a new
holding company to be named AMVESCO, to reflect the strongly complementary
strengths of our two companies which together create a "merger of equals."
AMVESCO will have combined assets under management in excess of $150 billion.
Most importantly, the agreement enables AIM to preserve its independent
culture--which has been so essential to our company's success. The locations,
management, structure, and brand names of AIM and INVESCO will not change.
With INVESCO, AIM achieves a strategic combination with a partner that
offers complementary rather than overlapping strengths. AIM has delivered
impressive performance over the years as a domestic retail fund manager.
INVESCO brings to AIM its primary strengths as an institutional money manager,
and as a successful international investment manager with significant
operations in North America, Europe, and the Pacific region.
NO CHANGES IN YOUR AIM FUND OR ITS MANAGEMENT
While AIM certainly will be enriched through these added strengths, it will
retain those qualities that have produced two decades of successful
performance. The reputation of AIM funds has been built by its seasoned team of
portfolio managers who adhere to AIM's disciplined and successful investment
management process. AIM's central goal is to keep the current investment team
in place and our time-tested investment philosophy intact. Also, the names of
AIM funds will not change.
Moreover, because the merger will not result in any changes in the way AIM
does business, this transaction will be seamless--without any disruption of
service to you.
YOUR VOTE IS IMPORTANT
The merger is expected to be completed on or about February 28. As a result of
the merger, it is necessary for shareholders of AIM funds to approve a new
investment advisory agreement.
Recently, we mailed an announcement for the shareholder meeting planned on
February 7, along with a proxy card that describes proposals that relate to the
management and policies of your Fund. We encourage you to review and return
your proxy as soon as possible. Your Fund's Board of Directors carefully
considered and unanimously approved the proposals and recommends that you vote
in favor of each one. Your vote is important to us. If you haven't yet mailed
your proxy card, please send it today.
The AIM/INVESCO merger marks a new and promising era for AIM, and we
believe it will yield exciting opportunities for AIM shareholders. We
appreciate the trust you have placed in us.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
----------------------------
With INVESCO, AIM
achieves a strategic
combination with a partner
that offers comple-
mentary rather than
overlapping strengths.
----------------------------
<PAGE> 4
The Managers' Overview
AIM SUMMIT FUND, INC. RESILIENT
IN VOLATILE MARKET
- --------------------------------------------------------------------------------
A roundtable discussion with the Fund management team for AIM Summit Fund, Inc.
for the year ended October 31, 1996.
Q. HOW DID AIM SUMMIT FUND PERFORM DURING THE FISCAL YEAR COVERED BY THIS
REPORT?
A. For the year ended October 31, 1996, the Fund's total return was a
respectable 15.61%. By comparison, the return for the Lipper Growth Fund
Index was 16.94% and the Standard & Poor's Composite Index of 500 Stocks
(S&P 500) returned 24.08%.
The Fund's total return reflected the significant volatility in the
technology sector, particularly in the fall of 1995. The Fund rebounded
strongly in 1996. From January 1, 1996, through October 31, 1996, the Fund
gained 16.29% compared to 12.63% for the Lipper Growth Fund Index and
16.62% for the S&P 500.
Q. HOW DID THE MARKET PERFORM DURING THIS PERIOD?
A. The Dow Jones Industrial Average (DJIA) posted impressive gains during the
year covered by this report. In May, the venerable Dow celebrated its
100th anniversary by reaching an all-time high of 5778. On October 14, the
Dow soared past the 6000 mark to set a new record. But the rise to the top
was anything but smooth.
For most of the period, investors were primarily concerned that the
economy might be overheating and that the Federal Reserve Board might
raise interest rates. That caused the market to fluctuate dramatically at
times. For example, the Dow fell 7.0% between July 1-15 after the release
of unexpectedly strong employment figures.
But subsequent economic data suggested what some analysts referred to
as a "Goldilocks" economy--not too hot, not too cold. The growth rate of
the gross domestic product (GDP) fell to 2.0% in the third quarter
compared to a blistering 4.7% in the second quarter. Convinced that the
economy was growing at a reasonable rate, the Fed left interest rates
unchanged at its summer and fall meetings. The DJIA recouped its losses in
August as investors tended to gravitate to the stocks of larger companies
with more predictable earnings. The Dow resumed its march into record
territory, closing on October 31, 1996, at 6029.
Q. HOW DID YOU MANAGE THE FUND DURING THIS PERIOD?
A. Due to its larger concentration in technology stocks, the Fund was
vulnerable when the technology sector suffered a broad-based decline in
the fall of 1995. In October 1995, technology stocks comprised roughly 35%
of the portfolio. By April 1996, the technology weighting had been pared
to approximately 30%, where it remained for the balance of the reporting
period.
As of October 31, 1996, the Fund had 320 holdings distributed over more
than 50 industry categories. The Fund's top holdings were securities in
the following sectors: technology, 31%; retail, 15%; financial, 13%; and
health care, 12%. These are broad categories which include a wide variety
of industries. For example, the technology sector includes the stocks of
aerospace and defense industries, software developers, computer hardware
manufacturers, and networking equipment providers.
Q. WHAT WERE THE TOP-PERFORMING TECHNOLOGY SECTORS?
A. Aerospace/defense industry stocks logged a gain of more than 33% during
the period covered by this report. Among the Fund's top-performing
holdings in this category were McDonnell Douglas Corp. and United
Technologies Corp.
Computer software company stocks posted a more than 19% gain for the
reporting period. Among holdings in that category was industry leader
Microsoft Corp., which posted better-than-expected earnings for the third
quarter of 1996. During that three-month period, Microsoft aggressively
marketed a new version of its Internet Explorer web browser, concluding
deals with almost every one of the major on-line services.
Semiconductor stocks, which had lagged the securities of other technology
industries, staged a more recent comeback--a rally that was given a boost
when Intel Corp., the microchip manufacturing giant, reported its
third-quarter earnings
------------------------------------
As of October 31, 1996,
the Fund had 320 holdings
distributed over more than
50 industry categories.
------------------------------------
See important Fund & index disclosures inside front cover.
2
<PAGE> 5
PORTFOLIO COMPOSITION
As of October 31, 1996.
================================================================================
TOP 10 EQUITY HOLDINGS TOP 10 INDUSTRIES
================================================================================
1. Intel Corp. 1. Retail--Stores
2. Microsoft Corp. 2. Computer Software/Services
3. Cisco Systems, Inc. 3. Computer Networking
4. 3Com Corp. 4. Telecommunications
5. Pep Boys--Manny, Moe, & Jack 5. Medical--Patient Services
6. Safeway, Inc. 6. Finance--Consumer Credit
7. ADC Telecommunications, Inc. 7. Medical--Drugs
8. Nike, Inc.--Class B 8. Oil Equipment and Supplies
9. Sun Microsystems, Inc. 9. Medical Instruments/Products
10. Diamond Offshore Drilling 10. Insurance--Multi-line Property
Please keep in mind that the Fund's portfolio is subject to change and
there is no assurance the Fund will continue to hold any particular
security.
================================================================================
were better than expected. Intel, one of the Fund's top holdings, reported
that third-quarter orders exceeded shipments, suggesting personal-computer
sales were strengthening as the industry entered its crucial fourth
quarter for holiday sales. Intel's microprocessors are used in almost 90%
of the world's personal computers, making the company a bellwether in the
PC industry.
In addition to technology stocks, retail, financial, health-care, and
oil and gas industry equities also performed well during the period,
thanks to strong earnings.
Q. WHAT'S BEHIND THE POSITIVE EARNINGS TRENDS IN THE RETAIL INDUSTRY?
A. Earnings in the retail sector have been surprisingly strong, and they
continue to grow at an attractive pace. Consumer demand for goods has kept
store inventories low and fully priced. Some retailers also have benefited
from consolidations. For example, Toys R Us, Inc., one of the stocks in
the Fund's portfolio, eliminated its chief rival in the infant gear market
when it took over Baby Superstores, Inc. Another attractive retail stock
was Pep Boys--Manny, Moe & Jack, the auto-parts chain. The company is
expanding into maintenance of vehicle fleets and reconditioning cars for
rental firms.
Q. WHY HAVE FINANCIAL-INSTITUTION STOCKS PERFORMED WELL?
A. The stocks of financial institutions such as banks and insurance companies
recorded gains of more than 30% during the year ended October 31, 1996.
During the first half of 1996, financial-services companies reported a
higher proportion of positive earnings surprises than any other sector,
due to the favorable interest-rate environment during most of the
reporting period. Fund holdings in this sector included Student Loan
Marketing Association, CIGNA Corp., and MGIC Investment Corp.
Q. WHAT'S GOING ON IN THE HEALTH-CARE INDUSTRY?
A. Large hospital chains and managed-care companies have improved efficiency
through major restructuring efforts including consolidations, networking,
and increased reliance on managed care. Drug manufacturers worldwide
continue to benefit from ongoing cost-cutting efforts, price increases,
and the introduction of new drugs. Among the Fund's top performers in the
health-care sector were Health-South Corp., Cardinal Health, Inc., and
Oxford Health Plans, Inc.
Q. WHAT HAS BENEFITED THE OIL AND GAS INDUSTRY?
A. The oil and gas industry, in particular the drilling sector, has benefited
from consolidations. Fund holdings in this sector included Reading & Bates
Corp. and Global Marine, Inc.
Q. WHAT IS YOUR MARKET OUTLOOK?
A. As 1996 draws to a close, conditions appear favorable for the stock
market. The economy is growing moderately as evidenced by the 2.0% growth
rate of the GDP in the third quarter. Inflation remains low and the Fed
seems to have little provocation to raise interest rates. The bull market
has run longer than any in history--October marked its sixth year.
How much longer can this record bull market last? Analysts disagree. Some
predict it will continue well into 1997. Other forecasters see an aging
bull rather than a raging bull and are predicting the current market rally
may soon end.
In light of the heady market performance that stocks have delivered for
more than six years, we recommend that investors keep an eye on the big
picture. Certainly, investors have enjoyed successful performance in the
stock market for some time. But markets run in cycles--even the longest
bull market in history.
-------------------------------------
As 1996
draws to a close,
conditions appear favorable
for the stock market.
-------------------------------------
See important Fund & index disclosures inside front cover.
3
<PAGE> 6
Long-Term Performance
AIM SUMMIT FUND, INC. VS. BENCHMARK INDEXES
The chart below compares your Fund to benchmark indexes. It is intended to give
you a general idea of how your Fund performed compared to the stock market over
the period 10/31/86-10/31/96. It is important to understand the difference
between your Fund and an index. Your Fund's total return is shown with a sales
charge and includes Fund expenses and management fees. An index measures the
performance of a hypothetical portfolio, in this case the Lipper Growth Fund
and the S&P 500 Indexes. Unlike your Fund, an index is not managed; therefore
there are no sales charges, expenses or fees. You cannot invest in an index.
But if you could buy all the securities that make up a particular index, you
would incur expenses that would affect the return on your investment.
================================================================================
GROWTH OF A $10,000 INVESTMENT
PAST PERFORMANCE IS NO GUARANTEE OF COMPARABLE FUTURE RESULTS.
(In Thousands)
- --------------------------------------------------------------------------------
AIM Summit Fund Lipper Growth Fund Index S&P 500 Stock Index
- --------------------------------------------------------------------------------
10/31/86 $ 9,150 $10,000 $10,000
10/31/87 8,700 10,085 10,634
10/31/88 10,157 11,622 12,212
10/31/89 12,693 14,557 15,420
10/31/90 12,178 12,690 14,261
10/31/91 17,264 17,950 19,039
10/31/92 18,734 19,351 20,929
10/31/93 21,782 23,024 24,045
10/31/94 21,915 23,494 24,975
10/31/95 28,715 29,128 31,558
10/31/96 33,202 34,061 39,139
===============================================================================
Your Fund's total return includes sales charges, expenses, and management fees.
For Fund performance calculations and descriptions of indexes cited on this
page, please refer to the inside front cover.
===============================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 10/31/96. Including sales charges.
10 Years 12.75%
5 Years 11.96%
1 Year 5.78%*
*15.61% excluding sales charges.
===============================================================================
4
<PAGE> 7
For Your Consideration
INVESTMENT STRATEGIES FOR 1997
TO KEEP YOU IN THE MARKET COME RAIN OR COME SHINE
DIVERSIFICATION: WEATHER-PROOFING
YOUR PORTFOLIO
As another investment year comes to a close, it's a good time to return to
the basics of investing: risk and reward. Focus on what you are trying to
accomplish--your reward--and ask yourself how much risk you are willing to take.
You've probably often heard that the higher the risk, the higher the reward,
but that maxim doesn't always hold true. There are different types of risks,
and different types of investments may help buffer those risks.
DIVERSIFICATION AS A STRATEGY
With a diversified investment strategy, return depends on the overall
performance of the portfolio, rather than of one particular investment. The
gains of one sector may offset the losses of another.
Let's look at a core diversification strategy. Investments are classified
into several categories: cash or cash equivalents, income and growth. These
categories are made up of different securities and each meets basic needs:
o MONEY MARKET SECURITIES: ready cash for emergencies or other immediate
needs;
o BONDS: current income to cover ongoing expenses;
o STOCKS: funds for the future.
All of these investment categories belong in a balanced, diversified
portfolio. The blend depends on your age, time horizon, objectives and
tolerance for risk. Money market securities are the most conservative, bonds
range from conservative to aggressive, and stocks generally are the most
aggressive investment. Each category reacts differently to the economy and
other factors affecting the financial markets.
Mutual funds fit well within a diversification strategy. A mutual fund
usually has one or two objectives, such as growth or income or both. It spreads
its professionally managed assets among a variety of investments. When you
invest in more than one fund, you decrease your level of exposure to investment
risks.
HOW SAFE IS SAFE? STOCKS HEDGE
INFLATION
One such risk is inflation: a rise in cost without a rise in value received,
a decrease in the value of money over time. Inflation means that your
investment may lose purchasing power as the cost of living rises.
Overly risk-averse investors who prefer to keep their money in "safe"
investments
================================================================================
INFLATION'S SHRINKING EFFECT
- --------------------------------------------------------------------------------
At 4% inflation, $1,000 would shrink to:
5 YEARS $822
10 YEARS $676
15 YEARS $555
20 YEARS $456
25 YEARS $375
================================================================================
================================================================================
STOCKS HISTORICALLY BEAT OTHER INVESTMENTS
- --------------------------------------------------------------------------------
Average Annual Total Returns, Year End: 1925-1996*
*1996 is through 9/30/96.
LARGE-COMPANY STOCKS 10.7%
LONG-TERM GOVERNMENT BONDS 5.1%
U.S. TREASURY BILLS 3.8%
INFLATION 3.1%
================================================================================
Source: Ibbotson Associates, Inc. The Standard & Poor's Composite Index of
500 Stocks (S&P 500) is a group of unmanaged securities widely regarded by
investors to be representative of large-company stocks in general; results
shown assume the reinvestment of dividends. Inflation is determined by the
Consumer Price Index, a measure of change in consumer prices, as determined by
the U.S. Bureau of Labor Statistics.
Government securities, such as U.S. Treasury bills and long-term government
bonds, offer a high degree of safety and are guaranteed as to the timely
payment of principal and interest if held to maturity. U.S. Treasury bills are
short-term securities with maturities of one year or less. Long-term government
bonds used in this illustration have a maturity of approximately 20 years. Fund
shares are not insured and their value and yield will vary with market
conditions.
CONSIDER THE THREE Ds:
DIVERSIFICATION
DOLLAR-COST AVERAGING
DISCIPLINE
5
<PAGE> 8
such as savings accounts may not have enough growth in their portfolio to
offset inflation. The charts on the previous page show inflation's shrinking
effect and how stocks historically have outperformed all other asset
categories.
BONDS AND MONEY MARKET SECURITIES OFFER BALLAST
Despite their long-term performance, stocks are subject to dramatic swings.
Investing in bonds and conservative money market securities may help offset
stocks' volatility. High-quality bonds usually are considered lower-risk
investments compared to stocks. They pay higher income than short-term
investments such as certificates of deposit, money market funds or savings
accounts. Bank certificates of deposit, which are insured by the FDIC for up to
$100,000, are short-term investments that pay fixed principal and interest, but
are subject to fluctuating rollover rates and early withdrawal penalties. Fund
shares are not insured and their value and yield will vary with market
conditions.
The "money market" is the marketplace for all debt securities of less than
one-year maturity. These securities are considered excellent short-term parking
places for cash that you may need quickly. Money market securities are among
the most conservative investments and, consequently, their level of return is
much lower than that of stocks or bonds.
Your financial consultant can help you create a diversification strategy to
meet your risk tolerance and long-term objectives.
AIM offers a free brochure on asset allocation which also can help you
evaluate your investments. To order, please call 800-347-4246.
DOLLAR-COST AVERAGING
The motto says buy low and sell high, but it's easy for an investor to buy high
and sell low instead. When markets are rising, the temptation to get in on the
action can be irresistible. When markets are dropping, people naturally want to
cut their losses and get out while the getting is good.
Is there a way to enjoy the advantages of having investments without
second-guessing your own decisions?
DOLLAR-COST AVERAGING EMPLOYS DISCIPLINE, NOT EMOTION
With dollar-cost averaging, you invest a set amount of money at regular
intervals regardless of market swings or pundits' forecasts. You decide how
much and how often to invest. And you decide when to change the amount or the
schedule if doing so suits you.
================================================================================
DOLLAR-COST AVERAGING: $200 INVESTMENT PER MONTH*
- --------------------------------------------------------------------------------
MONTH NET ASSET VALUE # OF SHARES PURCHASED
January $24.00 8.333
February $20.00 10.000
March $14.00 14.286
April $18.00 11.111
May $22.00 9.090
June $24.00 8.333
Average Net Asset Value: $20.33
Total Shares Bought: 61.153
Average Purchase Price per Share: $19.62
*Results are hypothetical.
================================================================================
This technique has emotional advantages:
o You will be less tempted to make investment decisions on the basis of
short-term phenomena and your feelings of the moment.
o Whichever way the market is moving, you will be part of it. Your fortunes
as an investor won't depend entirely on your making a right call about
future trends.
Dollar-cost averaging also has financial advantages:
o You automatically purchase more shares of a mutual fund when its cost per
share is low and fewer shares when its cost per share is high. As the
illustration below shows, dollar-cost averaging may lower your average
cost per share.
Of course, you don't have to dollar-cost average all the money you invest.
The technique is especially appropriate to investments where your goals are
long-term, since over time market volatility tends to even itself out.
Dollar-cost averaging involves investing continuously regardless of
fluctuating securities prices, so you need to be confident that you can keep
making purchases for an extended period.
No investment technique can assure a profit in a declining market. What
dollar-cost averaging will do is apply discipline to your investing behavior,
discipline that can be especially important when market watchers issue
conflicting forecasts.
<PAGE> 9
SCHEDULE OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-96.17%
ADVERTISING/BROADCASTING-0.93%
American Radio Systems Corp.(a) 30,000 $ 915,000
- ----------------------------------------------------------------
Chancellor Corp.-Class A(a) 30,000 967,500
- ----------------------------------------------------------------
Clear Channel Communications,
Inc.(a) 40,400 2,949,200
- ----------------------------------------------------------------
Infinity Broadcasting Corp.-Class
A(a) 78,750 2,283,750
- ----------------------------------------------------------------
Interpublic Group of Companies,
Inc. 65,000 3,152,500
- ----------------------------------------------------------------
Jacor Communications, Inc.(a) 55,000 1,540,000
- ----------------------------------------------------------------
11,807,950
- ----------------------------------------------------------------
AEROSPACE/DEFENSE-2.39%
Boeing Co. (The) 32,000 3,052,000
- ----------------------------------------------------------------
Gulfstream Aerospace Corp.(a) 100,000 2,362,500
- ----------------------------------------------------------------
McDonnell Douglas Corp. 185,000 10,082,500
- ----------------------------------------------------------------
Northrop Grumman Corp. 55,000 4,441,250
- ----------------------------------------------------------------
United Technologies Corp. 79,000 10,171,250
- ----------------------------------------------------------------
30,109,500
- ----------------------------------------------------------------
AIRLINES-0.70%
UAL Corp.(a) 186,000 8,811,750
- ----------------------------------------------------------------
AUTOMOBILE (MANUFACTURERS)-0.27%
Chrysler Corp. 100,000 3,362,500
- ----------------------------------------------------------------
BANKING-1.99%
BankAmerica Corp. 50,000 4,575,000
- ----------------------------------------------------------------
Bank of Boston Corp. 35,000 2,240,000
- ----------------------------------------------------------------
Chase Manhattan Corp. 87,152 7,473,284
- ----------------------------------------------------------------
Citicorp 30,000 2,970,000
- ----------------------------------------------------------------
Southtrust Corp. 175,000 5,796,875
- ----------------------------------------------------------------
Washington Mutual, Inc. 50,000 2,112,500
- ----------------------------------------------------------------
25,167,659
- ----------------------------------------------------------------
BEVERAGES-0.21%
PepsiCo Inc. 90,000 2,666,250
- ----------------------------------------------------------------
BIOTECHNOLOGY-1.11%
AMGEN, Inc.(a) 100,200 6,143,512
- ----------------------------------------------------------------
Guidant Corp. 170,000 7,841,250
- ----------------------------------------------------------------
13,984,762
- ----------------------------------------------------------------
BUILDING MATERIALS-0.24%
Georgia-Pacific Corp. 40,000 3,000,000
- ----------------------------------------------------------------
BUSINESS SERVICES-1.28%
AccuStaff Inc.(a) 61,300 1,639,775
- ----------------------------------------------------------------
APAC Teleservices, Inc.(a) 25,000 1,153,125
- ----------------------------------------------------------------
Career Horizons, Inc.(a) 18,000 731,250
- ----------------------------------------------------------------
CUC International, Inc.(a) 56,400 1,381,800
- ----------------------------------------------------------------
Diebold, Inc. 60,500 3,478,750
- ----------------------------------------------------------------
Equifax, Inc. 125,400 3,730,650
- ----------------------------------------------------------------
Healthcare COMPARE Corp.(a) 60,500 2,662,000
- ----------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
BUSINESS SERVICES-(CONTINUED)
Olsten Corp. 66,100 $ 1,322,000
- ----------------------------------------------------------------
16,099,350
- ----------------------------------------------------------------
CHEMICALS-0.73%
Agrium Inc. (Canada) 53,100 710,212
- ----------------------------------------------------------------
Goodrich (B.F.) Co. (The) 200,000 8,475,000
- ----------------------------------------------------------------
9,185,212
- ----------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.54%
Airgas, Inc.(a) 110,200 2,493,275
- ----------------------------------------------------------------
Cytec Industries Inc.(a) 120,000 4,290,000
- ----------------------------------------------------------------
6,783,275
- ----------------------------------------------------------------
COMPUTER MINI/PCS-2.97%
COMPAQ Computer Corp.(a) 140,000 9,747,500
- ----------------------------------------------------------------
Dell Computer Corp.(a) 101,200 8,235,150
- ----------------------------------------------------------------
Gateway 2000, Inc.(a) 110,000 5,176,875
- ----------------------------------------------------------------
Rational Software Corp.(a) 78,000 2,993,250
- ----------------------------------------------------------------
Sun Microsystems, Inc.(a) 185,000 11,285,000
- ----------------------------------------------------------------
37,437,775
- ----------------------------------------------------------------
COMPUTER NETWORKING-5.20%
Ascend Communications, Inc.(a) 121,800 7,962,675
- ----------------------------------------------------------------
Cabletron Systems, Inc.(a) 130,000 8,108,750
- ----------------------------------------------------------------
Cascade Communications Corp.(a) 110,100 7,996,012
- ----------------------------------------------------------------
Cisco Systems, Inc.(a) 250,000 15,468,750
- ----------------------------------------------------------------
FORE Systems, Inc.(a) 150,000 5,962,500
- ----------------------------------------------------------------
Newbridge Networks Corp.(a)
(Canada) 219,400 6,938,525
- ----------------------------------------------------------------
3Com Corp.(a) 195,000 13,186,875
- ----------------------------------------------------------------
65,624,087
- ----------------------------------------------------------------
COMPUTER PERIPHERALS-0.96%
American Power Conversion Corp.(a) 28,200 602,775
- ----------------------------------------------------------------
Microchip Technology, Inc.(a) 54,200 1,964,750
- ----------------------------------------------------------------
Storage Technology Corp.(a) 121,800 5,191,725
- ----------------------------------------------------------------
U.S. Robotics Corp.(a) 69,900 4,394,962
- ----------------------------------------------------------------
12,154,212
- ----------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES-8.65%
Affiliated Computer Services,
Inc.(a) 13,100 720,500
- ----------------------------------------------------------------
Baan Co., N.V.(a) (Netherlands) 43,500 1,609,500
- ----------------------------------------------------------------
BISYS Group, Inc. (The)(a) 30,000 1,117,500
- ----------------------------------------------------------------
BMC Software, Inc.(a) 100,000 8,300,000
- ----------------------------------------------------------------
Cadence Design Systems, Inc.(a) 100,075 3,652,737
- ----------------------------------------------------------------
CBT Group PLC-ADR(a) (Ireland) 1,100 60,500
- ----------------------------------------------------------------
Ceridian Corp.(a) 100,000 4,962,500
- ----------------------------------------------------------------
Computer Associates International,
Inc. 172,000 10,169,500
- ----------------------------------------------------------------
Computer Sciences Corp.(a) 40,000 2,970,000
- ----------------------------------------------------------------
Compuware Corp.(a) 140,000 7,385,000
- ----------------------------------------------------------------
CSG Systems International, Inc.(a) 35,300 591,275
- ----------------------------------------------------------------
DST Systems, Inc.(a) 67,500 2,075,625
- ----------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTER SOFTWARE/SERVICES-(CONTINUED)
Electronic Arts, Inc.(a) 47,600 $ 1,785,000
- ----------------------------------------------------------------
First Data Corp. 28,900 2,304,775
- ----------------------------------------------------------------
HBO & Co. 52,900 3,180,613
- ----------------------------------------------------------------
HPR, Inc.(a) 33,000 462,000
- ----------------------------------------------------------------
Integrated Systems, Inc.(a) 25,300 683,100
- ----------------------------------------------------------------
McAfee Associates, Inc.(a) 90,900 4,135,950
- ----------------------------------------------------------------
Microsoft Corp.(a) 140,800 19,324,800
- ----------------------------------------------------------------
National Data Corp. 35,000 1,439,375
- ----------------------------------------------------------------
Network General Corp.(a) 137,800 3,324,425
- ----------------------------------------------------------------
Oracle Corp.(a) 189,300 8,009,756
- ----------------------------------------------------------------
Parametric Technology Corp.(a) 165,400 8,083,925
- ----------------------------------------------------------------
Physician Computer Network,
Inc.(a) 60,000 536,250
- ----------------------------------------------------------------
Pure Atria Corp.(a) 6,900 188,025
- ----------------------------------------------------------------
Sterling Commerce, Inc.(a) 128,311 3,608,747
- ----------------------------------------------------------------
Sterling Software, Inc.(a) 39,000 1,267,500
- ----------------------------------------------------------------
SunGard Data Systems, Inc.(a) 33,900 1,449,225
- ----------------------------------------------------------------
Synopsys, Inc.(a) 100,000 4,500,000
- ----------------------------------------------------------------
Systemsoft Corp.(a) 12,400 350,300
- ----------------------------------------------------------------
Transition Systems, Inc.(a) 1,400 13,300
- ----------------------------------------------------------------
Wind River Systems(a) 20,000 850,000
- ----------------------------------------------------------------
109,111,703
- ----------------------------------------------------------------
CONGLOMERATES-1.36%
Allied Signal Inc. 40,000 2,620,000
- ----------------------------------------------------------------
Johnson Controls, Inc. 55,000 4,015,000
- ----------------------------------------------------------------
Textron Inc. 38,000 3,372,500
- ----------------------------------------------------------------
Tyco International Ltd. 99,000 4,912,875
- ----------------------------------------------------------------
U.S. Industries, Inc.(a) 83,700 2,259,900
- ----------------------------------------------------------------
17,180,275
- ----------------------------------------------------------------
COSMETICS & TOILETRIES-0.64%
Avon Products, Inc. 75,000 4,068,750
- ----------------------------------------------------------------
Gillette Co. (The) 54,100 4,043,975
- ----------------------------------------------------------------
8,112,725
- ----------------------------------------------------------------
ELECTRIC POWER-0.62%
CMS Energy Corp. 120,000 3,795,000
- ----------------------------------------------------------------
Texas Utilities Co. 100,000 4,050,000
- ----------------------------------------------------------------
7,845,000
- ----------------------------------------------------------------
ELECTRONIC COMPONENTS/MISCELLANEOUS-0.74%
Berg Electronics Corp.(a) 31,400 887,050
- ----------------------------------------------------------------
BMC Industries, Inc. 29,800 882,825
- ----------------------------------------------------------------
Checkpoint Systems, Inc.(a) 101,000 2,259,875
- ----------------------------------------------------------------
SCI Systems, Inc.(a) 27,000 1,343,250
- ----------------------------------------------------------------
Symbol Technologies, Inc.(a) 39,200 1,759,100
- ----------------------------------------------------------------
Thermo Instrument Systems, Inc.(a) 71,900 2,174,975
- ----------------------------------------------------------------
9,307,075
- ----------------------------------------------------------------
FINANCE (ASSET MANAGEMENT)-1.64%
Bear Stearns Companies, Inc. 58,820 1,389,623
- ----------------------------------------------------------------
Franklin Resources, Inc. 44,600 3,144,300
- ----------------------------------------------------------------
Imperial Credit Industries,
Inc.(a) 100,000 1,812,500
- ----------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FINANCE (ASSET MANAGEMENT)-(CONTINUED)
Merrill Lynch & Co., Inc. 50,000 $ 3,512,500
- ----------------------------------------------------------------
Morgan Stanley Group, Inc. 139,000 6,984,750
- ----------------------------------------------------------------
Salomon Inc. 59,300 2,675,913
- ----------------------------------------------------------------
Schwab (Charles) Corp. 45,500 1,137,500
- ----------------------------------------------------------------
20,657,086
- ----------------------------------------------------------------
FINANCE (CONSUMER CREDIT)-4.15%
Aames Financial Corp. 7,300 325,762
- ----------------------------------------------------------------
Beneficial Corp. 49,400 2,889,900
- ----------------------------------------------------------------
Capital One Financial Corp. 84,400 2,626,950
- ----------------------------------------------------------------
Cityscape Financial Corp.(a) 24,500 630,875
- ----------------------------------------------------------------
Concord EFS, Inc.(a) 5,500 159,500
- ----------------------------------------------------------------
Credit Acceptance Corp.(a) 60,400 1,630,800
- ----------------------------------------------------------------
Federal Home Loan Mortgage Corp. 27,000 2,727,000
- ----------------------------------------------------------------
Federal National Mortgage
Association 91,000 3,560,375
- ----------------------------------------------------------------
First USA, Inc. 20,000 1,150,000
- ----------------------------------------------------------------
Green Tree Financial Corp. 200,000 7,925,000
- ----------------------------------------------------------------
Household International, Inc. 55,000 4,867,500
- ----------------------------------------------------------------
MBNA Corp. 81,300 3,069,075
- ----------------------------------------------------------------
Money Store, Inc. (The) 70,200 1,807,650
- ----------------------------------------------------------------
Olympic Financial Ltd.(a) 74,400 1,181,100
- ----------------------------------------------------------------
PMI Group, Inc. (The) 76,800 4,387,200
- ----------------------------------------------------------------
PMT Services, Inc.(a) 45,000 900,000
- ----------------------------------------------------------------
Student Loan Marketing Association 129,200 10,691,300
- ----------------------------------------------------------------
SunAmerica, Inc. 50,000 1,875,000
- ----------------------------------------------------------------
52,404,987
- ----------------------------------------------------------------
FINANCE (SAVINGS & LOAN)-0.37%
GreenPoint Financial Corp. 100,000 4,650,000
- ----------------------------------------------------------------
FOOD/PROCESSING-0.56%
ConAgra, Inc. 50,900 2,538,637
- ----------------------------------------------------------------
Dean Foods Co. 100,000 2,900,000
- ----------------------------------------------------------------
Richfood Holdings, Inc. 66,850 1,612,756
- ----------------------------------------------------------------
7,051,393
- ----------------------------------------------------------------
FUNERAL SERVICES-0.59%
Service Corp. International 260,000 7,410,000
- ----------------------------------------------------------------
GAS DISTRIBUTION-0.28%
NICOR, Inc. 100,000 3,487,500
- ----------------------------------------------------------------
HOMEBUILDING-0.37%
Fleetwood Enterprises, Inc. 140,000 4,725,000
- ----------------------------------------------------------------
HOTELS/MOTELS-1.18%
HFS, Inc.(a) 150,000 10,987,500
- ----------------------------------------------------------------
Marriott International, Inc. 50,000 2,843,750
- ----------------------------------------------------------------
Promus Hotel Corp.(a) 35,000 1,111,250
- ----------------------------------------------------------------
14,942,500
- ----------------------------------------------------------------
INSURANCE (LIFE & HEALTH)-1.07%
Compdent Corp.(a) 33,700 1,158,437
- ----------------------------------------------------------------
Conseco Inc. 162,000 8,667,000
- ----------------------------------------------------------------
Equitable Companies, Inc. 92,000 2,162,000
- ----------------------------------------------------------------
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
INSURANCE (LIFE &
HEALTH)-(CONTINUED)
United Companies Financial Corp. 50,000 $ 1,493,750
- ----------------------------------------------------------------
13,481,187
- ----------------------------------------------------------------
INSURANCE (MULTI-LINE
PROPERTY)-3.02%
Allstate Corp. 59,200 3,322,600
- ----------------------------------------------------------------
American International Group, Inc. 33,000 3,584,625
- ----------------------------------------------------------------
CapMAC Holdings Inc. 48,100 1,605,338
- ----------------------------------------------------------------
CIGNA Corp. 50,000 6,525,000
- ----------------------------------------------------------------
Everest Reinsurance Holdings, Inc. 106,800 2,723,400
- ----------------------------------------------------------------
ITT Hartford Group, Inc. 43,000 2,709,000
- ----------------------------------------------------------------
MGIC Investment Corp. 130,000 8,921,250
- ----------------------------------------------------------------
Progressive Corp. 3,200 220,000
- ----------------------------------------------------------------
TIG Holdings, Inc. 37,600 1,085,700
- ----------------------------------------------------------------
Travelers Group, Inc. 135,450 7,348,163
- ----------------------------------------------------------------
38,045,076
- ----------------------------------------------------------------
LEISURE & RECREATION-1.91%
Callaway Golf Co. 97,000 2,970,625
- ----------------------------------------------------------------
Carnival Cruise Lines, Inc.-Class A 127,200 3,831,900
- ----------------------------------------------------------------
Eastman Kodak Co. 130,000 10,367,500
- ----------------------------------------------------------------
Harley-Davidson, Inc. 101,000 4,557,625
- ----------------------------------------------------------------
Mattel, Inc. 62,500 1,804,688
- ----------------------------------------------------------------
Speedway Motorsports, Inc.(a) 21,700 496,388
- ----------------------------------------------------------------
24,028,726
- ----------------------------------------------------------------
MACHINERY (HEAVY)-1.46%
Caterpillar Inc. 55,000 3,774,375
- ----------------------------------------------------------------
Dover Corp. 213,000 10,942,875
- ----------------------------------------------------------------
Ingersoll-Rand Co. 90,000 3,746,250
- ----------------------------------------------------------------
18,463,500
- ----------------------------------------------------------------
MACHINERY (MISCELLANEOUS)-0.59%
Pentair, Inc. 19,200 484,800
- ----------------------------------------------------------------
Thermo Electron Corp.(a) 191,250 6,980,625
- ----------------------------------------------------------------
7,465,425
- ----------------------------------------------------------------
MEDICAL (DRUGS)-3.95%
Abbott Laboratories 75,000 3,796,875
- ----------------------------------------------------------------
American Home Products Corp. 58,000 3,552,500
- ----------------------------------------------------------------
Amerisource Healthcorp(a) 53,000 2,245,875
- ----------------------------------------------------------------
Cardinal Health, Inc. 105,000 8,242,500
- ----------------------------------------------------------------
Dura Pharmaceuticals, Inc.(a) 25,000 862,500
- ----------------------------------------------------------------
Elan Corp., PLC-ADR(a) (Ireland) 172,000 4,773,000
- ----------------------------------------------------------------
ICN Pharmaceuticals, Inc. 132,700 2,521,300
- ----------------------------------------------------------------
Johnson & Johnson 70,000 3,447,500
- ----------------------------------------------------------------
Jones Medical Industries, Inc. 21,250 924,375
- ----------------------------------------------------------------
Merck & Co., Inc. 63,000 4,669,875
- ----------------------------------------------------------------
Parexel International Corp.(a) 13,600 666,400
- ----------------------------------------------------------------
Pfizer, Inc. 25,000 2,068,750
- ----------------------------------------------------------------
Pharmacia & Upjohn, Inc. 60,000 2,160,000
- ----------------------------------------------------------------
Rhone-Poulenc Rorer, Inc. 10,800 724,950
- ----------------------------------------------------------------
SmithKline Beecham PLC-ADR
(United Kingdom) 100,000 6,262,500
- ----------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
MEDICAL (DRUGS)-(CONTINUED)
Teva Pharmaceutical Industries
Ltd. (Israel) 70,000 $ 2,931,250
- ----------------------------------------------------------------
49,850,150
- ----------------------------------------------------------------
MEDICAL (PATIENT SERVICES)-4.63%
ClinTrials Inc.(a) 13,700 508,612
- ----------------------------------------------------------------
Columbia/HCA Healthcare Corp. 250,500 8,955,375
- ----------------------------------------------------------------
Genesis Health Ventures, Inc.(a) 54,800 1,253,550
- ----------------------------------------------------------------
Health Care & Retirement Corp.(a) 100,000 2,462,500
- ----------------------------------------------------------------
Health Management Associates,
Inc.-Class A(a) 180,000 3,960,000
- ----------------------------------------------------------------
HEALTHSOUTH Corp.(a) 253,400 9,502,500
- ----------------------------------------------------------------
Lincare Holdings Inc.(a) 120,000 4,500,000
- ----------------------------------------------------------------
Manor Care, Inc. 51,000 2,001,750
- ----------------------------------------------------------------
MedPartners, Inc.(a) 107,800 2,277,275
- ----------------------------------------------------------------
OccuSystems, Inc.(a) 25,000 684,375
- ----------------------------------------------------------------
OrNda HealthCorp(a) 70,000 1,907,500
- ----------------------------------------------------------------
Orthodontic Centers of America,
Inc.(a) 52,400 753,250
- ----------------------------------------------------------------
Oxford Health Plans, Inc.(a) 142,500 6,483,750
- ----------------------------------------------------------------
PhyCor, Inc.(a) 46,050 1,427,550
- ----------------------------------------------------------------
Tenet Healthcare Corp.(a) 260,000 5,427,500
- ----------------------------------------------------------------
Total Renal Care Holdings, Inc.(a) 34,300 1,337,700
- ----------------------------------------------------------------
Universal Health Services, Inc.(a) 77,100 1,927,500
- ----------------------------------------------------------------
Vencor, Inc.(a) 100,000 2,962,500
- ----------------------------------------------------------------
58,333,187
- ----------------------------------------------------------------
MEDICAL INSTRUMENTS/PRODUCTS-3.50%
Baxter International Inc. 83,800 3,488,175
- ----------------------------------------------------------------
Becton, Dickinson & Co. 112,000 4,872,000
- ----------------------------------------------------------------
Boston Scientific Corp.(a) 60,000 3,262,500
- ----------------------------------------------------------------
Cardiothoracic Systems, Inc.(a) 20,000 380,000
- ----------------------------------------------------------------
Dentsply International, Inc. 35,500 1,495,438
- ----------------------------------------------------------------
IDEXX Laboratories, Inc.(a) 52,900 2,076,325
- ----------------------------------------------------------------
Invacare Corp. 37,000 1,036,000
- ----------------------------------------------------------------
Medtronic, Inc. 75,300 4,847,438
- ----------------------------------------------------------------
Omnicare, Inc. 105,200 2,866,700
- ----------------------------------------------------------------
Physician Sales & Services, Inc.(a) 40,000 850,000
- ----------------------------------------------------------------
Quintiles Transnational Corp.(a) 29,000 1,906,750
- ----------------------------------------------------------------
Spine-Tech, Inc.(a) 4,500 113,625
- ----------------------------------------------------------------
St. Jude Medical, Inc.(a) 74,200 2,930,900
- ----------------------------------------------------------------
Stryker Corp.(a) 100,000 2,975,000
- ----------------------------------------------------------------
Sybron International Corp.(a) 206,900 6,025,963
- ----------------------------------------------------------------
US Surgical Corp. 120000 5,025,000
- ----------------------------------------------------------------
44,151,814
- ----------------------------------------------------------------
NATURAL GAS PIPELINE-0.10%
Columbia Gas Systems, Inc. 20,700 1,257,525
- ----------------------------------------------------------------
OFFICE AUTOMATION-0.35%
Danka Business Systems PLC-ADR
(United Kingdom) 110,600 4,382,525
- ----------------------------------------------------------------
OFFICE PRODUCTS-0.55%
Avery-Dennison Corp. 31,000 2,042,125
- ----------------------------------------------------------------
</TABLE>
9
<PAGE> 12
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
OFFICE PRODUCTS-(CONTINUED)
Reynolds & Reynolds Co.-Class A 183,600 $ 4,842,450
- ----------------------------------------------------------------
6,884,575
- ----------------------------------------------------------------
OIL & GAS (DRILLING)-1.23%
Global Marine, Inc.(a) 100,000 1,837,500
- ----------------------------------------------------------------
Marine Drilling Co., Inc.(a) 75,000 1,040,625
- ----------------------------------------------------------------
Reading & Bates Corp.(a) 220,000 6,325,000
- ----------------------------------------------------------------
Transocean Offshore Inc. 100,000 6,325,000
- ----------------------------------------------------------------
15,528,125
- ----------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-0.60%
Burlington Resources, Inc. 41,100 2,070,412
- ----------------------------------------------------------------
USX-Marathon Group 250,000 5,468,750
- ----------------------------------------------------------------
7,539,162
- ----------------------------------------------------------------
OIL & GAS (SERVICES)-3.01%
British Petroleum Co. PLC-ADR
(United Kingdom) 70,000 9,003,750
- ----------------------------------------------------------------
Camco International, Inc. 75,000 2,906,250
- ----------------------------------------------------------------
Consolidated Natural Gas Co. 75,000 3,984,375
- ----------------------------------------------------------------
Louisiana Land & Exploration Co. 44,800 2,548,000
- ----------------------------------------------------------------
NorAm Energy Corp. 105,300 1,618,987
- ----------------------------------------------------------------
Pennzoil Co. 109,000 5,559,000
- ----------------------------------------------------------------
Phillips Petroleum Co. 50,000 2,050,000
- ----------------------------------------------------------------
Pride Petroleum Services, Inc.(a) 145,000 2,537,500
- ----------------------------------------------------------------
Texaco Inc. 55,000 5,589,375
- ----------------------------------------------------------------
Unocal Corp. 60,000 2,197,500
- ----------------------------------------------------------------
37,994,737
- ----------------------------------------------------------------
OIL EQUIPMENT & SUPPLIES-3.57%
Baker Hughes, Inc. 125,000 4,453,125
- ----------------------------------------------------------------
Cooper Cameron Corp.(a) 70,000 4,471,250
- ----------------------------------------------------------------
Diamond Offshore Drilling, Inc.(a) 185,000 11,261,875
- ----------------------------------------------------------------
Dresser Industries, Inc. 100,000 3,287,500
- ----------------------------------------------------------------
ENSCO International, Inc.(a) 70,000 3,027,500
- ----------------------------------------------------------------
Rowan Companies, Inc.(a) 247,000 5,526,625
- ----------------------------------------------------------------
Schlumberger Ltd. 55,000 5,451,875
- ----------------------------------------------------------------
Smith International, Inc.(a) 85,000 3,230,000
- ----------------------------------------------------------------
Tidewater, Inc. 70,000 3,062,500
- ----------------------------------------------------------------
Varco International, Inc.(a) 62,100 1,226,475
- ----------------------------------------------------------------
44,998,725
- ----------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.50%
Mead Corp. 110,000 6,242,500
- ----------------------------------------------------------------
POLLUTION CONTROL-0.35%
United Waste Systems, Inc.(a) 33,500 1,151,562
- ----------------------------------------------------------------
USA Waste Services, Inc.(a) 100,000 3,200,000
- ----------------------------------------------------------------
4,351,562
- ----------------------------------------------------------------
PUBLISHING-0.34%
Gannett Co., Inc. 50,000 3,793,750
- ----------------------------------------------------------------
Gartner Group, Inc.(a) 16,400 504,300
- ----------------------------------------------------------------
4,298,050
- ----------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RESTAURANTS-0.38%
Brinker International, Inc.(a) 135,000 $ 2,295,000
- ----------------------------------------------------------------
Cracker Barrel Old Country Store,
Inc 25,900 527,712
- ----------------------------------------------------------------
Lone Star Steakhouse & Saloon(a) 76,700 1,965,437
- ----------------------------------------------------------------
4,788,149
- ----------------------------------------------------------------
RETAIL (FOOD & DRUG)-2.94%
American Stores Co. 164,000 6,785,500
- ----------------------------------------------------------------
Eckerd Corp.(a) 80,000 2,220,000
- ----------------------------------------------------------------
Kroger Co. (The)(a) 66,000 2,945,250
- ----------------------------------------------------------------
Revco D.S., Inc.(a) 60,200 1,813,525
- ----------------------------------------------------------------
Safeway, Inc.(a) 280,000 12,005,000
- ----------------------------------------------------------------
Starbucks Corp.(a) 110,000 3,575,000
- ----------------------------------------------------------------
Thrifty PayLess Holdings, Inc.(a) 7,000 149,625
- ----------------------------------------------------------------
Vons Companies, Inc. (The)(a) 135,900 7,525,462
- ----------------------------------------------------------------
37,019,362
- ----------------------------------------------------------------
RETAIL (STORES)-10.04%
AutoZone, Inc.(a) 130,000 3,331,250
- ----------------------------------------------------------------
Bed, Bath & Beyond, Inc.(a) 65,100 1,643,775
- ----------------------------------------------------------------
CDW Computer Centers, Inc.(a) 34,750 2,187,078
- ----------------------------------------------------------------
CompUSA, Inc.(a) 43,600 2,016,500
- ----------------------------------------------------------------
Consolidated Stores Corp.(a) 139,800 5,399,775
- ----------------------------------------------------------------
Corporate Express, Inc.(a) 57,100 1,862,888
- ----------------------------------------------------------------
Dayton-Hudson Corp. 214,500 7,427,063
- ----------------------------------------------------------------
Dollar General Corp. 42,375 1,175,906
- ----------------------------------------------------------------
Dollar Tree Stores, Inc.(a) 30,000 1,132,500
- ----------------------------------------------------------------
Federated Department Stores, Inc. 85,000 2,805,000
- ----------------------------------------------------------------
Fila Holding S.p.A.-ADR (Italy) 70,000 5,040,000
- ----------------------------------------------------------------
Finish Line, Inc. (The)-Class A(a) 30,000 1,275,000
- ----------------------------------------------------------------
Gap, Inc. (The) 135,000 3,915,000
- ----------------------------------------------------------------
Global DirectMail Corp.(a) 6,500 320,125
- ----------------------------------------------------------------
Home Depot, Inc. 125,000 6,843,750
- ----------------------------------------------------------------
Jones Apparel Group, Inc.(a) 30,000 937,500
- ----------------------------------------------------------------
Kohl's Corp.(a) 50,000 1,800,000
- ----------------------------------------------------------------
Lowe's Companies, Inc. 184,700 7,457,263
- ----------------------------------------------------------------
Meyer (Fred), Inc.(a) 40,500 1,422,563
- ----------------------------------------------------------------
Micro Warehouse, Inc.(a) 68,900 1,584,700
- ----------------------------------------------------------------
Neiman-Marcus Group, Inc. (The)(a) 18,000 587,250
- ----------------------------------------------------------------
Oakley, Inc.(a) 240,000 3,570,000
- ----------------------------------------------------------------
Pep Boys-Manny Moe & Jack 352,000 12,320,000
- ----------------------------------------------------------------
Petco Animal Supplies, Inc.(a) 40,000 940,000
- ----------------------------------------------------------------
PETsMART, Inc.(a) 109,300 2,951,100
- ----------------------------------------------------------------
Saks Holdings, Inc.(a) 15,000 525,000
- ----------------------------------------------------------------
Sports Authority, Inc. (The)(a) 145,650 3,532,012
- ----------------------------------------------------------------
Staples, Inc.(a) 450,000 8,381,250
- ----------------------------------------------------------------
Sysco Corp. 100,000 3,400,000
- ----------------------------------------------------------------
Tech Data Corp.(a) 89,200 2,296,900
- ----------------------------------------------------------------
Tiffany & Co. 40,000 1,480,000
- ----------------------------------------------------------------
TJX Companies, Inc. 120,000 4,800,000
- ----------------------------------------------------------------
Toys "R" Us, Inc.(a) 300,000 10,162,500
- ----------------------------------------------------------------
Viking Office Products, Inc.(a) 259,800 7,566,675
- ----------------------------------------------------------------
</TABLE>
10
<PAGE> 13
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (STORES)-(CONTINUED)
Williams-Sonoma, Inc.(a) 28,000 $ 770,000
- ----------------------------------------------------------------
Woolworth Corp.(a) 180,000 3,780,000
- ----------------------------------------------------------------
126,640,323
- ----------------------------------------------------------------
SEMICONDUCTORS-2.58%
Altera Corp.(a) 70,000 4,340,000
- ----------------------------------------------------------------
Intel Corp. 225,000 24,721,875
- ----------------------------------------------------------------
Solectron Corp.(a) 16,500 882,750
- ----------------------------------------------------------------
Texas Instruments, Inc. 45,000 2,165,625
- ----------------------------------------------------------------
Vitesse Semiconductor Corp.(a) 15,000 478,125
- ----------------------------------------------------------------
32,588,375
- ----------------------------------------------------------------
SHOES & RELATED APPAREL-1.15%
NIKE, Inc.-Class B 194,000 11,421,750
- ----------------------------------------------------------------
Nine West Group, Inc.(a) 61,200 3,052,350
- ----------------------------------------------------------------
14,474,100
- ----------------------------------------------------------------
TELECOMMUNICATIONS-4.94%
ADC Telecommunications, Inc.(a) 175,000 11,965,625
- ----------------------------------------------------------------
Allen Group, Inc. 3,400 53,975
- ----------------------------------------------------------------
Andrew Corp.(a) 134,550 6,559,313
- ----------------------------------------------------------------
Lucent Technologies, Inc. 125,000 5,875,000
- ----------------------------------------------------------------
MFS Communications Co., Inc.(a) 125,000 6,265,625
- ----------------------------------------------------------------
Northern Telecom Ltd. (Canada) 34,000 2,214,250
- ----------------------------------------------------------------
PairGain Technologies, Inc.(a) 99,600 6,859,950
- ----------------------------------------------------------------
Premiere Technologies Inc.(a) 10,100 164,125
- ----------------------------------------------------------------
Premisys Communications, Inc.(a) 28,400 1,420,000
- ----------------------------------------------------------------
Telefonaktiebolaget LM
Ericsson-ADR (Sweden) 330,000 9,116,250
- ----------------------------------------------------------------
Tellabs, Inc.(a) 132,000 11,236,500
- ----------------------------------------------------------------
360 Communications Co.(a) 23,333 527,909
- ----------------------------------------------------------------
62,258,522
- ----------------------------------------------------------------
TELEPHONE-0.63%
Cincinnati Bell, Inc. 161,600 7,979,000
- ----------------------------------------------------------------
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TEXTILES-2.02%
Designer Holdings Ltd.(a) 13,600 $ 260,100
- ----------------------------------------------------------------
Fruit Of The Loom, Inc.-Class A(a) 125,000 4,546,875
- ----------------------------------------------------------------
Liz Claiborne, Inc. 245,000 10,351,250
- ----------------------------------------------------------------
Nautica Enterprises, Inc.(a) 83,000 2,552,250
- ----------------------------------------------------------------
Russell Corp. 53,600 1,520,900
- ----------------------------------------------------------------
Tommy Hilfiger Corp.(a) 90,000 4,680,000
- ----------------------------------------------------------------
Unifi, Inc. 50,500 1,571,813
- ----------------------------------------------------------------
25,483,188
- ----------------------------------------------------------------
TRANSPORTATION (MISCELLANEOUS)-0.09%
Rural/Metro Corp.(a) 30,000 1,095,000
- ----------------------------------------------------------------
Total Common Stocks 1,212,702,096
- ----------------------------------------------------------------
PRINCIPAL
AMOUNT
CONVERTIBLE CORPORATE BONDS-0.57%
FINANCE (CONSUMER CREDIT)-0.04%
Cityscape Financial Corp.,
Conv. Sub. Deb., 6.00%, 05/01/06
(Acquired 08/06/96-08/29/96;
Cost $645,939)(b) $ 475,000 501,577
- ----------------------------------------------------------------
RESTAURANTS-0.53%
Boston Chicken, Inc.,
Conv. Liquid Yield Option
Notes, 8.00%, 06/01/15(c) 20,830,000 6,743,713
- ----------------------------------------------------------------
Total Convertible Corporate
Bonds 7,245,290
- ----------------------------------------------------------------
REPURCHASE AGREEMENTS-4.09%(d)
Daiwa Securities America Inc.,
5.53%, 11/01/96(e) 518,937 518,937
- ----------------------------------------------------------------
SBC Capital Markets, Inc.,
5.55%, 11/01/96(f) 51,000,000 51,000,000
- ----------------------------------------------------------------
Total Repurchase Agreements 51,518,937
- ----------------------------------------------------------------
TOTAL INVESTMENTS-100.83% 1,271,466,323
- ----------------------------------------------------------------
OTHER ASSETS LESS
LIABILITIES-(0.83)% (10,458,079)
- ----------------------------------------------------------------
NET ASSETS-100.00% $1,261,008,244
================================================================
</TABLE>
Abbreviations:
ADR - American Depository Receipts
Conv. - Convertible
Deb. - Debenture
Sub. - Subordinate
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Directors. The market
value of this security at October 31, 1996 was $501,577 which represented
0.04% of the Fund's net assets.
(c) Zero coupon bond. The interest rate shown represents the rate of the
original issue discount.
(d) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to insure its market value as being 102% of the sales price of the
repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds, private
accounts and certain non-registered investment companies managed by the
investment advisor or its affiliates.
(e) Joint repurchase agreement entered into 10/31/96 with a maturing value of
$750,115,208. Collateralized by $733,115,000 U.S. Treasury obligations, 0%
to 10.375% due 11/15/96 to 08/15/23.
(f) Joint repurchase agreement entered into 10/31/96 with a maturing value of
$700,107,917. Collateralized by $691,506,000 U.S. Treasury obligations, 0%
to 9.125% due 11/30/96 to 10/31/01.
See Notes to Financial Statements.
11
<PAGE> 14
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$963,750,659) $1,271,466,323
- ---------------------------------------------------------
Receivables for:
Investments sold 373,934
- ---------------------------------------------------------
Capital stock sold 29,195
- ---------------------------------------------------------
Dividends and interest 530,954
- ---------------------------------------------------------
Investment for deferred compensation
plan 19,335
- ---------------------------------------------------------
Other assets 25,619
Total assets 1,272,445,360
- ---------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 10,337,638
- ---------------------------------------------------------
Capital stock reacquired 114,117
- ---------------------------------------------------------
Deferred compensation 19,335
- ---------------------------------------------------------
Accrued advisory fees 694,965
- ---------------------------------------------------------
Accrued accounting service fees 5,450
- ---------------------------------------------------------
Accrued directors' fees 933
- ---------------------------------------------------------
Accrued operating expenses 264,678
- ---------------------------------------------------------
Total liabilities 11,437,116
- ---------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES
OUTSTANDING $1,261,008,244
=========================================================
Capital stock, $.01 par value per share:
Authorized 1,000,000,000
- ---------------------------------------------------------
Outstanding 97,070,057
=========================================================
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE $ 12.99
=========================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $73,997 foreign
withholding tax) $ 9,131,189
- --------------------------------------------------------
Interest 2,131,750
- --------------------------------------------------------
Total investment income 11,262,939
- --------------------------------------------------------
EXPENSES:
Advisory fees 7,360,028
- --------------------------------------------------------
Custodian fees 173,520
- --------------------------------------------------------
Transfer agent fees 23,774
- --------------------------------------------------------
Accounting service fees 63,439
- --------------------------------------------------------
Directors' fees 11,952
- --------------------------------------------------------
Other 339,878
- --------------------------------------------------------
Total expenses 7,972,591
- --------------------------------------------------------
Less: Expenses paid indirectly (1,368)
- --------------------------------------------------------
Net expenses 7,971,223
- --------------------------------------------------------
Net investment income 3,291,716
- --------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENT
SECURITIES AND FUTURES CONTRACTS:
Net realized gain on sales of:
Investment securities 113,288,006
- --------------------------------------------------------
Futures contracts 853,326
- --------------------------------------------------------
114,141,332
- --------------------------------------------------------
Net unrealized appreciation of investment
securities 50,514,049
- --------------------------------------------------------
Net gain on investment securities and
futures contracts 164,655,381
- --------------------------------------------------------
Net increase in net assets resulting from
operations $167,947,097
========================================================
</TABLE>
See Notes to Financial Statements.
12
<PAGE> 15
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
OPERATIONS:
Net investment income $ 3,291,716 $ 2,929,038
- ---------------------------------------------------------------------------------------------------------------------------
Net realized gain on sales of investment securities and futures contracts 114,141,332 74,322,239
- ---------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities 50,514,049 169,626,929
- ---------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 167,947,097 246,878,206
- ---------------------------------------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (2,276,042) (7,935,485)
- ---------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains (74,181,022) (30,550,717)
- ---------------------------------------------------------------------------------------------------------------------------
Net equalization credits 2,660,812 1,739,780
- ---------------------------------------------------------------------------------------------------------------------------
Net increase from capital stock transactions 116,846,774 74,806,153
- ---------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 210,997,619 284,937,937
- ---------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 1,050,010,625 765,072,688
- ---------------------------------------------------------------------------------------------------------------------------
End of period $1,261,008,244 $1,050,010,625
===========================================================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $ 817,023,360 $ 700,176,586
- ---------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income 22,676,773 19,000,287
- ---------------------------------------------------------------------------------------------------------------------------
Undistributed net realized gain on sales of investment securities and futures
contracts 113,592,447 73,632,137
- ---------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities 307,715,664 257,201,615
- ---------------------------------------------------------------------------------------------------------------------------
$1,261,008,244 $1,050,010,625
===========================================================================================================================
</TABLE>
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
October 31, 1996
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Summit Fund, Inc. (the "Fund") is a Maryland corporation registered under
the Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund's investment objective is capital
growth.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. Security Valuations -- Common stocks listed or traded on an exchange are
valued at the last sales price on the exchange on which the security is
principally traded, or lacking any sales on a particular day, the security is
valued at the mean between the closing bid and asked prices on that day.
Exchange listed convertible bonds are valued at the mean between the closing
bid and asked prices obtained from a broker-dealer. Each security traded in
the over-the-counter market (but not including securities reported on the
NASDAQ National Market System) is valued at the mean between the last bid and
asked prices based upon quotes furnished by market makers for such
securities. Each security reported on the NASDAQ National Market System is
valued at the last sales price on the valuation date or absent a last sales
price, at the mean of the closing bid and asked prices. Securities for which
market quotations are not readily available or are questionable are valued at
fair value as determined in good faith by or under the supervision of the
Fund's officers in a manner specifically authorized by the Board of Directors
of the Fund. Short-term obligations having 60 days or less to maturity are
valued at amortized cost which approximates market value.
B. Securities Transactions, Investment Income and Distributions -- Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date
and is recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date.
C. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
D. Equalization -- The Fund follows the accounting practice known as
equalization by which a portion of the proceeds from
13
<PAGE> 16
sales and costs of repurchases of Fund shares, equivalent on a per share
basis to the amount of undistributed net investment income, is credited or
charged to undistributed income when the transaction is recorded so that the
undistributed net investment income per share is unaffected by sales or
redemptions of Fund shares.
E. Stock Index Futures Contracts -- The Fund may purchase or sell stock index
futures contracts as a hedge against changes in market conditions. Initial
margin deposits required upon entering into futures contracts are satisfied
by the segregation of specific securities as collateral for the account of
the broker (the Fund's agent in acquiring the futures position). During the
period the futures contracts are open, changes in the value of the contracts
are recognized as unrealized gains or losses by "marking to market" on a
daily basis to reflect the market value of the contracts at the end of each
day's trading. Variation margin payments are made or received depending upon
whether unrealized gains or losses are incurred. When the contracts are
closed, the Fund recognizes a realized gain or loss equal to the difference
between the proceeds from, or cost of, the closing transaction and the Fund's
basis in the contract. Risks include the possibility of an illiquid market
and that a change in the value of contracts may not correlate with changes in
the value of the securities being hedged.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund has entered into an investment advisory agreement with A I M Advisors,
Inc. ("AIM"). Under the terms of the advisory agreement, the Fund pays AIM a fee
at the annual rate of 1.0% of the first $10 million of the Fund's average daily
net assets, 0.75% of the next $140 million of the Fund's average daily net
assets and 0.625% of the Fund's average daily net assets in excess of $150
million. Under the terms of a restated sub-advisory agreement dated April 1,
1996 between AIM and Trade Street Investment Associates, Inc. ("TradeStreet"), a
new subsidiary of NationsBank, N.A. and a registered investment advisor, AIM
pays TradeStreet a fee at an annual rate of 0.50% of the first $10 million of
the Fund's average daily net assets, 0.35% of the next $140 million of the
Fund's average daily net assets, 0.225% of the next $550 million of the Fund's
average daily net assets and 0.15% of the Fund's average daily net assets in
excess of $700 million.
The Fund, pursuant to an administrative services agreement with AIM, has
agreed to reimburse AIM for certain costs incurred in providing accounting
services to the Fund. During the year ended October 31, 1996, the Fund
reimbursed AIM $63,439 for such services.
The Fund incurred expenses of $1,368 for pricing services which are paid
through directed brokerage commissions. The effect of the above arrangement
resulted in a reduction in the Fund's total expenses of $1,368 during the year
ended October 31, 1996.
During the year ended October 31, 1996, the Fund paid legal fees of $6,421 for
services rendered by Kramer, Levin, Naftalis & Frankel as counsel to the Board
of Directors. A member of that firm is a director of the Fund.
Substantially all shares of the Fund are held of record by State Street Bank &
Trust Company as custodian for Summit Investors Plans, a unit investment trust
that is sponsored by A I M Distributors, Inc. (an affiliated company of AIM).
Certain officers and directors of the Fund are officers of AIM and A I M
Distributors, Inc.
NOTE 3-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Fund may invest directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 4-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $325,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. Interest on
borrowings under the line of credit is payable on maturity or prepayment date.
Prior to an amendment of the line of credit on July 19, 1996, the Fund was
limited to borrowing $14,700,000. During the year, the Fund did not borrow under
the line of credit agreement. The funds which are party to the line of credit
are charged a commitment fee of 0.08% on the unused balance of the committed
line. The commitment fee is allocated among the funds based on their respective
average net assets for the period.
NOTE 5-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended October 31, 1996, was
$1,365,656,432 and $1,312,780,236, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of October 31, 1996, on a tax basis, is as follows:
Aggregate unrealized appreciation of
investment securities $319,252,345
- ----------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (12,148,699)
- ----------------------------------------------------------
Net unrealized appreciation of investment
securities $307,103,646
==========================================================
Cost of investments for tax purposes is $964,362,677.
NOTE 6-CAPITAL STOCK
Changes in capital stock outstanding for the years ended October 31, 1996 and
1995 were as follows:
<TABLE>
<CAPTION>
1996 1995
----------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ---------- --------- ------------
<S> <C> <C> <C> <C>
Sold 9,230,433 $108,559,927 10,287,176 $101,899,889
- ------------- --------- ------------ ---------- ------------
Issued as
reinvestment
of dividends 6,936,341 74,080,187 4,324,777 36,847,100
- ------------- ---------- ------------ ---------- ------------
Reacquired (5,576,722) (65,793,340) (6,354,529) (63,940,836)
- ------------- ---------- ------------ ---------- ------------
10,590,052 $116,846,774 8,257,424 $ 74,806,153
========== ============ ========== ============
</TABLE>
14
<PAGE> 17
NOTE 7-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of capital stock
outstanding during each of the years in the three-year period ended October 31,
1996, the ten months ended October 31, 1993 and each of the years in the
six-year period ended December 31, 1992.
<TABLE>
<CAPTION>
OCTOBER 31, DECEMBER 31,
----------------------------------------------- --------------------------------
1996 1995 1994 1993 1992 1991 1990
---------- ---------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 12.14 $ 9.78 $ 10.46 $ 9.64 $ 10.09 $ 7.56 $ 7.79
- --------------------------------------------- ---------- ---------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.04 0.04 0.10 0.09 0.11 0.14 0.15
- --------------------------------------------- ---------- ---------- -------- -------- -------- -------- --------
Net gains (losses) on securities (both
realized and unrealized) 1.69 2.81 (0.04) 0.73 0.35 3.16 (0.08)
- --------------------------------------------- ---------- ---------- -------- -------- -------- -------- --------
Total from investment operations 1.73 2.85 0.06 0.82 0.46 3.30 0.07
- --------------------------------------------- ---------- ---------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.03) (0.10) (0.10) -- (0.11) (0.13) (0.16)
- --------------------------------------------- ---------- ---------- -------- -------- -------- -------- --------
Distributions from capital gains (0.85) (0.39) (0.64) -- (0.80) (0.64) (0.14)
- --------------------------------------------- ---------- ---------- -------- -------- -------- -------- --------
Total distributions (0.88) (0.49) (0.74) -- (0.91) (0.77) (0.30)
- --------------------------------------------- ---------- ---------- -------- -------- -------- -------- --------
Net asset value, end of period $ 12.99 $ 12.14 $ 9.78 $ 10.46 $ 9.64 $ 10.09 $ 7.56
============================================= ========== ========== ======== ======== ======== ======== ========
Total return(b) 15.61% 31.03% 0.61% 8.51% 4.50% 43.64% 0.93%
============================================= ========== ========== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,261,008 $1,050,011 $765,073 $705,580 $604,329 $517,835 $316,043
============================================= ========== ========== ======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.70(c)(d) 0.71% 0.72% 0.79%(e) 0.76% 0.75% 0.80%
============================================= ========== ========== ======== ======== ======== ======== ========
Ratio of net investment income to average net
assets 0.29%(c) 0.33% 1.04% 1.13%(e) 1.09% 1.48% 2.02%
============================================= ========== ========== ======== ======== ======== ======== ========
Portfolio turnover rate 118.34% 126.00% 121.69% 115.76% 97.41% 109.04% 142.60%
============================================= ========== ========== ======== ======== ======== ======== ========
Average brokerage commission rate(f) $ 0.0643 N/A N/A N/A N/A N/A N/A
============================================= ========== ========== ======== ======== ======== ======== ========
<CAPTION>
DECEMBER 31,
------------------------------------
1989 1988(a) 1987
------- ------- --------
<S> <C> <C> <C>
Net asset value, beginning of period $ 6.57 $ 5.70 $ 6.68
- --------------------------------------------- -------- -------- --------
Income from investment operations:
Net investment income 0.16 0.16 0.09
- --------------------------------------------- -------- -------- --------
Net gains (losses) on securities (both
realized and unrealized) 1.86 0.84 (0.40)
- --------------------------------------------- -------- -------- --------
Total from investment operations 2.02 1.00 (0.31)
- --------------------------------------------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.16) (0.13) (0.10)
- --------------------------------------------- -------- -------- --------
Distributions from capital gains (0.64) -- (0.57)
- --------------------------------------------- -------- -------- --------
Total distributions (0.80) (0.13) (0.67)
- --------------------------------------------- -------- -------- --------
Net asset value, end of period $ 7.79 $ 6.57 $ 5.70
============================================= ======== ======== ========
Total return(b) 30.92% 17.65% (4.66)%
============================================= ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $262,655 $164,996 $101,541
============================================= ======== ======== ========
Ratio of expenses to average net assets 0.82% 1.04% 0.98%
============================================= ======== ======== ========
Ratio of net investment income to average net
assets 2.14% 2.57% 1.06%
============================================= ======== ======== ========
Portfolio turnover rate 97.26% 114.94% 81.99%
============================================= ======== ======== ========
Average brokerage commission rate(f) N/A N/A N/A
============================================= ======== ======== ========
</TABLE>
(a) The Fund changed investment advisers on October 5, 1988.
(b) For periods less than one year, total return is not annualized.
(c) Ratios are based on average net assets of $1,143,534,605.
(d) Ratio includes indirectly paid expenses. Excluding indirectly paid expenses,
the ratio of expenses to average net assets would have been the same.
(e) Annualized.
(f) Disclosure requirement beginning with the Fund's fiscal year ending October
31, 1996.
NOTE 8-SUBSEQUENT EVENT
On November 4, 1996, A I M Management Group Inc. ("AIM Management") and INVESCO
PLC announced the execution of an agreement and plan of merger pursuant to which
AIM Management will be merged with and into a direct wholly-owned subsidiary of
INVESCO PLC. AIM Management is the parent company of the Fund's advisor. The
merger is conditional on, among other things, approval by the shareholders of
INVESCO PLC and AIM Management and the shareholders of the AIM funds and the
mutual funds managed by INVESCO PLC, and is expected to take place during the
first quarter of 1997.
15
<PAGE> 18
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
AIM Summit Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of AIM
Summit Fund, Inc., including the schedule of investments, as of October 31,
1996, the related statement of operations for the year then ended, the statement
of changes in net assets for each of the years in the two-year period then
ended, and financial highlights for each of the years in the three-year period
then ended, the ten months ended October 31, 1993, and each of the years in the
six-year period ended December 31, 1992. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of AIM
Summit Fund, Inc. as of October 31, 1996, the results of its operations for the
year then ended, the changes in its net assets for each of the years in the
two-year period then ended, and the financial highlights for each of the years
in the three-year period then ended, the ten month period ended October 31,
1993, and each of the years in the six-year period ended December 31, 1992, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
December 6, 1996
16
<PAGE> 19
Directors & Officers
<TABLE>
<S> <C> <C>
BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman and Chief Executive Officer Chairman Suite 1919
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Formerly Director, President and
Chief Executive Officer John J. Arthur A I M Advisors, Inc.
COMSAT Corporation Senior Vice President and Treasurer 11 Greenway Plaza
Suite 1919
Owen Daly II Carol F. Relihan Houston, TX 77046
Director Senior Vice President and Secretary
Cortland Trust Inc. SUB-ADVISOR
Gary T. Crum
Carl Frischling Senior Vice President TradeStreet Investment
Partner Associates, Inc.
Kramer, Levin, Naftalis & Frankel Scott G. Lucas 101 South Tyron Street
Senior Vice President Suite 1000
Robert H. Graham Charlotte, NC 28255
President and Chief Operating Officer Dana R. Sutton
A I M Management Group Inc. Vice President and Assistant Treasurer TRANSFER AGENT
John F. Kroeger Melville B. Cox Boston Financial Data Services, Inc.
Formerly Consultant Vice President P.O. Box 8300
Wendell & Stockel Associates, Inc. Boston, MA 02266-8300
Jonathan C. Schoolar
Lewis F. Pennock Vice President CUSTODIAN
Attorney
P. Michelle Grace State Street Bank & Trust Company
Ian W. Robinson Assistant Secretary 225 Franklin Street
Consultant; Formerly Executive Vice President and Boston, MA 02110
Chief Financial Officer David L. Kite
Bell Atlantic Management Assistant Secretary COUNSEL TO THE FUND
Services, Inc.
Nancy L. Martin Ballard Spahr
Louis S. Sklar Assistant Secretary Andrews & Ingersoll
Executive Vice President 1735 Market Street
Hines Interests Ofelia M. Mayo Philadelphia, PA 19103
Limited Partnership Assistant Secretary
COUNSEL TO THE DIRECTORS
Kathleen J. Pflueger
Assistant Secretary Kramer, Levin, Naftalis & Frankel
919 Third Avenue
Samuel D. Sirko New York, NY 10022
Assistant Secretary
DISTRIBUTOR
Stephen I. Winer
Assistant Secretary A I M Distributors, Inc.
11 Greenway Plaza
Mary J. Benson Suite 1919
Assistant Treasurer Houston, TX 77046
AUDITORS
KPMG Peat Marwick LLP
700 Louisiana
NationsBank Bldg.
Houston, TX 77002
</TABLE>
REQUIRED INCOME TAX INFORMATION
AIM Summit Fund, Inc. paid ordinary dividends in the amount of $0.026 per share
to shareholders during its tax year ended October 31, 1996. Of this amount
31.42% is eligible for the dividends received deduction for corporations. The
Fund also distributed long-term capital gains of $0.0849 per share during its
tax year ended October 31, 1996.
<PAGE> 20
[AIM LOGO APPEARS HERE] ---------------
AIM Distributors, Inc. BULK RATE
11 Greenway Plaza, Suite 1919 U.S. POSTAGE
Houston, TX 77046 PAID
Houston, TX
Permit No. 1919
---------------
