<PAGE> 1
[AIM LOGO APPEARS HERE]
AIM SUMMIT FUND, INC.
ANNUAL REPORT
OCTOBER 31, 1997
<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 AIM Summit Fund, Inc.'s performance figures are historical and reflect
reinvestment of all distributions and changes in net asset value. Unless
otherwise indicated, the Fund's performance is computed at net asset value
without a sales charge. When sales charges are included in performance
figures, performance reflects the maximum 8.50% sales charge. The 8.50%
sales charge is attributable to the 15-year investment plan.
o During the fiscal year ended October 31, 1997, the Fund paid distributions
of $1.204 per share.
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. Past performance cannot guarantee comparable future results.
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 investments regardless of fluctuating securities prices,
investors should consider their ability to continue purchases over an
extended period of time.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The Standard & Poor's Composite Index of 500 Stocks (S&P 500) is a group of
unmanaged securities widely regarded by investors to be representative of
the stock market in general.
o The unmanaged Lipper Growth Fund Index represents an average of the
performance of the 30 largest growth funds charted by Lipper Analytical
Services, Inc., an independent mutual funds performance monitor.
o The Dow Jones Industrial Average (DJIA) is price-weighted average of 30
actively traded primarily industrial stocks.
o The Europe, Australia, Far East (EAFE) Index is a group of unmanaged foreign
securities. The index is compiled by Morgan Stanley Capital International.
o The NASDAQ (National Association of Securities Dealers Automated Quotation
system) Composite Index is a group of more than 4,500 unmanaged
over-the-counter securities widely regarded by investors to be
representative of the small- and medium-sized company stock universe.
o An investment cannot be made in any index listed. Unless otherwise
indicated, index results include reinvested dividends and do not reflect
sales charges.
MUTUAL FUNDS, ANNUITIES, AND OTHER INVESTMENTS ARE NOT INSURED BY THE
FDIC OR ANY OTHER GOVERNMENT AGENCY; ARE NOT DEPOSITS OR OTHER
OBLIGATIONS OF, OR GUARANTEED BY, ANY BANK OR ANY AFFILIATE;
AND ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE
LOSS OF PRINCIPAL AMOUNT INVESTED.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the Fund.
<PAGE> 3
The Chairman's Letter
Dear Fellow Shareholder:
The fiscal year ended October 31 experienced no let-up in the
[PHOTO OF volatility in equity markets, and it closed on an unsettling
Charles T. note. In late October, in the wake of a currency crisis in
Bauer, Southeast Asia, the stock market experienced its first 10%
Chairman of correction since 1991. On Monday, October 27, the New York
the Board of Stock Exchange closed to deal with market volatility for the
THE FUND first time in its history when the Dow Jones Industrial
APPEARS HERE] Average fell 554 points, the index's largest point decline
ever. It is important to note that in percentage terms, this
was a drop of 7.18%, far smaller than the 22.61% decline that
occurred October 19, 1987. Fortunately, this time the market
snapped back, and the Dow regained 337 points the next day. As
of this writing, markets continue to recover.
Many investment managers, including AIM, had cautioned
that a correction was inevitable, that the relentless rise in
benchmarks like the Dow could not continue. In less than 12
months, the Dow had climbed from 6010 on October 14, 1996, to
reach its all-time high of 8259 on August 6, 1997.
When markets become overvalued, no one knows what will precipitate a
decline. No one foresaw that a currency devaluation by Thailand beginning during
the summer would lead to worldwide stock market turmoil.
Despite recent activities, the fiscal year ended October 31 brought domestic
equity investors excellent returns: The Dow was up almost 26%; the broader S&P
500, more than 32%; the NASDAQ small-cap index, 30.46%. International
investments, while positive, weren't as robust; the EAFE Index rose 4.63%. On
the following pages, your Fund managers discuss how your Fund performed in this
market context and their outlook for the future.
REALISTIC EXPECTATIONS
The 1100-point decline in the Dow between early August and late October was the
latest in a series of market breaks. Between mid-March and mid-April of this
year, for example, the Dow dropped almost 10%.
Many investors, including professional fund managers, have become accustomed
to buying on these market breaks because the market has bounced back quickly.
From its 1997 low of 6391 on April 11, the Dow took less than four months to
rise almost 2000 points to its all-time high.
However, this time could be different. Many investors have developed two
unrealistic expectations: first, a belief that stocks can rise more than 20% a
year indefinitely; and second, confidence that the market always rebounds
swiftly from a decline.
Neither notion is historically correct. History tells us that over the long
term, average annual total return for stocks is about 10%, not 20%. And those of
us who have been in this business for many years remember the bear market of the
1970s, when the market experienced a series of declines and recovery was very
slow.
Nevertheless, there is reason for optimism, including sound fiscal policy
steadily shrinking the federal deficit, stable interest rates, and a strong
economy unharmed by inflation. Despite recent events in Asia, it is difficult to
be pessimistic about the U.S. economy and, indeed, about most of the developed
economies in the world.
We are pleased to send you this report on your Fund. Please contact our
Client Services department at 800-995-4246 if you have any questions or
comments.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
---------------------------------------
DESPITE RECENT ACTIVITIES,
THE FISCAL YEAR ENDED OCTOBER 31
BROUGHT DOMESTIC EQUITY INVESTORS
EXCELLENT RETURNS.
---------------------------------------
<PAGE> 4
The Managers' Overview
TECHNOLOGY AND ENERGY HOLDINGS HELP FUND DELIVER SOLID RESULTS
A roundtable discussion with the Fund management team for AIM Summit Fund, Inc.
for the fiscal year ended October 31, 1997.
- --------------------------------------------------------------------------------
TOTAL RETURNS
- --------------------------------------------------------------------------------
4/30/97 - 10/31/97
AIM Summit Fund 24.08%
Lipper Growth Fund Index 18.34%
================================================================================
NET ASSETS UNDER MANAGEMENT
- --------------------------------------------------------------------------------
10/31/96 1.26%
10/31/97 1.65%
================================================================================
Q. HOW DID AIM SUMMIT FUND PERFORM DURING THE FISCAL YEAR?
A. Performance was excellent in one of the Fund's best years ever. Total return
for the fiscal year was 28.53%, slightly outperforming the Lipper Growth
Fund Index, which was up 28.42% during the same period.
Fund performance was especially strong during the second half of the
fiscal year. For the six-month period ended October 31, the Fund's total
return was an impressive 24.08%, compared to 18.34% for the Lipper Index for
the same six-month period.
Net assets under management grew from $1.26 billion to $1.65 billion
during the fiscal year.
Q. WERE THERE PARTICULAR HOLDINGS THAT ESPECIALLY CONTRIBUTED TO SUCH GOOD
PERFORMANCE?
A. There were two sectors that performed very well for us: the technology
sector, about 27% of the Fund; and the energy sector, about 13% of the Fund.
Our computer-related holdings have definitely delivered. These include
PC makers Compaq Computer Corp. and Dell Computer Corp. During the fiscal
year, we increased our holdings of these companies, both of which have
announced record recent earnings.
Another successful holding is software maker Compuware Corp., which is
poised to profit from the so called "millennium problem," the need to
reprogram older computers to recognize the year 2000. And we continue to own
Microsoft Corp., still the leader in the software business. Each of these
four stocks represents more than 1% of the Fund, which for AIM Summit Fund
is a large position.
Despite its volatility and potential negative effects of the recent
turmoil in Asia, we still think the technology sector's long-term growth
prospects are excellent and will continue to seek out individual companies
whose earnings performance justifies our investment. For example, while not
included in the technology sector, retailers of computers and other
electronic gear, companies like portfolio holding CompUSA Inc., have been
doing well recently.
Q. WHY HAS THE ENERGY SECTOR PERFORMED WELL?
A. After more than a decade of restructuring and shakeout, the energy sector,
especially oil and gas, finally looks healthy.
There are a number of reasons for this. Though oil and gas prices have
been stable, energy demand is strong worldwide and likely will remain so
despite very recent economic shocks in Asia. Technological improvements have
lowered the cost of finding oil--for example, the drilling success rate has
improved from one out of five holes drilled to one out of two. Equipment
suppliers have become especially attractive, as an equipment shortage has
raised the prices they command. Fund holding Varco International, Inc., a
manufacturer of computer-controlled drilling equipment, is representative of
this side of the business.
We found a number of opportunities to invest in energy companies at
relatively attractive prices. We increased our holdings in energy from about
8% of the Fund a year ago to more than 13% as of October 31. Future earnings
prospects in this area look quite good, as demand for energy shows no signs
of slackening.
Q. IN THE SEMIANNUAL REPORT ON THE FUND DATED APRIL 30, YOU SAID THE MARKET IN
GENERAL HAD BEEN DIFFICULT. YET PERFORMANCE FOR THE FISCAL YEAR WAS
EXCELLENT. WHAT CHANGED?
A. Like many broadly diversified growth-oriented mutual funds, AIM Summit Fund
found the market inhospitable during 1996 and early 1997. Investors were
narrowly focused on a relatively few large companies sometimes dubbed "the
new Nifty Fifty" in reference to the stocks that dominated the markets back
in the 1960s and early 1970s. We discussed the "narrow market" phenomenon in
our last shareholder report.
During the latter half of the Fund's fiscal year, investors began to
look beyond
-----------------------------------------------
This is a truly diversified equity fund--
as of October 31, 1997,
your Fund held 299 securities.
-----------------------------------------------
See important fund and index disclosures inside front cover.
2
<PAGE> 5
The Managers' Overview
PORTFOLIO COMPOSITION
As of 10/31/97, based on total net assets
<TABLE>
<CAPTION>
===================================================================================================
TOP 10 INDUSTRIES TOP 10 EQUITY HOLDINGS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Oil & Gas (Drilling & Equipment) 9.23% 1. Dell Computer Corp. 1.97%
2. Computers (Software & Services) 6.35 2. Compaq Computer Corp. 1.35
3. Computers (Hardware) 4.33 3. Guidant Corp. 1.18
4. Electronics (Semiconductors) 4.28 4. Ahmanson (H.F.) & Co. 1.16
5. Communications Equipment 4.05 5. Compuware Corp. 1.12
6. Health Care (Medical Products & Supplies) 2.65 6. Safeway, Inc. 1.06
7. Manufacturing (Diversified) 2.60 7. Microsoft Corp. 1.02
8. Consumer Finance 2.57 8. SLM Holding Corp. 1.02
9. Financial (Diversified) 2.24 9. Varco International, Inc. 1.02
10. Electrical Equipment 2.22 10. MGIC Investment Corp. 0.95
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.
===================================================================================================
</TABLE>
these stocks. From May 1997 through the end of the fiscal year, small- and
mid-sized company stocks either paced or outpaced larger-company stocks. For
example, during the three months ended October 31, the large-cap S&P 500
lost ground, producing a total return of -3.75%; during that same period the
mid-cap S&P 400 index rose 1.02%.
This change in sentiment benefited AIM Summit Fund because this is a
truly diversified equity fund--as of October 31, 1997, your Fund held 299
securities. The Fund invests in small-, medium-, and large-sized firms. A
portion of the portfolio also is managed with a value orientation, looking
for stocks the market has overlooked for one reason or another. At the close
of the fiscal year, more than a third of the portfolio was in
mid-capitalization stocks. So we enjoyed seeing the markets broaden beyond a
comparatively few blue chips.
Q. WHAT CAUSED MARKET SENTIMENT TO CHANGE?
A. A number of factors contributed. Many market watchers thought the dramatic
disparity in performance between smaller stocks and the larger blue-chips
signaled time for a change. Others doubted that large-capitalization
companies could sustain the double-digit earnings growth they reported for
three years running, especially after cautions on earnings from such giants
as Coca-Cola Company and The Gillette Company. Others pointed out that
price/earnings ratios for small- and mid-cap companies were more attractive
than for the big blue chips given their comparative growth potential. And
the strong dollar boded well for less export-dependent smaller companies.
Q. WHAT IS YOUR OUTLOOK FOR THE ECONOMY FOR THE NEAR FUTURE?
A. There are a few cautionary signs: a tight labor market that could put
inflationary pressure on wages, a drop in consumer confidence measured by
The Conference Board, a slip in new vehicle sales.
Nevertheless, there is much evidence of a favorable economic
environment. Inflation is so well controlled many economy watchers are more
concerned about deflation. Because of monetary turmoil and market declines
overseas, few market participants anticipate a rate hike by the Federal
Reserve Board, at least for the immediate future. And finally, corporate
earnings continue to grow. As of the third quarter of 1997, earnings for S&P
500 companies were up more than 12% year over year.
Q. WHAT DO YOU SEE FOR EQUITY MARKETS OVER THE NEXT FEW MONTHS?
A. Earnings remain key to market performance, and with the recent turmoil in
Asia, companies with global reach may see some softness in corporate profits
growth to a more normal level of 8-10% in 1998. This level is much closer to
the historical norm, which has coincided with market returns of
approximately 10%.
Given our earnings-focused discipline, in which we seek out companies
reporting the best performance, we believe AIM Summit Fund is
well-positioned for this market.
--------------------------------------------
With the recent turmoil in Asia,
companies with global reach may see
some softness in corporate profits
growth to a more normal level
of 8-10% in 1998.
--------------------------------------------
See important fund and index disclosures inside front cover.
3
<PAGE> 6
Long-Term Performance
Earnings-Based Approach Produces Impressive Long-Term Results
GROWTH OF A $10,000 INVESTMENT
10/31/87- 10/31/97, based on net asset value
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
AIM SUMMIT FUND S&P 500 STOCK INDEX LIPPER GROWTH FUND INDEX
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
10,000 10,000 10,000
10/31/88 11,674 11,483 11,525
10/31/89 14,589 14,500 14,435
10/31/90 13,997 13,411 12,583
10/31/91 19,843 17,903 17,799
10/31/92 21,532 19,681 19,188
10/31/93 25,035 22,611 22,831
10/31/94 25,188 23,486 23,297
10/31/95 33,003 29,676 28,883
10/31/96 38,155 36,805 33,776
10/31/97 49,041 48,621 43,374
================================================================================
</TABLE>
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
For periods ended 10/31/97, including sales charges.
10 Years 16.20%
5 Years 15.82
1 Year 17.60
================================================================================
Past performance cannot guarantee comparable future results.
Source: Lipper Analytical Services, Inc.
Average annual total returns reflect reinvestment of all distributions and
effect of all sales charges. A mutual 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. Summit Investors Plans employ dollar-cost
averaging, which does not assure a profit and does not protect against loss in
declining markets. 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.
4
<PAGE> 7
SCHEDULE OF INVESTMENTS
October 31, 1997
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMON STOCKS-94.82%
AEROSPACE/DEFENSE-0.05%
Precision Castparts Corp. 13,000 $ 764,563
- ---------------------------------------------------------------
AIR FREIGHT-0.71%
CNF Transportation Inc. 57,300 2,557,012
- ---------------------------------------------------------------
Federal Express Corp.(a) 137,000 9,144,750
- ---------------------------------------------------------------
11,701,762
- ---------------------------------------------------------------
AIRLINES-1.01%
Southwest Airlines Co. 49,000 1,598,625
- ---------------------------------------------------------------
UAL Corp.(a) 173,000 15,159,125
- ---------------------------------------------------------------
16,757,750
- ---------------------------------------------------------------
AUTOMOBILES-0.60%
Ford Motor Co. 225,000 9,829,688
- ---------------------------------------------------------------
BANKS (MAJOR REGIONAL)-0.25%
First Union Corp. 84,000 4,121,250
- ---------------------------------------------------------------
BANKS (MONEY CENTER)-1.58%
BankAmerica Corp. 140,000 10,010,000
- ---------------------------------------------------------------
Chase Manhattan Corp. 107,152 12,362,662
- ---------------------------------------------------------------
Citicorp 30,000 3,751,875
- ---------------------------------------------------------------
26,124,537
- ---------------------------------------------------------------
BANKS (REGIONAL)-0.10%
AmSouth Bancorporation 35,000 1,682,188
- ---------------------------------------------------------------
BEVERAGES (NON-ALCOHOLIC)-0.17%
Panamerican Beverages, Inc.-Class A
(Mexico) 5,200 161,200
- ---------------------------------------------------------------
PepsiCo, Inc. 70,000 2,576,875
- ---------------------------------------------------------------
2,738,075
- ---------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE)-0.31%
Clear Channel Communications, Inc.(a) 41,800 2,758,800
- ---------------------------------------------------------------
Jacor Communications, Inc.(a) 55,000 2,303,125
- ---------------------------------------------------------------
5,061,925
- ---------------------------------------------------------------
CHEMICALS-0.39%
Rohm & Haas Co. 77,200 6,431,725
- ---------------------------------------------------------------
CHEMICALS (SPECIALTY)-0.52%
Cytec Industries Inc.(a) 175,000 8,531,250
- ---------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-4.05%
ADC Telecommunications, Inc.(a) 200,000 6,625,000
- ---------------------------------------------------------------
Brightpoint, Inc.(a) 50,000 1,650,000
- ---------------------------------------------------------------
DSC Communications Corp.(a) 310,000 7,556,250
- ---------------------------------------------------------------
ECI Telecommunications Ltd. (Israel) 100,000 2,762,500
- ---------------------------------------------------------------
Lucent Technologies, Inc. 140,000 11,541,250
- ---------------------------------------------------------------
MARKET
SHARES VALUE
COMMUNICATIONS EQUIPMENT-(CONTINUED)
MasTech, Inc.(a) 14,300 $ 463,856
- ---------------------------------------------------------------
Nokia Oy A.B.-Class A-ADR (Finland) 110,000 9,707,500
- ---------------------------------------------------------------
Northern Telecom Ltd. (Canada) 60,000 5,381,250
- ---------------------------------------------------------------
PairGain Technologies, Inc.(a) 85,000 2,401,250
- ---------------------------------------------------------------
Telefonaktiebolaget LM
Ericsson-ADR (Sweden) 190,900 8,447,325
- ---------------------------------------------------------------
Tellabs, Inc.(a) 190,800 10,303,200
- ---------------------------------------------------------------
66,839,381
- ---------------------------------------------------------------
COMPUTERS (HARDWARE)-4.33%
Comdisco, Inc. 72,500 2,288,281
- ---------------------------------------------------------------
Compaq Computer Corp. 350,000 22,312,500
- ---------------------------------------------------------------
Concord EFS, Inc.(a) 123,700 3,672,344
- ---------------------------------------------------------------
Dell Computer Corp.(a) 404,800 32,434,600
- ---------------------------------------------------------------
Digital Equipment Corp.(a) 50,000 2,503,125
- ---------------------------------------------------------------
International Business Machines
Corp. 83,500 8,188,219
- ---------------------------------------------------------------
71,399,069
- ---------------------------------------------------------------
COMPUTERS (NETWORKING)-1.46%
3Com Corp.(a) 70,000 2,900,625
- ---------------------------------------------------------------
Bay Networks, Inc.(a) 278,600 8,810,725
- ---------------------------------------------------------------
Cisco Systems, Inc.(a) 70,800 5,807,813
- ---------------------------------------------------------------
Newbridge Networks Corp.(a) (Canada) 125,000 6,625,000
- ---------------------------------------------------------------
24,144,163
- ---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-1.98%
Adaptec, Inc.(a) 109,000 5,279,687
- ---------------------------------------------------------------
EMC Corp.(a) 163,000 9,128,000
- ---------------------------------------------------------------
Iomega Corp.(a) 326,300 8,748,918
- ---------------------------------------------------------------
Quantum Corp.(a) 58,000 1,834,250
- ---------------------------------------------------------------
SMART Modular Technologies, Inc.(a) 25,000 1,243,750
- ---------------------------------------------------------------
Storage Technology Corp.(a) 110,000 6,455,625
- ---------------------------------------------------------------
32,690,230
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-6.35%
America Online, Inc.(a) 150,000 11,550,000
- ---------------------------------------------------------------
Avant! Corp.(a) 50,000 1,312,500
- ---------------------------------------------------------------
BMC Software, Inc.(a) 140,000 8,452,500
- ---------------------------------------------------------------
Cadence Design Systems, Inc.(a) 125,000 6,656,250
- ---------------------------------------------------------------
Computer Associates International,
Inc. 120,000 8,947,500
- ---------------------------------------------------------------
Computer Sciences Corp.(a) 21,000 1,489,687
- ---------------------------------------------------------------
Compuware Corp.(a) 280,000 18,515,000
- ---------------------------------------------------------------
Electronic Arts, Inc.(a) 50,000 1,693,750
- ---------------------------------------------------------------
HBO & Co. 294,200 12,797,700
- ---------------------------------------------------------------
McAfee Associates, Inc.(a) 30,000 1,492,500
- ---------------------------------------------------------------
Microsoft Corp.(a) 130,000 16,900,000
- ---------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMPUTERS (SOFTWARE & SERVICES)-(CONTINUED)
Parametric Technology Co.(a) 80,000 $ 3,530,000
- ---------------------------------------------------------------
Security Dynamics Technologies,
Inc.(a) 70,000 2,371,250
- ---------------------------------------------------------------
Sterling Commerce, Inc.(a) 109,211 3,624,440
- ---------------------------------------------------------------
Sterling Software, Inc.(a) 39,000 1,330,875
- ---------------------------------------------------------------
Symantec Corp.(a) 50,000 1,093,750
- ---------------------------------------------------------------
Tecnomatix Technologies Ltd.(a)
(Israel) 25,000 771,875
- ---------------------------------------------------------------
Wind River Systems(a) 60,000 2,302,500
- ---------------------------------------------------------------
104,832,077
- ---------------------------------------------------------------
CONSUMER (JEWELRY, NOVELTIES & GIFTS)-0.04%
Blyth Industries, Inc.(a) 28,650 712,669
- ---------------------------------------------------------------
CONSUMER FINANCE-2.57%
FIRSTPLUS Financial Group, Inc.(a) 50,000 2,750,000
- ---------------------------------------------------------------
Green Tree Financial Corp. 200,000 8,425,000
- ---------------------------------------------------------------
Household International, Inc. 54,000 6,115,500
- ---------------------------------------------------------------
IMC Mortgage Co.(a) 82,500 1,433,437
- ---------------------------------------------------------------
MBNA Corp. 260,700 6,859,669
- ---------------------------------------------------------------
SLM Holding Corp. 120,200 16,873,075
- ---------------------------------------------------------------
42,456,681
- ---------------------------------------------------------------
DISTRIBUTORS (FOOD & HEALTH)-0.93%
AmeriSource Health Corp.-Class A(a) 53,000 3,146,875
- ---------------------------------------------------------------
Cardinal Health, Inc. 81,000 6,014,250
- ---------------------------------------------------------------
McKesson Corp. 30,000 3,219,375
- ---------------------------------------------------------------
Sysco Corp. 75,000 3,000,000
- ---------------------------------------------------------------
15,380,500
- ---------------------------------------------------------------
ELECTRICAL EQUIPMENT-2.22%
American Power Conversion Corp.(a) 66,000 1,798,500
- ---------------------------------------------------------------
Berg Electronics Corp.(a) 62,800 1,467,950
- ---------------------------------------------------------------
General Electric Co. 163,700 10,568,881
- ---------------------------------------------------------------
Kemet Corp.(a) 57,400 1,248,450
- ---------------------------------------------------------------
Philips Electronics N.V.-ADR-New
York Shares (Netherlands) 70,400 5,517,600
- ---------------------------------------------------------------
Sanmina Corp.(a) 30,000 2,242,500
- ---------------------------------------------------------------
SCI Systems, Inc.(a) 145,000 6,380,000
- ---------------------------------------------------------------
Solectron Corp.(a) 129,200 5,071,100
- ---------------------------------------------------------------
Symbol Technologies, Inc. 58,800 2,337,300
- ---------------------------------------------------------------
36,632,281
- ---------------------------------------------------------------
ELECTRONICS (INSTRUMENTATION)-0.31%
Perkin-Elmer Corp. 59,000 3,687,500
- ---------------------------------------------------------------
Tektronix, Inc. 24,600 1,454,475
- ---------------------------------------------------------------
5,141,975
- ---------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS)-4.28%
ANADIGICS, Inc.(a) 50,000 1,850,000
- ---------------------------------------------------------------
Analog Devices, Inc.(a) 125,000 3,820,312
- ---------------------------------------------------------------
ASE Test Ltd.(a) (Taiwan) 10,000 547,500
- ---------------------------------------------------------------
MARKET
SHARES VALUE
ELECTRONICS (SEMICONDUCTORS)-(CONTINUED)
ASM Lithography Holding N.V.(a)
(Netherlands) 17,000 $ 1,245,250
- ---------------------------------------------------------------
Atmel Corp.(a) 100,000 2,587,500
- ---------------------------------------------------------------
Dallas Semiconductor Corp. 50,000 2,443,750
- ---------------------------------------------------------------
Intel Corp. 140,000 10,780,000
- ---------------------------------------------------------------
Linear Technology Corp. 129,000 8,110,875
- ---------------------------------------------------------------
Maxim Integrated Products,
Inc.(a) 100,000 6,625,000
- ---------------------------------------------------------------
Microchip Technology, Inc.(a) 166,100 6,623,237
- ---------------------------------------------------------------
National Semiconductor Corp.(a) 204,600 7,365,600
- ---------------------------------------------------------------
PMC-Sierra, Inc.(a) 50,000 1,318,750
- ---------------------------------------------------------------
Taiwan Semiconductor Manufacturing Co.
Ltd.-ADR(a) (Taiwan 25,000 495,313
- ---------------------------------------------------------------
Texas Instruments, Inc. 110,000 11,735,625
- ---------------------------------------------------------------
Vitesse Semiconductor Corp.(a) 50,000 2,168,750
- ---------------------------------------------------------------
Xilinx, Inc.(a) 85,100 2,904,038
- ---------------------------------------------------------------
70,621,500
- ---------------------------------------------------------------
EQUIPMENT (SEMICONDUCTORS)-1.57%
Applied Materials, Inc.(a) 298,400 9,959,100
- ---------------------------------------------------------------
BMC Industries, Inc. 29,800 959,187
- ---------------------------------------------------------------
KLA-Tencor Corp.(a) 150,000 6,590,625
- ---------------------------------------------------------------
Novellus Systems, Inc.(a) 50,000 2,225,000
- ---------------------------------------------------------------
Teradyne, Inc.(a) 165,100 6,180,931
- ---------------------------------------------------------------
25,914,843
- ---------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-2.24%
American Express Co. 50,000 3,900,000
- ---------------------------------------------------------------
Federal Home Loan Mortgage Corp. 156,000 5,908,500
- ---------------------------------------------------------------
Federal National Mortgage Association 104,600 5,066,562
- ---------------------------------------------------------------
MBIA, Inc. 14,000 836,500
- ---------------------------------------------------------------
MGIC Investment Corp. 260,000 15,681,250
- ---------------------------------------------------------------
Morgan Stanley, Dean Witter,
Discover & Co. 43,200 2,116,800
- ---------------------------------------------------------------
Newcourt Credit Group, Inc. (Canada) 20,000 696,250
- ---------------------------------------------------------------
SunAmerica, Inc. 75,000 2,695,312
- ---------------------------------------------------------------
36,901,174
- ---------------------------------------------------------------
FOODS-0.24%
ConAgra, Inc. 132,000 3,976,500
- ---------------------------------------------------------------
FOOTWEAR-0.14%
Nike, Inc.-Class B 50,000 2,350,000
- ---------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-1.73%
Abbott Laboratories 61,500 3,770,719
- ---------------------------------------------------------------
American Home Products Corp. 65,000 4,818,125
- ---------------------------------------------------------------
Bristol-Myers Squibb Co. 77,000 6,756,750
- ---------------------------------------------------------------
Johnson & Johnson 94,600 5,427,675
- ---------------------------------------------------------------
Warner-Lambert Co. 54,700 7,832,356
- ---------------------------------------------------------------
28,605,625
- ---------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (DRUGS-GENERIC & OTHER)-1.31%
Dura Pharmaceuticals, Inc.(a) 100,000 $ 4,837,500
- ---------------------------------------------------------------
Elan Corp. PLC-ADR(a) (Ireland) 102,300 5,102,212
- ---------------------------------------------------------------
Mylan Laboratories, Inc. 80,000 1,755,000
- ---------------------------------------------------------------
Parexel International Corp.(a) 19,800 715,275
- ---------------------------------------------------------------
Teva Pharmaceutical Industries
Ltd.-ADR (Israel) 45,000 2,103,750
- ---------------------------------------------------------------
Watson Pharmaceuticals, Inc.(a) 224,600 7,131,050
- ---------------------------------------------------------------
21,644,787
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)-1.45%
Lilly (Eli) & Co. 50,000 3,343,750
- ---------------------------------------------------------------
Merck & Co., Inc. 90,000 8,032,500
- ---------------------------------------------------------------
Pfizer, Inc. 19,300 1,365,475
- ---------------------------------------------------------------
Schering-Plough Corp. 80,000 4,485,000
- ---------------------------------------------------------------
SmithKline Beecham PLC-ADR
(United Kingdom) 140,000 6,667,500
- ---------------------------------------------------------------
23,894,225
- ---------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT)-1.11%
Health Management Associates,
Inc.-Class A(a) 300,000 7,312,500
- ---------------------------------------------------------------
Tenet Health Care Corp.(a) 249,700 7,631,456
- ---------------------------------------------------------------
Universal Health Services,
Inc.-Class B(a) 77,100 3,397,219
- ---------------------------------------------------------------
18,341,175
- ---------------------------------------------------------------
HEALTH CARE (LONG TERM CARE)-1.09%
Beverly Enterprises, Inc.(a) 100,000 1,493,750
- ---------------------------------------------------------------
Health Care and Retirement Corp.(a) 167,800 6,344,938
- ---------------------------------------------------------------
HEALTHSOUTH Corp.(a) 400,000 10,225,000
- ---------------------------------------------------------------
18,063,688
- ---------------------------------------------------------------
HEALTH CARE (MANAGED CARE)-0.44%
Concentra Managed Care, Inc.(a) 90,000 2,936,250
- ---------------------------------------------------------------
PhyCor, Inc.(a) 105,000 2,421,563
- ---------------------------------------------------------------
Wellpoint Health Networks, Inc.(a) 40,000 1,830,000
- ---------------------------------------------------------------
7,187,813
- ---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-2.65%
Arterial Vascular Engineering, Inc.(a) 59,200 3,145,000
- ---------------------------------------------------------------
Baxter International Inc. 81,700 3,778,625
- ---------------------------------------------------------------
Becton, Dickinson & Co. 50,000 2,303,125
- ---------------------------------------------------------------
Dentsply International, Inc. 47,200 1,339,300
- ---------------------------------------------------------------
Guidant Corp. 340,000 19,550,000
- ---------------------------------------------------------------
Quintiles Transnational Corp.(a) 26,700 1,935,750
- ---------------------------------------------------------------
Sofamor Danek Group, Inc.(a) 11,400 785,175
- ---------------------------------------------------------------
Stryker Corp. 100,000 3,718,750
- ---------------------------------------------------------------
Sybron International Corp.(a) 100,000 4,012,500
- ---------------------------------------------------------------
US Surgical Corp. 120,000 3,232,500
- ---------------------------------------------------------------
43,800,725
- ---------------------------------------------------------------
MARKET
SHARES VALUE
HEALTH CARE (SPECIALIZED SERVICES)-1.03%
FPA Medical Management, Inc.(a) 70,500 $ 1,700,812
- ---------------------------------------------------------------
Lincare Holdings, Inc.(a) 120,000 6,435,000
- ---------------------------------------------------------------
Omnicare, Inc. 159,900 4,447,219
- ---------------------------------------------------------------
Orthodontic Centers of America,
Inc.(a) 52,400 907,175
- ---------------------------------------------------------------
Total Renal Care Holdings, Inc.(a) 112,667 3,471,542
- ---------------------------------------------------------------
16,961,748
- ---------------------------------------------------------------
HOMEBUILDING-0.05%
Clayton Homes, Inc. 46,300 761,056
- ---------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES)-0.70%
Fort James Corp. 197,225 7,827,367
- ---------------------------------------------------------------
Procter & Gamble Co. (The) 54,000 3,672,000
- ---------------------------------------------------------------
11,499,367
- ---------------------------------------------------------------
HOUSEWARES-0.09%
Central Garden and Pet Co.(a) 55,000 1,443,750
- ---------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-1.09%
AFLAC Inc. 31,200 1,587,300
- ---------------------------------------------------------------
Conseco Inc. 79,600 3,472,550
- ---------------------------------------------------------------
Equitable Companies, Inc. 254,000 10,461,625
- ---------------------------------------------------------------
Nationwide Financial Services,
Inc.-Class A 80,000 2,435,000
- ---------------------------------------------------------------
17,956,475
- ---------------------------------------------------------------
INSURANCE (MULTI-LINE)-1.55%
American International Group, Inc. 51,100 5,215,394
- ---------------------------------------------------------------
CIGNA Corp. 50,000 7,762,500
- ---------------------------------------------------------------
Travelers Group, Inc. 180,600 12,642,000
- ---------------------------------------------------------------
25,619,894
- ---------------------------------------------------------------
INSURANCE (PROPERTY-CASUALTY)-0.73%
Allstate Corp. 72,900 6,046,144
- ---------------------------------------------------------------
CapMAC Holdings, Inc. 24,100 723,000
- ---------------------------------------------------------------
Everest Reinsurance Holdings, Inc. 141,800 5,335,225
- ---------------------------------------------------------------
12,104,369
- ---------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE-1.05%
Merrill Lynch & Co., Inc. 140,000 9,467,500
- ---------------------------------------------------------------
PaineWebber Group Inc. 178,000 7,865,375
- ---------------------------------------------------------------
17,332,875
- ---------------------------------------------------------------
INVESTMENT MANAGEMENT-1.22%
Franklin Resources, Inc. 77,000 6,920,375
- ---------------------------------------------------------------
T. Rowe Price Associates 200,000 13,250,000
- ---------------------------------------------------------------
20,170,375
- ---------------------------------------------------------------
IRON & STEEL-0.50%
USX-US Steel Group, Inc. 244,000 8,296,000
- ---------------------------------------------------------------
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
LEISURE TIME (PRODUCTS)-0.13%
Harley-Davidson, Inc. 78,400 $ 2,175,600
- ---------------------------------------------------------------
LODGING-HOTELS-0.63%
Carnival Corp. -- Class A 80,000 3,880,000
- ---------------------------------------------------------------
Choice Hotels International, Inc.(a) 54,000 948,375
- ---------------------------------------------------------------
Host Marriott Corp.(a) 195,200 4,074,800
- ---------------------------------------------------------------
Promus Hotel Corp.(a) 35,000 1,373,750
- ---------------------------------------------------------------
Sunburst Hospitality Corp.(a) 18,000 182,250
- ---------------------------------------------------------------
10,459,175
- ---------------------------------------------------------------
MACHINERY (DIVERSIFIED)-1.13%
Caterpillar Inc. 110,000 5,637,500
- ---------------------------------------------------------------
Deere & Co. 72,000 3,789,000
- ---------------------------------------------------------------
Dover Corp. 37,600 2,538,000
- ---------------------------------------------------------------
Ingersoll-Rand Co. 172,500 6,716,719
- ---------------------------------------------------------------
18,681,219
- ---------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-2.60%
Eaton Corp. 95,000 9,179,375
- ---------------------------------------------------------------
Hillenbrand Industries, Inc. 41,800 1,786,950
- ---------------------------------------------------------------
Pentair, Inc. 19,200 741,600
- ---------------------------------------------------------------
Premark International, Inc. 285,000 7,712,813
- ---------------------------------------------------------------
Thermo Electron Corp.(a) 230,250 8,591,203
- ---------------------------------------------------------------
Tyco International Ltd. 100,000 3,775,000
- ---------------------------------------------------------------
United Technologies Corp. 158,000 11,060,000
- ---------------------------------------------------------------
42,846,941
- ---------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-0.32%
Cognex Corp.(a) 55,000 1,471,250
- ---------------------------------------------------------------
Diebold, Inc. 84,750 3,734,297
- ---------------------------------------------------------------
5,205,547
- ---------------------------------------------------------------
NATURAL GAS-0.74%
Columbia Gas System, Inc. 114,600 8,279,850
- ---------------------------------------------------------------
NICOR, Inc. 100,000 3,856,250
- ---------------------------------------------------------------
12,136,100
- ---------------------------------------------------------------
OFFICE EQUIPMENT & SUPPLIES-0.28%
Danka Business Systems PLC-ADR
(United Kingdom) 125,000 4,625,000
- ---------------------------------------------------------------
OIL (DOMESTIC INTEGRATED)-1.03%
Pennzoil Co. 109,000 8,066,000
- ---------------------------------------------------------------
USX-Marathon Group 250,000 8,937,500
- ---------------------------------------------------------------
17,003,500
- ---------------------------------------------------------------
OIL (INTERNATIONAL INTEGRATED)-1.37%
British Petroleum Co. PLC-ADR
(United Kingdom) 140,000 12,285,000
- ---------------------------------------------------------------
Exxon Corp. 65,000 3,993,438
- ---------------------------------------------------------------
MARKET
SHARES VALUE
OIL (INTERNATIONAL INTEGRATED)-(CONTINUED)
Texaco, Inc. 110,000 $ 6,263,125
- ---------------------------------------------------------------
22,541,563
- ---------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT)-9.23%
Baker Hughes, Inc. 200,000 9,187,500
- ---------------------------------------------------------------
BJ Services Co.(a) 120,000 10,170,000
- ---------------------------------------------------------------
Camco International, Inc. 135,000 9,753,750
- ---------------------------------------------------------------
Cooper Cameron Corp.(a) 100,000 7,225,000
- ---------------------------------------------------------------
Diamond Offshore Drilling, Inc. 200,000 12,450,000
- ---------------------------------------------------------------
ENSCO International, Inc. 140,000 5,888,750
- ---------------------------------------------------------------
EVI, Inc.(a) 149,100 9,570,356
- ---------------------------------------------------------------
Falcon Drilling Company, Inc.(a) 350,000 12,731,250
- ---------------------------------------------------------------
Global Industries Ltd.(a) 95,000 1,911,875
- ---------------------------------------------------------------
Global Marine, Inc.(a) 60,000 1,867,500
- ---------------------------------------------------------------
Halliburton Co. 65,000 3,875,625
- ---------------------------------------------------------------
Input/Output, Inc.(a) 176,800 4,740,450
- ---------------------------------------------------------------
Marine Drilling Companies, Inc.(a) 150,000 4,443,750
- ---------------------------------------------------------------
Nabors Industries, Inc.(a) 170,000 6,991,250
- ---------------------------------------------------------------
Precision Drilling Corp.(a)
(Canada) 85,000 2,613,750
- ---------------------------------------------------------------
Pride International, Inc.(a) 200,000 6,600,000
- ---------------------------------------------------------------
Rowan Companies, Inc.(a) 132,300 5,143,162
- ---------------------------------------------------------------
Schlumberger Ltd. 110,000 9,625,000
- ---------------------------------------------------------------
Smith International, Inc.(a) 140,800 10,736,000
- ---------------------------------------------------------------
Varco International, Inc.(a) 275,000 16,757,813
- ---------------------------------------------------------------
152,282,781
- ---------------------------------------------------------------
OIL & GAS (EXPLORATION & PRODUCTION)-0.66%
Apache Corp. 150,000 6,300,000
- ---------------------------------------------------------------
Burlington Resources, Inc. 41,100 2,011,331
- ---------------------------------------------------------------
Santa Fe Energy Resources, Inc.(a) 200,000 2,612,500
- ---------------------------------------------------------------
10,923,831
- ---------------------------------------------------------------
OIL & GAS (REFINING & MARKETING)-0.37%
Valero Energy Corp. 200,000 6,025,000
- ---------------------------------------------------------------
PERSONAL CARE-0.79%
Avon Products, Inc. 77,400 5,069,700
- ---------------------------------------------------------------
Gillette Co. 55,000 4,898,438
- ---------------------------------------------------------------
Perrigo Co.(a) 64,800 996,300
- ---------------------------------------------------------------
Rexall Sundown, Inc.(a) 96,200 2,104,375
- ---------------------------------------------------------------
13,068,813
- ---------------------------------------------------------------
PHOTOGRAPH/IMAGING-0.35%
Xerox Corp. 73,000 5,789,812
- ---------------------------------------------------------------
POWER PRODUCERS (INDEPENDENT)-0.14%
AES Corp.(a) 60,000 2,377,500
- ---------------------------------------------------------------
RESTAURANTS-0.55%
CKE Restaurants, Inc. 75,000 2,995,312
- ---------------------------------------------------------------
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RESTAURANTS-(CONTINUED)
Cracker Barrel Old Country Store, Inc. 60,000 $ 1,770,000
- ---------------------------------------------------------------
Starbucks Corp.(a) 130,000 4,290,000
- ---------------------------------------------------------------
9,055,312
- ---------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS)-0.87%
CompUSA, Inc.(a) 208,000 6,812,000
- ---------------------------------------------------------------
Ingram Micro, Inc.-Class A(a) 121,300 3,616,256
- ---------------------------------------------------------------
Tech Data Corp.(a) 89,200 3,969,400
- ---------------------------------------------------------------
14,397,656
- ---------------------------------------------------------------
RETAIL (DEPARTMENT STORES)-0.71%
Federated Department Stores, Inc.(a) 33,600 1,478,400
- ---------------------------------------------------------------
Fred Meyer, Inc.(a) 140,000 3,998,750
- ---------------------------------------------------------------
Kohl's Corp.(a) 25,000 1,678,125
- ---------------------------------------------------------------
Nordstrom, Inc. 75,000 4,593,750
- ---------------------------------------------------------------
11,749,025
- ---------------------------------------------------------------
RETAIL (DISCOUNTERS)-0.93%
Consolidated Stores Corp.(a) 223,187 8,899,582
- ---------------------------------------------------------------
Dollar General Corp. 47,460 1,569,146
- ---------------------------------------------------------------
Dollar Tree Stores, Inc.(a) 45,000 1,822,500
- ---------------------------------------------------------------
Men's Wearhouse, Inc. (The)(a) 80,000 3,100,000
- ---------------------------------------------------------------
15,391,228
- ---------------------------------------------------------------
RETAIL (DRUG STORES)-0.69%
CVS Corp. 65,580 4,020,874
- ---------------------------------------------------------------
Rite Aid Corp. 124,000 7,362,500
- ---------------------------------------------------------------
11,383,374
- ---------------------------------------------------------------
RETAIL (FOOD CHAINS)-1.66%
Kroger Co.(a) 302,600 9,872,325
- ---------------------------------------------------------------
Safeway, Inc.(a) 300,657 17,475,688
- ---------------------------------------------------------------
27,348,013
- ---------------------------------------------------------------
RETAIL (GENERAL MERCHANDISE)-1.56%
Costco Companies, Inc.(a) 250,000 9,625,000
- ---------------------------------------------------------------
Dayton Hudson Corp. 214,500 13,473,281
- ---------------------------------------------------------------
Wal-Mart Stores, Inc. 74,900 2,630,863
- ---------------------------------------------------------------
25,729,144
- ---------------------------------------------------------------
RETAIL (HOME SHOPPING)-0.26%
CDW Computer Centers, Inc.(a) 68,000 4,216,000
- ---------------------------------------------------------------
RETAIL (SPECIALTY)-1.74%
Michaels Stores, Inc.(a) 70,000 2,104,375
- ---------------------------------------------------------------
Office Depot, Inc.(a) 297,400 6,133,875
- ---------------------------------------------------------------
Polo Ralph Lauren Corp.(a) 44,000 1,144,000
- ---------------------------------------------------------------
Staples, Inc.(a) 248,600 6,525,750
- ---------------------------------------------------------------
Tiffany & Co. 38,700 1,528,650
- ---------------------------------------------------------------
Toys "R" Us, Inc.(a) 100,000 3,406,250
- ---------------------------------------------------------------
Viking Office Products, Inc.(a) 140,000 3,351,250
- ---------------------------------------------------------------
MARKET
SHARES VALUE
RETAIL (SPECIALTY)-(CONTINUED)
Williams-Sonoma, Inc.(a) 28,000 $ 1,123,500
- ---------------------------------------------------------------
Woolworth Corp.(a) 180,000 3,420,000
- ---------------------------------------------------------------
28,737,650
- ---------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-0.64%
Gap, Inc. 41,000 2,180,688
- ---------------------------------------------------------------
TJX Companies, Inc. 284,000 8,413,500
- ---------------------------------------------------------------
10,594,188
- ---------------------------------------------------------------
SAVINGS & LOAN COMPANIES-1.59%
Ahmanson (H.F.) & Co. 325,000 19,175,000
- ---------------------------------------------------------------
Dime Bancorp, Inc. 25,000 600,000
- ---------------------------------------------------------------
GreenPoint Financial Corp. 100,000 6,437,500
- ---------------------------------------------------------------
26,212,500
- ---------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING)-0.28%
Interpublic Group of Companies,
Inc. 58,500 2,778,750
- ---------------------------------------------------------------
Omnicom Group, Inc. 25,000 1,765,625
- ---------------------------------------------------------------
4,544,375
- ---------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-1.65%
Cerner Corp.(a) 170,000 4,122,500
- ---------------------------------------------------------------
HFS, Inc.(a) 100,000 7,050,000
- ---------------------------------------------------------------
Service Corp. International 460,000 14,001,250
- ---------------------------------------------------------------
Stewart Enterprises, Inc.- Class A 49,900 2,070,850
- ---------------------------------------------------------------
27,244,600
- ---------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS)-0.10%
SunGard Data Systems Inc.(a) 67,800 1,601,775
- ---------------------------------------------------------------
SERVICES (DATA PROCESSING)-1.18%
CSG Systems International, Inc.(a) 44,400 1,739,925
- ---------------------------------------------------------------
DST Systems, Inc.(a) 67,500 2,383,594
- ---------------------------------------------------------------
Equifax, Inc. 177,000 5,498,062
- ---------------------------------------------------------------
Fiserv, Inc.(a) 88,500 3,960,375
- ---------------------------------------------------------------
National Data Corp. 70,000 2,585,625
- ---------------------------------------------------------------
Paychex, Inc. 55,350 2,110,219
- ---------------------------------------------------------------
PMT Services, Inc.(a) 70,000 1,128,750
- ---------------------------------------------------------------
19,406,550
- ---------------------------------------------------------------
SERVICES (EMPLOYMENT)-0.24%
AccuStaff, Inc.(a) 135,440 3,868,505
- ---------------------------------------------------------------
Kelly Services, Inc.-Class A 2,700 95,850
- ---------------------------------------------------------------
3,964,355
- ---------------------------------------------------------------
SERVICES (FACILITIES & ENVIRONMENTAL)-0.11%
Corrections Corp. of America(a) 60,000 1,830,000
- ---------------------------------------------------------------
SPECIALTY PRINTING-0.09%
Gartner Group, Inc.(a) 50,000 1,412,500
- ---------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-0.91%
LCI International, Inc.(a) 100,000 2,587,500
- ---------------------------------------------------------------
</TABLE>
9
<PAGE> 12
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELECOMMUNICATIONS (LONG DISTANCE)-(CONTINUED)
MCI Communications Corp. 125,000 $ 4,437,500
- ---------------------------------------------------------------
WorldCom, Inc.(a) 238,700 8,026,288
- ---------------------------------------------------------------
15,051,288
- ---------------------------------------------------------------
TELEPHONE-0.67%
Bell Atlantic Corp. 30,100 2,404,238
- ---------------------------------------------------------------
Cincinnati Bell, Inc. 323,200 8,726,400
- ---------------------------------------------------------------
11,130,638
- ---------------------------------------------------------------
TEXTILES (APPAREL)-1.23%
Jones Apparel Group, Inc.(a) 103,700 5,275,737
- ---------------------------------------------------------------
Liz Claiborne, Inc. 245,000 12,418,438
- ---------------------------------------------------------------
Nautica Enterprises, Inc.(a) 100,000 2,662,500
- ---------------------------------------------------------------
20,356,675
- ---------------------------------------------------------------
TEXTILES (SPECIALTY)-0.15%
Unifi, Inc. 62,300 2,394,656
- ---------------------------------------------------------------
TRUCKS & PARTS-0.48%
Cummins Engine Co., Inc. 131,500 8,013,281
- ---------------------------------------------------------------
WASTE MANAGEMENT-0.57%
Browning-Ferris Industries, Inc. 108,000 3,510,000
- ---------------------------------------------------------------
WASTE MANAGEMENT-(CONTINUED)
USA Waste Services, Inc.(a) 159,125 $ 5,887,625
- ---------------------------------------------------------------
9,397,625
- ---------------------------------------------------------------
Total Common Stocks 1,564,726,493
- ---------------------------------------------------------------
PRINCIPAL
AMOUNT
CONVERTIBLE CORPORATE BONDS-0.22%
COMPUTER (PERIPHERALS)-0.12%
EMC Corp., Conv. Sub. Notes,
3.25%, 03/15/02 (Acquired
09/12/97; Cost $1,963,721)(b) $ 1,450,000 2,012,383
- ---------------------------------------------------------------
INSURANCE (MULTI-LINE)-0.10%
Loews Corp., Conv. Sub. Deb.,
3.125%, 09/15/07 1,400,000 1,597,610
- ---------------------------------------------------------------
Total Convertible Corporate
Bonds 3,609,993
- ---------------------------------------------------------------
REPURCHASE AGREEMENT-4.68%(c)
SBC Warburg Inc.,
5.65%, 11/03/97(d) 77,247,953 77,247,953
- ---------------------------------------------------------------
TOTAL INVESTMENTS-99.72% 1,645,584,439
- ---------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-0.28% 4,649,597
- ---------------------------------------------------------------
NET ASSETS-100.00% $1,650,234,036
===============================================================
</TABLE>
Abbreviations:
ADR - American Depository Receipt
Conv. - Convertible
Deb. - Debentures
Sub. - Subordinated
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 this security has been determined in
accordance with procedures established by the Board of Directors. The market
value of this security at 10/31/97 was $2,012,383 which represented 0.12% of
the Fund's net assets.
(c) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value 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
investments advisor or its affiliates.
(d) Joint repurchase agreement entered into 10/31/97 with a maturing value of
$350,164,792. Collateralized by $355,329,000 U.S. Government agency
obligations, 7.00% to 9.875% due 11/15/15 to 10/01/27 with an aggregate
market value at 10/31/97 of $359,463,470.
See Notes to Financial Statements.
10
<PAGE> 13
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$1,125,824,040) $1,645,584,439
- -------------------------------------------------------------
Receivables for:
Investments sold 7,416,232
- -------------------------------------------------------------
Capital stock sold 124,990
- -------------------------------------------------------------
Dividends and interest 647,554
- -------------------------------------------------------------
Investment for deferred compensation plan 27,503
- -------------------------------------------------------------
Other assets 21,985
- -------------------------------------------------------------
Total assets 1,653,822,703
- -------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 2,270,696
- -------------------------------------------------------------
Capital stock reacquired 118,988
- -------------------------------------------------------------
Deferred compensation 27,503
- -------------------------------------------------------------
Accrued advisory fees 940,205
- -------------------------------------------------------------
Accrued administrative service fees 5,088
- -------------------------------------------------------------
Accrued directors' fees 5,680
- -------------------------------------------------------------
Accrued operating expenses 220,507
- -------------------------------------------------------------
Total liabilities 3,588,667
- -------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $1,650,234,036
=============================================================
Capital stock, $.01 par value per share:
Authorized 1,000,000,000
- -------------------------------------------------------------
Outstanding 108,895,887
- -------------------------------------------------------------
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE $ 15.15
=============================================================
</TABLE>
STATEMENT OF OPERATIONS
For the year ended October 31, 1997
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $106,713 foreign withholding
tax) $ 9,871,106
- ------------------------------------------------------------
Interest 1,733,705
- ------------------------------------------------------------
Total investment income 11,604,811
- ------------------------------------------------------------
EXPENSES:
Advisory fees 9,353,715
- ------------------------------------------------------------
Administrative service fees 67,450
- ------------------------------------------------------------
Custodian fees 163,248
- ------------------------------------------------------------
Transfer agent fees 46,321
- ------------------------------------------------------------
Directors' fees 16,639
- ------------------------------------------------------------
Other 365,045
- ------------------------------------------------------------
Total expenses 10,012,418
- ------------------------------------------------------------
Less: Expenses paid indirectly (16,363)
- ------------------------------------------------------------
Net expenses 9,996,055
- ------------------------------------------------------------
Net investment income 1,608,756
- ------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENT
SECURITIES:
Net realized gain on sales of investment
securities 151,798,786
- ------------------------------------------------------------
Net unrealized appreciation of investment
securities 212,044,735
- ------------------------------------------------------------
Net gain on investment securities 363,843,521
- ------------------------------------------------------------
Net increase in net assets resulting from
operations $365,452,277
============================================================
</TABLE>
See Notes to Financial Statements.
11
<PAGE> 14
STATEMENT OF CHANGES IN NET ASSETS
For the years ended October 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,608,756 $ 3,291,716
- ----------------------------------------------------------------------------------------------
Net realized gain on sales of investment securities and
futures contracts 151,798,786 114,141,332
- ----------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities 212,044,735 50,514,049
- ----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 365,452,277 167,947,097
- ----------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (3,131,614) (2,276,042)
- ----------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains (114,611,563) (74,181,022)
- ----------------------------------------------------------------------------------------------
Net equalization credits 2,437,968 2,660,812
- ----------------------------------------------------------------------------------------------
Net increase from capital stock transactions 139,078,724 116,846,774
- ----------------------------------------------------------------------------------------------
Net increase in net assets 389,225,792 210,997,619
- ----------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 1,261,008,244 1,050,010,625
- ----------------------------------------------------------------------------------------------
End of period $1,650,234,036 $1,261,008,244
==============================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $ 956,102,084 $ 817,023,360
- ----------------------------------------------------------------------------------------------
Undistributed net investment income 23,591,883 22,676,773
- ----------------------------------------------------------------------------------------------
Undistributed net realized gain on sales of investment
securities and futures contracts 150,779,670 113,592,447
- ----------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities 519,760,399 307,715,664
- ----------------------------------------------------------------------------------------------
$1,650,234,036 $1,261,008,244
==============================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
October 31, 1997
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 -- A security listed or traded on an exchange (except
convertible bonds) is 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. Each security traded in the over-the-counter market (but not
including securities reported on the NASDAQ National Market System) is valued
at the mean between the last bid and asked prices based upon quotes furnished
by market makers for such securities. Each security reported on the NASDAQ
National Market System is valued at the last sales price on the valuation
date or absent a last sales price, at the mean of the closing bid and asked
prices. Debt obligations (including convertible bonds) are valued on the
basis of prices provided by an independent pricing service. Prices provided
by an independent pricing service may be determined without exclusive
reliance on quoted prices, and may reflect appropriate factors such as yield,
type of issue, coupon rate and maturity date. Securities for which market
quotations are not readily available or are questionable are valued at fair
value as determined in good faith by or under the supervision of the 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
12
<PAGE> 15
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 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 sub-advisory agreement between AIM and TradeStreet
Investment Associates, Inc. ("TradeStreet"), 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, 1997, the Fund
reimbursed AIM $67,450 for such services.
During the year ended October 31, 1997, the Fund paid legal fees of $6,842 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-INDIRECT EXPENSES
AIM has directed certain portfolio trades to brokers who paid a portion of the
Fund's expenses related to pricing services used by the Fund. For the year ended
October 31, 1997, the Fund's expenses were reduced by $5,684. The Fund received
reductions in custodian fees of $10,679 under an expense offset arrangement. The
effect of the above arrangements resulted in reductions of the Fund's total
expenses of $16,363 during the year ended October 31, 1997.
NOTE 4-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 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $500,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. Interest on
borrowings under the line of credit is payable on maturity or prepayment date.
Prior to an amendment of the line of credit on July 15, 1997, the Fund was
limited to borrowing up to the lesser of i) $325,000,000 or ii) the limit set by
its prospectus for borrowings. During the year ended October 31, 1997, the Fund
did not borrow under the line of credit agreement. The funds which are party to
the line of credit are charged a commitment fee of 0.05% on the unused balance
of the committed line. The commitment fee is allocated among the funds based on
their respective average net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended October 31, 1997 was
$1,250,840,627 and $1,266,091,305, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of October 31, 1997, on a tax basis, is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $534,245,225
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (17,810,567)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $516,434,658
=========================================================
</TABLE>
* Cost of investments for tax purposes is $1,129,149,781.
13
<PAGE> 16
NOTE 7-CAPITAL STOCK
Changes in capital stock outstanding for the year ended October 31, 1997 and
1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold 8,716,348 $114,553,393 9,230,433 $108,559,927
- ----------------------------------------------------------- ---------- ------------ ---------- ------------
Issued as reinvestment of dividends 9,816,281 113,770,753 6,936,341 74,080,187
- ----------------------------------------------------------- ---------- ------------ ---------- ------------
Reacquired (6,706,799) (89,245,422) (5,576,722) (65,793,340)
- ----------------------------------------------------------- ---------- ------------ ---------- ------------
11,825,830 $139,078,724 10,590,052 $116,846,774
========== ============ ========== ============
</TABLE>
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of capital stock
outstanding during each of the years in the four-year period ended October 31,
1997, the ten months ended October 31, 1993 and the year ended December 31,
1992.
<TABLE>
<CAPTION>
OCTOBER 31, DECEMBER 31,
------------------------------------------------------------- ------------
1997 1996 1995 1994 1993 1992
---------- --------- --------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 12.99 $ 12.14 $ 9.78 $ 10.46 $ 9.64 $ 10.09
- --------------------------------------------- ---------- --------- --------- -------- -------- --------
Income from investment operations:
Net investment income 0.02 0.04 0.04 0.10 0.09 0.11
- --------------------------------------------- ---------- --------- --------- -------- -------- --------
Net gains (losses) on securities (both
realized and unrealized) 3.34 1.69 2.81 (0.04) 0.73 0.35
- --------------------------------------------- ---------- --------- --------- -------- -------- --------
Total from investment operations 3.36 1.73 2.85 0.06 0.82 0.46
- --------------------------------------------- ---------- --------- --------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.03) (0.03) (0.10) (0.10) -- (0.11)
- --------------------------------------------- ---------- --------- --------- -------- -------- --------
Distributions from net realized gains (1.17) (0.85) (0.39) (0.64) -- (0.80)
- --------------------------------------------- ---------- --------- --------- -------- -------- --------
Total distributions (1.20) (0.88) (0.49) (0.74) -- (0.91)
- --------------------------------------------- ---------- --------- --------- -------- -------- --------
Net asset value, end of period $ 15.15 $ 12.99 $ 12.14 $ 9.78 $ 10.46 $ 9.64
============================================ ========== ========== ========== ======== ======== ========
Total return(a) 28.53% 15.61% 31.03% 0.61% 8.51% 4.50%
============================================ ========== ========== ========== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,650,234 $1,261,008 $1,050,011 $765,073 $705,580 $604,329
============================================ ========== ========== ========== ======== ======== ========
Ratio of expenses to average net assets 0.68%(b)(c) 0.70% 0.71% 0.72% 0.79%(d) 0.76%
============================================ ========== ========== ========== ======== ======== ========
Ratio of net investment income to average
net assets 0.11%(b) 0.29% 0.33% 1.04% 1.13%(d) 1.09%
============================================ ========== ========== ========== ======== ======== ========
Portfolio turnover rate 88.23% 118.34% 126.00% 121.69% 115.76% 97.41%
============================================ ========== ========== ========== ======== ======== ========
Average brokerage commission rate paid(e) $ 0.0608 $ 0.0643 N/A N/A N/A N/A
============================================ ========== ========== ========== ======== ======== ========
</TABLE>
(a) For periods less than one year, total return is not annualized.
(b) Ratios are based on average net assets of $1,462,594,326.
(c) Ratio includes indirectly paid expenses. Excluding indirectly paid
expenses, the ratio of expenses to average net assets would have been the
same.
(d) Annualized.
(e) The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the
total number of related shares purchased and sold, which is required to be
disclosed for fiscal years beginning September 1, 1995 and thereafter.
14
<PAGE> 17
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 the AIM Summit Fund, Inc., including the
schedule of investments, as of October 31, 1997, 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 four-year period
then ended, the ten months ended October 31, 1993, and
the year 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, 1997, 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, 1997, and 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 four-year period then ended, the ten months
ended October 31, 1993, and the year ended December 31,
1992, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Houston, Texas
December 5, 1997
15
<PAGE> 18
- --------------------------------------------------------------------------------
SUPPLEMENTAL PROXY INFORMATION AIM SUMMIT FUND, INC.
The Annual Meeting of Shareholders of the AIM Summit Fund, Inc. (the "Fund") was
held on February 7, 1997 at the offices of A I M Management Group Inc., 11
Greenway Plaza, Houston, Texas. The meeting was held for the following purposes:
(1) To elect Directors as follows: Charles T. Bauer, Bruce L. Crockett, Owen
Daly II, Carl Frischling, Robert H. Graham, John F. Kroeger, Lewis F.
Pennock, Ian W. Robinson, and Louis S. Sklar.
(2) To approve a new Master Investment Advisory Agreement between the Fund and
A I M Advisors, Inc. ("AIM Advisors").
(3) To approve a new Sub-Advisory Agreement between AIM Advisors and TradeStreet
Investment Associates, Inc.
(4) To approve the elimination of the fundamental investment policy prohibiting
or restricting investments in other investment companies.
(5) To ratify the selection of KPMG Peat Marwick LLP as independent accountants
for the Fund for the Fund's fiscal year ending October 31, 1997.
The results of proxy solicitation on the above matters were as follows:
<TABLE>
<CAPTION>
Votes Withheld/
Director/Matter Votes for Against Abstentions
--------------- --------- ------- -----------
<S> <C> <C> <C> <C>
(1) Charles T. Bauer........................................... 70,528,895 N/A 2,501,145
Bruce L. Crockett.......................................... 70,665,829 N/A 2,364,211
Owen Daly II............................................... 70,455,617 N/A 2,574,423
Carl Frischling............................................ 70,528,507 N/A 2,501,533
Robert H. Graham........................................... 70,692,348 N/A 2,337,692
John F. Kroeger............................................ 70,446,208 N/A 2,583,832
Lewis F. Pennock........................................... 70,561,638 N/A 2,468,402
Ian W. Robinson............................................ 70,452,892 N/A 2,577,148
Louis S. Sklar............................................. 70,633,066 N/A 2,396,974
(2) Approval of Master Investment Advisory Agreement........... 67,927,052 1,843,418 3,259,570
(3) Approval of Sub-Advisory Agreement......................... 66,561,907 2,129,229 4,338,904
(4) Elimination of Fundamental Policy.......................... 63,661,478 6,015,069 3,353,493
(5) KPMG Peat Marwick LLP...................................... 69,037,714 841,603 3,150,723
</TABLE>
16
<PAGE> 19
Directors & Officers
<TABLE>
<S> <C>
BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman Chairman Suite 100
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Director
ACE Limited; John J. Arthur A I M Advisors, Inc.
Formerly Director, President, and Chief Senior Vice President and Treasurer 11 Greenway Plaza
Executive Officer Suite 100
COMSAT Corporation Carol F. Relihan Houston, TX 77046
Senior Vice President
Owen Daly II and Secretary SUB-ADVISOR
Director
Cortland Trust Inc. Gary T. Crum TradeStreet Investment Associates, Inc.
Senior Vice President 101 South Tryon Street
Jack Fields Suite 100
Formerly Member of the Dana R. Sutton Charlotte, NC 28255
U.S. House of Representatives Vice President and Assistant Treasurer
TRANSFER AGENT
Carl Frischling Melville B. Cox
Partner Vice President Boston Financial Data Services, Inc.
Kramer, Levin, Naftalis & Frankel P. O. Box 8300
Jonathan C. Schoolar Boston, MA 02266-8300
Robert H. Graham Vice President
President and Chief Executive Officer CUSTODIAN
A I M Management Group Inc. P. Michelle Grace
Assistant Secretary State Street Bank & Trust Company
John F. Kroeger 225 Franklin Street
Formerly Consultant Nancy L. Martin Boston, MA 02110
Wendell & Stockel Associates, Inc. Assistant Secretary
COUNSEL TO THE FUND
Lewis F. Pennock Ofelia M. Mayo
Attorney Assistant Secretary Ballard Spahr Andrews & Ingersoll
1735 Market Street, 51st Floor
Ian W. Robinson Kathleen J. Pflueger Philadelphia, PA 19103
Consultant; Formerly Executive Assistant Secretary
Vice President and COUNSEL TO THE DIRECTORS
Chief Financial Officer Samuel D. Sirko
Bell Atlantic Management Assistant Secretary Kramer, Levin, Naftalis & Frankel
Services, Inc. 919 Third Avenue
Stephen I. Winer New York, NY 10022
Louis S. Sklar Assistant Secretary
Executive Vice President DISTRIBUTOR
Hines Interests Mary J. Benson
Limited Partnership Assistant Treasurer A I M Distributors, Inc.
11 Greenway Plaza
Suite 100
Houston, TX 77046
AUDITORS
KMPG Peat Marwick LLP
700 Louisiana
Houston, TX 77002
</TABLE>
REQUIRED FEDERAL INCOME TAX INFORMATION
AIM Summit Fund paid ordinary dividends in the amount of $0.032 per share to
shareholders during its tax year ended October 31, 1997. Of this amount, 97.70%
is eligible for the dividends received deduction for corporations. The Fund also
distributed long-term capital gains of $1.172 per share during its tax year
ended October 31, 1997.
<PAGE> 20
[AIM LOGO APPEARS HERE]
----------------
AIM DISTRIBUTORS, INC. BULK RATE
11 Greenway Plaza, Suite 100 U.S. POSTAGE
Houston, TX 77046 PAID
HOUSTON, TX
Permit No. 1919
----------------
