<PAGE> 1
SEMIANNUAL REPORT / APRIL 30, 1999
AIM
SUMMIT FUND, INC.
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
<PAGE> 2
[Cover Image]
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THE PIONEER CABIN OF THE YOSEMITE VALLEY
BY CURRIER AND IVES (1857-1907, AMERICAN)
THE LITHOGRAPHY FIRM OF CURRIER AND IVES IMMORTALIZED LIFE IN
19TH-CENTURY AMERICA THROUGH ITS SERIES OF POPULAR PRINTS. THESE
NATIONAL TREASURES SHAPED A WHOLE ERA'S UNDERSTANDING OF WHAT IT
MEANS TO BE "AMERICAN." THIS CLASSIC PIECE PAYS TRIBUTE TO THE
PERSEVERANCE AND DEDICATION OF PIONEERS IN THE AMERICAN WEST--
QUALITIES THAT, TODAY, CHARACTERIZE THE DISCIPLINED INVESTOR.
------------------------------------------------------------------
AIM Summit Fund, Inc. is for shareholders who seek capital growth through
systematic investments.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The Dow Jones Industrial Average (the Dow) is a price-weighted average of 30
actively traded primarily industrial stocks.
o The unmanaged Lipper Growth Funds Index represents an average of the
performance of the 30 largest growth funds charted by Lipper, Inc., an
independent mutual-fund performance monitor. Results shown reflect
reinvestment of dividends.
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.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT
THIS REPORT:
o Fund performance figures are historical and reflect reinvestment of all
distributions and changes in net asset value.
o When sales charges are included in performance figures, performance reflects
the maximum 8.50% sales charge. The 8.50% sales charge is attributable to
the 15-year investment plan. Maximum sales and creation charges total 8.50%
for the smallest plan size, $50 per month. Larger plans carry lower sales
charges as outlined in the prospectus.
o Dollar-cost averaging 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.
o The Fund's investment return and principal value will fluctuate, so an
investor's shares, when redeemed, may be worth more or less than their
original cost.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER GOVERNMENT AGENCY. THERE IS A RISK THAT YOU COULD
LOSE SOME OR ALL OF YOUR MONEY.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the Fund.
AIM SUMMIT FUND, INC.
<PAGE> 3
SEMIANNUAL REPORT / CHAIRMAN'S LETTER
Dear Fellow Shareholder:
With only several months remaining in 1999, the question on
[PHOTO OF many of your minds may be, "How will the year 2000 computer
Charles T. issue affect AIM and my investments?" We would like you to
Bauer, feel comfortable.
Chairman of During March and April, AIM participated in an
the Board of industrywide test that gave us a chance to see how our
THE FUND technology systems might be affected by the changeover to
APPEARS HERE] the year 2000 (Y2K). Everything went as well as we had
hoped; in general, the industry sailed through the testing
process with flying colors. The financial industry has been
seen as a leader in planning for year 2000 concerns. Thus,
it was no surprise to most participants that the test was an
overwhelming success.
The general purpose of the process was to test
electronic interfaces among financial industry members in
the United States and to follow transactions through a
typical trading cycle--from order entry to the settlement process. Investment
banks, broker-dealers, custodian banks and mutual-fund companies all worked
together to make this possible. Approximately 400 firms were involved in the
testing; AIM was one of 70 asset managers.
TEST RESULTS EXCELLENT
During the testing process, thousands of transactions were submitted and
approximately 260,000 steps were tested. Of those, only a handful experienced
minor glitches--just 0.02% of the total number of transactions. All problems
were worked through quickly before the hypothetical trades were settled. Of
course, AIM will keep testing and planning throughout 1999 as a precaution.
AIM'S INTERNAL EFFORTS CONTINUE
As you know from our previous communications to you, AIM has been addressing the
year 2000 issue for several years. During 1998, we made substantial progress on
our preparations. We are now in the final phases of the project, continually
testing internal applications and our interfaces with outside parties. On the
investment side, our portfolio-management staff is evaluating the Y2K
preparedness of the companies in which we invest.
We feel that our preparations for 2000 are very comprehensive, and the
industrywide testing showed that our colleagues in the financial industry are
also working hard to be ready for the new year. We do not think shareholders
need to take any extraordinary measures with their investments to prepare for
2000. However, if you have any lingering concerns, it may reassure you to know
that AIM is finalizing contingency plans that will be ready if there are
unexpected problems. Our plans will give AIM employees guidelines to follow for
a wide variety of situations.
We are pleased to send you this report covering your Fund's performance over
the last six months. On the pages that follow, your Fund's management team
offers more detailed discussion of how markets behaved, how they managed the
portfolio, and what they foresee for markets and your Fund. We hope you find
their discussion informative. If you have any questions or comments, please
contact our Client Services department at 800-995-4246.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
PLEASE NOTE THAT THE INFORMATION ABOUT THE YEAR 2000 IN THIS LETTER
IS DEEMED AIM'S YEAR 2000 READINESS DISCLOSURE.
----------------------
THE FINANCIAL
INDUSTRY HAS BEEN
SEEN AS A LEADER
IN PLANNING FOR
YEAR 2000 CONCERNS.
----------------------
AIM SUMMIT FUND, INC.
<PAGE> 4
SEMIANNUAL REPORT / MANAGERS' OVERVIEW
AIM SUMMIT FUND SURPASSES
BENCHMARK INDEXES
HOW DID AIM SUMMIT FUND, INC. PERFORM DURING THE REPORTING PERIOD?
For the six-month reporting period ended April 30, 1999, the Fund posted a
sterling performance, returning 35.99% at net asset value, that is, without the
effect of sales charges. Fund performance far outpaced the gains returned by
benchmark indexes. For the same period, the S&P 500 posted a 22.31% gain, while
the Lipper Growth Funds Index returned 23.71%.
The Fund has made a strong comeback from last fall's market downturn. For
1998, AIM Summit Fund boasted a 34.45% gain, without sales charges--well ahead
of the 28.60% return of the S&P 500 for the same period.
The Fund's net assets increased by 36% during the last six months for a
total of $2.49 billion at the reporting period's close.
WHAT WERE THE MAJOR TRENDS IN THE FINANCIAL MARKETS DURING THE REPORTING PERIOD?
At the beginning of the reporting period, the Fund benefited from the "flight to
quality" during the market downturn in 1998. Increasing narrowness in the U.S.
financial markets through early 1999 continued the dominance of large-cap
stocks. The Dow closed above 10,000 on March 29, 1999, and surpassed several
other milestones in April.
The beginning of 1999 was not so hospitable for the technology sector. After
the sector's sterling performance in 1998, many investors began to worry about a
bubble developing, especially in high-flying Internet stocks, the so-called
".com" universe. A sell-off in the technology arena ensued, but the markets
rebounded after first-quarter 1999 earnings reports came in quite strong.
WHAT CONTRIBUTED TO THE FUND'S STRONG SHOWING?
We attribute the Fund's strong gains to sector changes within its portfolio. Our
time-tested investment discipline led us in the direction of earnings-momentum
stocks of well-established companies in growth sectors. During the reporting
period, we significantly increased our position in technology companies, which
continued to experience explosive growth. Technology holdings accounted for
approximately 45% of the Fund's total net assets at the reporting period's
close. In contrast, our holdings in the energy sector were reduced to less than
1% of the Fund's total net assets in light of the sector's downturn in 1998.
Although energy prices started to show signs of recovery in early 1999, we
remain cautious about their long-term growth prospects.
YOUR FUND'S PERFORMANCE
AIM SUMMIT FUND LIPPER RANKINGS
As of 4/30/99
================================================================================
RANK VS.
ALL GROWTH %
PERIOD FUNDS RANK
15 years 36 of 109 34%
10 years 40 of 171 24
5 years 83 of 391 22
1 year 103 of 1,035 10
Fund percentage rankings are vs. all funds in the category tracked by Lipper,
Inc., excluding sales charges and including fees and expenses.
AIM SUMMIT FUND VS. BENCHMARK INDEXES
Six-month total returns, excluding sales charges
As of 4/30/99
[BAR CHART]
AIM SUMMIT FUND, INC. 35.99%
S&P 500 INDEX 23.71%
LIPPER GROWTH FUNDS INDEX 22.315
AVERAGE ANNUAL TOTAL RETURNS
As of 4/30/99, including sales charges
10 years 17.47%
5 years 22.35
1 year 18.35
Past performance cannot guarantee comparable future results. Fund performance
includes sales charges, expenses and management fees.
===============================================================================
MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE. RESULTS OF AN
INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE
SHOWN.
-------------------------------------------------
OUR TIME-TESTED INVESTMENT DISCIPLINE
LED US IN THE DIRECTION OF EARNINGS-MOMENTUM
STOCKS OF WELL-ESTABLISHED COMPANIES
IN GROWTH SECTORS.
-------------------------------------------------
See important Fund and index disclosures inside front cover.
AIM SUMMIT FUND, INC.
2
<PAGE> 5
SEMIANNUAL REPORT / MANAGERS' OVERVIEW
PORTFOLIO COMPOSITION
As of 4/30/99, based on total net assets
<TABLE>
<CAPTION>
========================================================================================================
TOP 10 EQUITY HOLDINGS TOP 10 INDUSTRIES
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. America Online, Inc. 4.93% 1. Computers (Software & Services) 20.29%
2. Cisco Systems, Inc. 2.75 2. Communications Equipment 6.68
3. Microsoft Corp. 2.55 3. Electronics (Semiconductors) 4.74
4. EMC Corp. 2.19 4. Telecommunications (Long Distance) 4.73
5. Motorola Inc. 2.09 5. Computers (Peripherals) 4.67
6. InfoSpace.com, Inc. 1.73 6. Telephone 3.65
7. Inktomi Corp. 1.59 7. Computers (Networking) 2.75
8. EBAY, Inc. 1.52 8. Investment Banking/Brokerage 2.66
9. Schwab (Charles), Corp. 1.46 9. Financial (Diversified) 2.32
10. MCI WorldCom, Inc. 1.40 10. Retail (Specialty-Apparel) 2.13
========================================================================================================
</TABLE>
MOST OF THE FUND'S TOP HOLDINGS ARE TECHNOLOGY COMPANIES. IN WHAT TYPE OF
TECHNOLOGY STOCKS DOES THE FUND INVEST?
The majority of the Fund's technology holdings are high-quality, dominant
brand-name firms. Companies such as America Online and Cisco Systems continued
to do well due to their large size, which has become a strategic weapon for
companies in this sector. Larger technology companies have more money to spend
on research and development, which in turn drives further technological
advancement. In this sector, being small or mid-cap may not necessarily be an
advantage. Having money to spend on research and development and the ability to
provide global reach to customers have become the main thrusts behind a
technology business's success.
When it comes to Internet investments, we focus on companies that are
making money, not on companies that hope to make money. Because of our
earnings-driven investment discipline, we did not participate in the huge run-up
in Internet stocks during 1998. Many of these companies simply have no earnings
to report. Instead, we focus on companies that build and support the structure
of the Internet. Successful larger firms, such as EMC and Inktomi, are among the
Fund's top holdings.
WHAT OTHER SECTORS DO YOU FAVOR?
The "wealth effect" created by the bull market of the 1990s is currently one of
the main drivers of continued growth in the U.S. economy. Red-hot demand for
consumer cyclicals--which accounted for 17.2% of the Fund's holdings on April
30--has remained relatively unaffected by global economic crises. We believe
that this trend will hold up so long as wages continue to grow faster than
inflation and interest rates remain steady. Market watchers are predicting
another successful year for retail stores in 1999. The Fund's holdings in this
sector include specialty retailers, such as Office Depot and The Gap, as well as
successful general merchandisers, such as Wal-Mart. For the first quarter of
1999, Wal-Mart, the nation's largest retailer, reported a record earnings
increase of 39%. This record represented the fourth consecutive quarter of net
income in excess of $1 billion and the highest net income ever reported by the
company in a non-holiday-season quarter.
HEALTH CARE WAS A PROMINENT SECTOR DURING THE LAST REPORTING PERIOD. IS THE FUND
STILL INVESTED IN HEALTH-CARE COMPANIES?
Health-care holdings, which represented 12.5% of the Fund's holdings six months
ago, were culled to 6.6% at the end of this reporting period. Stocks of
health-care providers have performed poorly. Medicare reimbursement policy has
eroded hospitals' earnings, and competition is preventing HMOs from raising
client fees. For these reasons, we have shifted our assets out of this sector to
more profitable sectors, like technology and consumer cyclicals.
However, we have retained some holdings in large pharmaceutical and medical
equipment companies, including Pfizer and Guidant. Our investments in these
industries are driven by long-term demographic trends. As the population ages,
the need for more health-care services will increase. Worldwide drug sales are
rising at a rate of 8% to 10% a year, and medical-device sales at 7% annually.
WHAT IS YOUR OUTLOOK FOR THE FUTURE?
Four months into 1999, fears of a recession in the United States have faded. In
fact, most economists are betting on continued steady growth, with low inflation
and high employment. We are now in the ninth straight year of growth, heading
for a record of the longest business expansion. International markets have
stabilized, leading analysts to believe that the worst may be over. To the
extent that these factors remain in place, the investing environment for the
Fund continues to be favorable.
See important Fund and index disclosures inside front cover.
AIM SUMMIT FUND, INC.
3
<PAGE> 6
SCHEDULE OF INVESTMENTS
April 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS-94.36%
AEROSPACE/DEFENSE-1.49%
General Dynamics Corp. 270,000 $ 18,967,500
- ---------------------------------------------------------------
Gulfstream Aerospace Corp.(a) 100,000 4,875,000
- ---------------------------------------------------------------
Sundstrand Corp. 185,000 13,273,750
- ---------------------------------------------------------------
37,116,250
- ---------------------------------------------------------------
AIR FREIGHT-0.58%
Airborne Freight Corp. 100,000 3,200,000
- ---------------------------------------------------------------
FDX Corp.(a) 100,000 11,256,250
- ---------------------------------------------------------------
14,456,250
- ---------------------------------------------------------------
AUTO PARTS & EQUIPMENT-0.10%
SPX Corp.(a) 40,000 2,612,500
- ---------------------------------------------------------------
AUTOMOBILES-0.58%
Ford Motor Co. 225,000 14,385,938
- ---------------------------------------------------------------
BANKS (MAJOR REGIONAL)-0.13%
Northern Trust Corp. 36,000 3,352,500
- ---------------------------------------------------------------
BANKS (MONEY CENTER)-0.67%
Chase Manhattan Corp. (The) 200,000 16,550,000
- ---------------------------------------------------------------
BANKS (REGIONAL)-0.32%
AmSouth Bancorporation 52,500 2,497,032
- ---------------------------------------------------------------
First Tennessee National Corp. 50,000 2,156,250
- ---------------------------------------------------------------
Firstar Corp. 111,000 3,336,937
- ---------------------------------------------------------------
7,990,219
- ---------------------------------------------------------------
BIOTECHNOLOGY-1.21%
Amgen, Inc.(a) 220,000 13,516,250
- ---------------------------------------------------------------
Biogen, Inc.(a) 175,000 16,635,938
- ---------------------------------------------------------------
30,152,188
- ---------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE)-0.84%
AT&T Corp.-Liberty Media Group(a) 125,000 7,984,375
- ---------------------------------------------------------------
Comcast Corp.-Class A 150,000 9,853,125
- ---------------------------------------------------------------
USA Networks, Inc.(a) 80,500 3,008,689
- ---------------------------------------------------------------
20,846,189
- ---------------------------------------------------------------
BUILDING MATERIALS-0.42%
USG Corp. 180,000 10,507,500
- ---------------------------------------------------------------
COMMUNICATIONS EQUIPMENT-5.70%
Lucent Technologies, Inc. 250,000 15,031,250
- ---------------------------------------------------------------
Motorola, Inc. 650,000 52,081,250
- ---------------------------------------------------------------
QUALCOMM, Inc.(a) 130,000 26,000,000
- ---------------------------------------------------------------
Tellabs, Inc.(a) 201,000 22,022,064
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
COMMUNICATIONS EQUIPMENT-(CONTINUED)
Uniphase Corp.(a) 220,000 $ 26,702,500
- ---------------------------------------------------------------
141,837,064
- ---------------------------------------------------------------
COMPUTERS (HARDWARE)-2.08%
International Business Machines
Corp. 150,000 31,378,125
- ---------------------------------------------------------------
NCR Corp.(a) 275,000 11,275,000
- ---------------------------------------------------------------
Sun Microsystems, Inc.(a) 150,000 8,971,875
- ---------------------------------------------------------------
51,625,000
- ---------------------------------------------------------------
COMPUTERS (NETWORKING)-2.75%
Cisco Systems, Inc.(a) 600,000 68,437,500
- ---------------------------------------------------------------
COMPUTERS (PERIPHERALS)-4.39%
EMC Corp.(a) 500,000 54,468,750
- ---------------------------------------------------------------
Jabil Circuit, Inc.(a) 600,000 27,937,500
- ---------------------------------------------------------------
Lexmark International Group,
Inc.(a) 160,000 19,760,000
- ---------------------------------------------------------------
QLogic Corp.(a) 100,000 6,993,750
- ---------------------------------------------------------------
109,160,000
- ---------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES)-20.29%
America Online, Inc.(a) 860,000 122,765,000
- ---------------------------------------------------------------
AT Home Corporation(a) 150,000 21,590,625
- ---------------------------------------------------------------
Computer Sciences Corp.(a) 200,000 11,912,500
- ---------------------------------------------------------------
Compuware Corp.(a) 720,000 17,550,000
- ---------------------------------------------------------------
EBAY Inc.(a) 181,200 37,712,250
- ---------------------------------------------------------------
Electronics for Imaging, Inc.(a) 225,000 10,645,313
- ---------------------------------------------------------------
Excite, Inc.(a) 130,000 18,980,000
- ---------------------------------------------------------------
InfoSpace.com, Inc.(a) 300,000 42,993,750
- ---------------------------------------------------------------
Inktomi Corp.(a) 330,000 39,517,500
- ---------------------------------------------------------------
Intuit, Inc.(a) 400,000 34,450,000
- ---------------------------------------------------------------
Lycos, Inc.(a) 90,000 8,971,875
- ---------------------------------------------------------------
Microsoft Corp.(a) 780,000 63,423,750
- ---------------------------------------------------------------
Novell, Inc.(a) 900,000 20,025,000
- ---------------------------------------------------------------
Unisys Corp.(a) 450,000 14,146,875
- ---------------------------------------------------------------
Veritas Software Corp.(a) 100,000 7,100,000
- ---------------------------------------------------------------
Yahoo! Inc.(a) 190,000 33,190,625
- ---------------------------------------------------------------
504,975,063
- ---------------------------------------------------------------
CONSUMER FINANCE-0.77%
Capital One Financial Corp. 110,000 19,105,625
- ---------------------------------------------------------------
DISTRIBUTORS (FOOD &
HEALTH)-0.29%
SUPERVALU, INC. 341,800 7,135,075
- ---------------------------------------------------------------
ELECTRICAL EQUIPMENT-0.32%
American Power Conversion
Corp.(a) 150,000 4,950,000
- ---------------------------------------------------------------
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRICAL EQUIPMENT-(CONTINUED)
Sanmina Corp.(a) 45,000 $ 2,986,875
- ---------------------------------------------------------------
7,936,875
- ---------------------------------------------------------------
ELECTRONIC COMPANIES-1.01%
DTE Energy Co. 300,000 12,243,750
- ---------------------------------------------------------------
Peco Energy Co. 270,000 12,808,125
- ---------------------------------------------------------------
25,051,875
- ---------------------------------------------------------------
ELECTRONICS
(INSTRUMENTATION)-0.50%
Perkin-Elmer Corp. 11,900 1,286,687
- ---------------------------------------------------------------
Waters Corp.(a) 106,000 11,143,250
- ---------------------------------------------------------------
12,429,937
- ---------------------------------------------------------------
ELECTRONICS
(SEMICONDUCTORS)-4.74%
Altera Corp.(a) 200,000 14,450,000
- ---------------------------------------------------------------
Analog Devices, Inc.(a) 150,000 5,268,750
- ---------------------------------------------------------------
Broadcom Corp.(a) 350,000 26,993,750
- ---------------------------------------------------------------
Maxim Integrated Products,
Inc.(a) 157,000 8,792,000
- ---------------------------------------------------------------
Microchip Technology, Inc.(a) 134,300 4,700,500
- ---------------------------------------------------------------
Micron Technology, Inc.(a) 301,000 11,174,625
- ---------------------------------------------------------------
PMC-Sierra, Inc.(a) 300,000 28,762,500
- ---------------------------------------------------------------
Texas Instruments, Inc. 130,000 13,276,250
- ---------------------------------------------------------------
Vitesse Semiconductor Corp.(a) 100,000 4,631,250
- ---------------------------------------------------------------
118,049,625
- ---------------------------------------------------------------
ENTERTAINMENT-0.65%
Time Warner, Inc. 230,000 16,100,000
- ---------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR)-0.09%
KLA-Tencor Corp.(a) 45,000 2,233,125
- ---------------------------------------------------------------
FINANCIAL (DIVERSIFIED)-2.32%
American Express Co. 44,000 5,750,250
- ---------------------------------------------------------------
Associates First Capital
Corp.-Class A 117,938 5,226,128
- ---------------------------------------------------------------
Fannie Mac 234,000 16,599,375
- ---------------------------------------------------------------
Freddie Mac 280,000 17,570,000
- ---------------------------------------------------------------
MGIC Investment Corp. 260,000 12,626,250
- ---------------------------------------------------------------
57,772,003
- ---------------------------------------------------------------
HEALTH CARE (DIVERSIFIED)-1.19%
Abbott Laboratories 127,000 6,151,563
- ---------------------------------------------------------------
Allergan, Inc. 260,000 23,367,500
- ---------------------------------------------------------------
29,519,063
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-GENERIC & OTHER)-0.73%
Mylan Laboratories, Inc. 440,000 9,982,500
- ---------------------------------------------------------------
Watson Pharmaceuticals, Inc.(a) 200,000 8,100,000
- ---------------------------------------------------------------
18,082,500
- ---------------------------------------------------------------
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)-0.94%
Lilly (Eli) & Co. 76,800 5,654,400
- ---------------------------------------------------------------
Pfizer, Inc. 90,000 10,355,625
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS)-(CONTINUED)
Schering-Plough Corp. 155,200 $ 7,498,100
- ---------------------------------------------------------------
23,508,125
- ---------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT)-0.45%
Health Management Associates,
Inc.-Class A(a) 285,000 4,453,125
- ---------------------------------------------------------------
Quorum Health Group, Inc.(a) 225,000 2,784,375
- ---------------------------------------------------------------
Universal Health Services,
Inc.-Class B(a) 77,100 3,994,744
- ---------------------------------------------------------------
11,232,244
- ---------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)-1.62%
Becton, Dickinson & Co. 190,000 7,065,625
- ---------------------------------------------------------------
Guidant Corp. 620,000 33,286,250
- ---------------------------------------------------------------
40,351,875
- ---------------------------------------------------------------
HOMEBUILDING-0.11%
Clayton Homes, Inc. 245,375 2,729,796
- ---------------------------------------------------------------
HOUSEHOLD FURNISHINGS & APPLIANCES-0.73%
Maytag Corp. 265,000 18,119,375
- ---------------------------------------------------------------
INSURANCE (LIFE/HEALTH)-0.78%
Equitable Companies, Inc. 254,000 17,097,375
- ---------------------------------------------------------------
ReliaStar Financial Corp. 62,000 2,278,500
- ---------------------------------------------------------------
19,375,875
- ---------------------------------------------------------------
INSURANCE (MULTI-LINE)-0.99%
American International Group,
Inc. 209,550 24,609,029
- ---------------------------------------------------------------
INSURANCE
(PROPERTY-CASUALTY)-0.35%
Allstate Corp. (The) 240,000 8,730,000
- ---------------------------------------------------------------
INVESTMENT
BANKING/BROKERAGE-2.66%
Lehman Brothers Holdings, Inc. 40,000 2,222,500
- ---------------------------------------------------------------
Morgan Stanley, Dean Witter,
Discover & Co. 154,000 15,274,875
- ---------------------------------------------------------------
Paine Webber Group Inc. 267,000 12,532,313
- ---------------------------------------------------------------
Schwab (Charles) Corp. 330,000 36,217,500
- ---------------------------------------------------------------
66,247,188
- ---------------------------------------------------------------
LODGING-HOTELS-0.45%
Carnival Corp. 272,000 11,220,000
- ---------------------------------------------------------------
MACHINERY (DIVERSIFIED)-0.48%
Ingersoll-Rand Co. 172,500 11,934,843
- ---------------------------------------------------------------
MANUFACTURING (DIVERSIFIED)-1.67%
Premark International, Inc. 285,000 10,491,562
- ---------------------------------------------------------------
Tyco International Ltd. 100,000 8,125,000
- ---------------------------------------------------------------
United Technologies Corp. 158,000 22,890,250
- ---------------------------------------------------------------
41,506,812
- ---------------------------------------------------------------
MANUFACTURING (SPECIALIZED)-0.03%
Diebold, Inc. 31,200 750,750
- ---------------------------------------------------------------
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
NATURAL GAS-0.98%
Coastal Corp. (The) 420,000 $ 16,065,000
- ---------------------------------------------------------------
Columbia Energy Group 171,900 8,261,943
- ---------------------------------------------------------------
24,326,943
- ---------------------------------------------------------------
OIL & GAS (REFINING & MARKETING)-0.73%
Ashland, Inc. 200,000 8,450,000
- ---------------------------------------------------------------
Sunoco, Inc. 270,000 9,652,500
- ---------------------------------------------------------------
18,102,500
- ---------------------------------------------------------------
PAPER & FOREST PRODUCTS-0.71%
Georgia Pacific Corp. 190,000 17,575,000
- ---------------------------------------------------------------
PUBLISHING-0.67%
Dow Jones & Co., Inc. 194,000 10,573,000
- ---------------------------------------------------------------
McGraw-Hill Companies, Inc. (The) 60,000 3,315,000
- ---------------------------------------------------------------
Readers Digest Association,
Inc.-Class A 75,000 2,667,187
- ---------------------------------------------------------------
16,555,187
- ---------------------------------------------------------------
PUBLISHING (NEWSPAPERS)-0.45%
Knight-Ridder, Inc. 210,000 11,300,625
- ---------------------------------------------------------------
RESTAURANTS-0.30%
Starbucks Corp.(a) 90,000 3,324,375
- ---------------------------------------------------------------
Tricon Global Restaurants,
Inc.(a) 65,000 4,184,375
- ---------------------------------------------------------------
7,508,750
- ---------------------------------------------------------------
RETAIL (BUILDING SUPPLIES)-1.77%
Home Depot, Inc. (The) 200,000 11,987,500
- ---------------------------------------------------------------
Lowe's Companies, Inc. 340,000 17,935,000
- ---------------------------------------------------------------
Sherwin-Williams Co. 450,000 14,006,250
- ---------------------------------------------------------------
43,928,750
- ---------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS)-1.22%
Best Buy Co., Inc.(a) 634,800 30,311,700
- ---------------------------------------------------------------
RETAIL (DEPARTMENT STORES)-0.76%
Federated Department Stores,
Inc.(a) 265,000 12,372,187
- ---------------------------------------------------------------
Kohl's Corp.(a) 100,000 6,643,750
- ---------------------------------------------------------------
19,015,937
- ---------------------------------------------------------------
RETAIL (DISCOUNTERS)-0.22%
Family Dollar Stores, Inc. 225,000 5,428,125
- ---------------------------------------------------------------
RETAIL (FOOD CHAINS)-0.60%
Kroger Co.(a) 275,500 14,963,093
- ---------------------------------------------------------------
RETAIL (GENERAL
MERCHANDISE)-1.24%
Dayton Hudson Corp. 289,000 19,453,313
- ---------------------------------------------------------------
Wal-Mart Stores, Inc. 250,000 11,500,000
- ---------------------------------------------------------------
30,953,313
- ---------------------------------------------------------------
RETAIL (SPECIALTY)-2.13%
Amazon.com, Inc.(a) 32,000 5,506,000
- ---------------------------------------------------------------
Bed Bath & Beyond, Inc.(a) 225,000 8,029,687
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (SPECIALTY)-(CONTINUED)
Linens 'N Things, Inc.(a) 100,000 $ 4,575,000
- ---------------------------------------------------------------
Office Depot, Inc.(a) 570,000 12,540,000
- ---------------------------------------------------------------
Staples, Inc.(a) 742,500 22,275,000
- ---------------------------------------------------------------
52,925,687
- ---------------------------------------------------------------
RETAIL (SPECIALTY-APPAREL)-2.13%
Abercrombie & Fitch Co.-Class
A(a) 100,000 9,512,500
- ---------------------------------------------------------------
American Eagle Outfitters,
Inc.(a) 100,000 7,475,000
- ---------------------------------------------------------------
Gap, Inc. (The) 200,000 13,312,500
- ---------------------------------------------------------------
Intimate Brands, Inc. 77,400 3,870,000
- ---------------------------------------------------------------
TJX Companies, Inc. 568,000 18,921,500
- ---------------------------------------------------------------
53,091,500
- ---------------------------------------------------------------
SAVINGS & LOAN COMPANIES-0.45%
Dime Bancorp, Inc. 185,000 4,266,562
- ---------------------------------------------------------------
GreenPoint Financial Corp. 200,000 7,000,000
- ---------------------------------------------------------------
11,266,562
- ---------------------------------------------------------------
SERVICES
(ADVERTISING/MARKETING)-1.48%
CMGI Inc.(a) 55,000 14,000,937
- ---------------------------------------------------------------
Omnicom Group, Inc. 150,000 10,875,000
- ---------------------------------------------------------------
Outdoor Systems, Inc.(a) 300,000 7,556,250
- ---------------------------------------------------------------
Snyder Communications, Inc.(a) 150,000 4,406,250
- ---------------------------------------------------------------
36,838,437
- ---------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER)-0.73%
Cintas Corp. 123,700 8,504,375
- ---------------------------------------------------------------
G & K Services, Inc.-Class A 100,000 4,675,000
- ---------------------------------------------------------------
IMS Health Inc. 60,000 1,800,000
- ---------------------------------------------------------------
Viad Corp. 100,000 3,306,250
- ---------------------------------------------------------------
18,285,625
- ---------------------------------------------------------------
SERVICES (COMPUTER SYSTEMS)-0.04%
Policy Management Systems
Corp.(a) 31,700 996,568
- ---------------------------------------------------------------
SERVICES (DATA PROCESSING)-1.68%
Ceridian Corp.(a) 109,800 4,021,425
- ---------------------------------------------------------------
Concord EFS, Inc.(a) 300,000 10,012,500
- ---------------------------------------------------------------
CSG Systems International,
Inc.(a) 266,600 10,297,425
- ---------------------------------------------------------------
Fiserv, Inc.(a) 124,650 7,299,815
- ---------------------------------------------------------------
National Data Corp. 80,000 3,690,000
- ---------------------------------------------------------------
Paychex, Inc. 128,025 6,537,277
- ---------------------------------------------------------------
41,858,442
- ---------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)-1.27%
Level 3 Communications, Inc.(a) 275,000 24,767,187
- ---------------------------------------------------------------
Metromedia Fiber Network, Inc.(a) 80,000 6,740,000
- ---------------------------------------------------------------
31,507,187
- ---------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE)-4.52%
AT&T Corp. 555,000 28,027,500
- ---------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
TELECOMMUNICATIONS (LONG
DISTANCE)-(CONTINUED)
Global TeleSystems Group, Inc.(a) 450,000 $ 29,756,250
- ---------------------------------------------------------------
IXC Communications, Inc.(a) 500,000 19,812,500
- ---------------------------------------------------------------
MCI WorldCom, Inc.(a) 422,926 34,759,230
- ---------------------------------------------------------------
112,355,480
- ---------------------------------------------------------------
TELEPHONE-3.65%
BellSouth Corp. 390,000 17,452,500
- ---------------------------------------------------------------
Century Telephone Enterprises,
Inc. 390,000 15,697,500
- ---------------------------------------------------------------
Frontier Corp. 200,000 11,037,500
- ---------------------------------------------------------------
Qwest Communications
International Inc.(a) 400,000 34,175,000
- ---------------------------------------------------------------
US West, Inc. 240,000 12,555,000
- ---------------------------------------------------------------
90,917,500
- ---------------------------------------------------------------
TEXTILES (APPAREL)-0.43%
VF Corp. 210,000 10,815,000
- ---------------------------------------------------------------
TEXTILES (HOME FURNISHINGS)-0.25%
Shaw Industries, Inc.(a) 348,000 6,307,500
- ---------------------------------------------------------------
WASTE MANAGEMENT-0.53%
Allied Waste Industries, Inc.(a) 190,500 3,369,468
- ---------------------------------------------------------------
Waste Management, Inc. 172,825 9,764,613
- ---------------------------------------------------------------
13,134,081
- ---------------------------------------------------------------
Total Domestic Common Stocks
(Cost $1,446,010,203) 2,348,005,268
- ---------------------------------------------------------------
FOREIGN STOCKS & OTHER EQUITY
INTERESTS-2.20%
BERMUDA-0.22%
Global Crossing Ltd.
(Telecommunications- Long
Distance)(a) 100,000 5,400,000
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
FINLAND-0.98%
Nokia Oyj A.B.-Class A-ADR
(Communications Equipment) 330,000 $ 24,481,875
- ---------------------------------------------------------------
GERMANY-0.78%
Daimler Chrysler A.G. 71,450 7,015,498
- ---------------------------------------------------------------
Porsche A.G. (Automobiles) 5,000 12,361,635
- ---------------------------------------------------------------
19,377,133
- ---------------------------------------------------------------
IRELAND-0.22%
Elan Corp. PLC-ADR (Health
Care-Drugs- Generic & Other)(a) 105,000 5,407,500
- ---------------------------------------------------------------
Total Foreign Stocks & Other
Equity Interests (Cost
$37,147,553) 54,666,508
- ---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
CONVERTIBLE CORPORATE NOTES-0.28%
COMPUTERS (PERIPHERALS)-0.28%
EMC Corp., Conv. Sub. Notes,
3.25%, 03/15/02 (Cost
$1,963,721) $ 1,450,000 6,992,625
- ---------------------------------------------------------------
REPURCHASE AGREEMENTS-3.21%(b)
Dean Witter Reynolds, Inc.,
4.93%, 05/03/99(c) 45,308,145 45,308,145
- ---------------------------------------------------------------
Credit Suisse First Boston Corp.,
4.93%, 05/03/99(d) 34,527,181 34,527,181
- ---------------------------------------------------------------
Total Repurchase Agreements
(Cost $79,835,326) 79,835,326
- ---------------------------------------------------------------
TOTAL INVESTMENTS-100.05% 2,489,499,727
- ---------------------------------------------------------------
OTHER ASSET LESS
LIABILITIES-0.05% (1,135,653)
- ---------------------------------------------------------------
NET ASSETS-100.00% $2,488,364,074
===============================================================
</TABLE>
Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
Sub. - Subordinated
Notes to Schedule of Investments:
(a) Non-income producing security.
(b) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value 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.
(c) Joint repurchase agreement entered into 04/30/99 with a maturing value of
$300,123,250. Collateralized by $316,962,000 U.S. Government obligations, 0%
to 7.55% due 07/01/99 to 04/15/30 with an aggregate market value at 04/30/99
of $306,001,331.
(d) Joint repurchase agreement entered into 04/30/99 with a maturing value of
$500,205,417. Collateralized by $527,642,000 U.S. Government obligations,
4.60% to 9.05% due 05/03/99 to 04/28/14 with an aggregate market value at
04/30/99 of $531,179,320.
See Notes to Financial Statements.
7
<PAGE> 10
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1999
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$1,564,956,803) $2,489,499,727
- -------------------------------------------------------------
Receivables for:
Capital stock sold 197,038
- -------------------------------------------------------------
Dividends and interest 780,041
- -------------------------------------------------------------
Investment for deferred compensation plan 41,144
- -------------------------------------------------------------
Other assets 21,581
- -------------------------------------------------------------
Total assets 2,490,539,531
- -------------------------------------------------------------
LIABILITIES:
Payables for:
Capital stock reacquired 622,610
- -------------------------------------------------------------
Deferred compensation 41,144
- -------------------------------------------------------------
Accrued advisory fees 1,309,020
- -------------------------------------------------------------
Accrued administrative services fees 7,000
- -------------------------------------------------------------
Accrued directors' fees 5,442
- -------------------------------------------------------------
Accrued operating expenses 190,241
- -------------------------------------------------------------
Total liabilities 2,175,457
- -------------------------------------------------------------
Net assets applicable to shares outstanding $2,488,364,074
- -------------------------------------------------------------
Capital stock, $0.01 par value per share:
Authorized 1,000,000,000
- -------------------------------------------------------------
Outstanding 129,509,020
- -------------------------------------------------------------
Net asset value and redemption price per
share $ 19.21
- -------------------------------------------------------------
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended April 30, 1999
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of $25,245 foreign withholding
tax) $ 4,995,791
- ------------------------------------------------------------
Interest 1,979,380
- ------------------------------------------------------------
Total investment income 6,975,171
- ------------------------------------------------------------
EXPENSES:
Advisory fees 7,073,162
- ------------------------------------------------------------
Administrative services fees 41,927
- ------------------------------------------------------------
Custodian fees 121,940
- ------------------------------------------------------------
Directors' fees 10,891
- ------------------------------------------------------------
Other 224,248
- ------------------------------------------------------------
Total expenses 7,472,168
- ------------------------------------------------------------
Less: Expenses paid indirectly (15,636)
- ------------------------------------------------------------
Net expenses 7,456,532
- ------------------------------------------------------------
Net investment income (loss) (481,361)
- ------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM
INVESTMENT SECURITIES AND FOREIGN
CURRENCIES:
Net realized gain (loss) from:
Investment securities 287,654,567
- ------------------------------------------------------------
Foreign currencies (274,167)
- ------------------------------------------------------------
287,380,400
- ------------------------------------------------------------
NET UNREALIZED APPRECIATION (DEPRECIATION) OF:
Investment securities 374,407,122
- ------------------------------------------------------------
Foreign currencies (4,763)
- ------------------------------------------------------------
374,402,359
- ------------------------------------------------------------
Net gain from investment securities and
foreign currencies 661,782,759
- ------------------------------------------------------------
Net increase in net assets resulting from
operations $661,301,398
============================================================
</TABLE>
See Notes to Financial Statements.
8
<PAGE> 11
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended April 30, 1999 and the year ended October 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
1999 1998
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (481,361) $ 4,083,684
- ----------------------------------------------------------------------------------------------
Net realized gain from investment securities and foreign
currencies 287,380,400 123,367,355
- ----------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities and
foreign currencies 374,402,359 30,378,725
- ----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 661,301,398 157,829,764
- ----------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income (4,240,917) (1,659,397)
- ----------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains (112,079,149) (156,547,424)
- ----------------------------------------------------------------------------------------------
Share transactions-net 113,350,514 180,175,249
- ----------------------------------------------------------------------------------------------
Net increase in net assets 658,331,846 179,798,192
- ----------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 1,830,032,228 1,650,234,036
- ----------------------------------------------------------------------------------------------
End of period $2,488,364,074 $1,830,032,228
==============================================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $1,271,735,116 $1,158,384,602
- ----------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (558,123) 4,164,155
- ----------------------------------------------------------------------------------------------
Undistributed net realized gain from investment
securities, foreign currencies, futures and option
contracts 292,645,598 117,344,347
- ----------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities and
foreign currencies 924,541,483 550,139,124
- ----------------------------------------------------------------------------------------------
$2,488,364,074 $1,830,032,228
==============================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
April 30, 1999
(Unaudited)
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 preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of significant accounting policies followed by the Fund
in the preparation of its financial statements.
A. Security Valuations-A security listed or traded on an exchange (except
convertible bonds) is valued at 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 closing bid price on that day. Each security
traded in the over-the-counter market (but not including securities reported
on the NASDAQ National Market System) is valued at the mean between the last
bid and asked prices based upon quotes furnished by market makers for such
securities. Each security reported on the NASDAQ National Market System is
valued at the last sales price on the valuation date or absent a last sales
price, at the closing bid price. Debt obligations (including convertible
bonds) are valued on the basis of prices provided by an independent pricing
service. Prices provided by 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. Generally, trading in foreign securities is substantially completed
each day at various times prior to the close of the New York Stock Exchange.
The values of such securities used in computing the net asset value of the
Fund's shares are determined as of such times. Foreign currency exchange
rates are also generally determined prior to the close of the New York Stock
Exchange. Occasionally, events affecting the values of such securities and
such exchange rates
9
<PAGE> 12
may occur between the times at which they are determined and the close of the
New York Stock Exchange which would not be reflected in the computation of
the Fund's net asset value. If events materially affecting the value of such
securities occur during such period, then these securities will be valued at
their fair value as determined in good faith by or under the supervision of
the Board of Directors.
B. Bond Premiums-It is the policy of the Fund not to amortize market premiums on
bonds for financial reporting purposes.
C. Securities Transactions, Investment Income and Distributions-Securities
transactions are accounted for on a trade date basis. Realized gains or
losses on sales are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date
and is recorded on the accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date and are paid annually.
D. Foreign Currency Translations-Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollar
amounts at the date of valuation. Purchases and sales of portfolio securities
and income items denominated in foreign currencies are translated into U.S.
dollar amounts on the respective dates of such transactions. The Fund does
not separately account for that portion of the results of operations
resulting from changes in foreign exchange rates on investments and the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
E. Foreign Currency Contracts-A foreign currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract to attempt to
minimize the risk to the Fund from adverse changes in the relationship
between currencies. The Fund may also enter into a foreign currency contract
for the purchase or sale of a security denominated in a foreign currency in
order to "lock in" the U.S. dollar price of that security. The Fund could be
exposed to risk if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
F. 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.
G. Stock Index Futures Contracts-The Fund may purchase or sell stock index
futures contracts as a hedge against changes in market conditions. Initial
margin deposits required upon entering into futures contracts are satisfied
by the segregation of specific securities 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.
H. Covered Call Options-The Fund may write call options, but only on a covered
basis; that is, the Fund will own the underlying security. Options written by
the Fund normally will have expiration dates between three and nine months
from the date written. The exercise price of a call option may be below,
equal to, or above the current market value of the underlying security at the
time the option is written. When the Fund writes a covered call option, an
amount equal to the premium received by the Fund is recorded as an asset and
an equivalent liability. The amount of the liability is subsequently
"marked-to-market" to reflect the current market value of the option written.
The current market value of a written option is the mean between the last bid
and asked prices on that day. If a written call option expires on the
stipulated expiration date, or if the Fund enters into a closing purchase
transaction, the Fund realizes a gain (or a loss if the closing purchase
transaction exceeds the premium received when the option was written) without
regard to any unrealized gain or loss on the underlying security, and the
liability related to such option is extinguished. If a written option is
exercised, the Fund realizes a gain or a loss from the sale of the underlying
security and the proceeds of the sale are increased by the premium originally
received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the call
option at any time during the option period. During the option period, in
return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has retained
the risk of loss should the price of the underlying security decline. During
the option period, the Fund may be required at any time to deliver the
underlying security against payment of the exercise price. This obligation is
terminated upon the expiration of the option period or at such earlier time
at which the Fund effects a closing purchase transaction by purchasing (at a
price which may be higher than that received when the call option was
written) a call option identical to the one originally written.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund has entered into an investment advisory agreement with A I M Advisors,
Inc. ("AIM"). Under the terms of the master investment advisory agreement, the
Fund pays AIM a fee at the
10
<PAGE> 13
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 six months ended April 30, 1999, the Fund
reimbursed AIM $41,927 for such services.
During the six months ended April 30, 1999, the Fund paid legal fees of $2,778
for services rendered by Kramer, Levin, Naftalis & Frankel LLP 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
and Trust Company as custodian for Summit Investors Plans I, 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
During the six months ended April 30, 1999, the Fund received reductions in
custodian fees of $15,636 under an expense offset arrangement. The effect of the
above arrangement resulted in a reduction of the Fund's total expenses of
$15,636 during the six months ended April 30, 1999.
NOTE 4-DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The 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) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the six
months ended April 30, 1999, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.05% on the unused balance of the committed line. The
commitment fee is allocated among the funds based on their respective average
net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the six months ended April 30, 1999 was
$1,002,669,776 and $1,040,173,474, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of April 30, 1999, on a tax basis, is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $949,706,297
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (25,637,521)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $924,068,776
=========================================================
</TABLE>
* Cost of investments for tax purposes is $1,565,430,951.
NOTE 7-CAPITAL STOCK
Changes in capital stock outstanding during six months ended April 30, 1999 and
the year ended October 31, 1998 were as follows:
<TABLE>
<CAPTION>
APRIL 30, 1999 OCTOBER 31, 1998
-------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold 9,439,403 $ 160,314,342 13,962,660 $ 208,683,626
- -------------------------------------------------------------------------------
Issued as reinvest-
ment of dividends 7,005,862 112,304,012 11,672,671 154,897,796
- -------------------------------------------------------------------------------
Reacquired (9,272,554) (159,267,840) (12,194,909) (183,406,173)
- -------------------------------------------------------------------------------
7,172,711 $ 113,350,514 13,440,422 $ 180,175,249
===============================================================================
</TABLE>
11
<PAGE> 14
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of capital stock
outstanding during the six months ended April 30, 1999 and each of the years in
the five-year period ended October 31, 1998.
<TABLE>
<CAPTION>
OCTOBER 31,
APRIL 30, ------------------------------------------------------------
1999 1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 14.96 $ 15.15 $ 12.99 $ 12.14 $ 9.78 $ 10.46
- ---------------------------------------------------- ---------- ---------- ---------- ---------- ---------- --------
Income from investment operations:
Net investment income -- 0.03 0.02 0.04 0.04 0.10
- ---------------------------------------------------- ---------- ---------- ---------- ---------- ---------- --------
Net gains (losses) on securities (both realized
and unrealized) 5.20 1.23 3.34 1.69 2.81 (0.04)
- ---------------------------------------------------- ---------- ---------- ---------- ---------- ---------- --------
Total from investment operations 5.20 1.26 3.36 1.73 2.85 0.06
- ---------------------------------------------------- ---------- ---------- ---------- ---------- ---------- --------
Less distributions:
Dividends from net investment income (0.04) (0.02) (0.03) (0.03) (0.10) (0.10)
- ---------------------------------------------------- ---------- ---------- ---------- ---------- ---------- --------
Distributions from net realized gains (0.91) (1.43) (1.17) (0.85) (0.39) (0.64)
- ---------------------------------------------------- ---------- ---------- ---------- ---------- ---------- --------
Total distributions (0.95) (1.45) (1.20) (0.88) (0.49) (0.74)
- ---------------------------------------------------- ---------- ---------- ---------- ---------- ---------- --------
Net asset value, end of period $ 19.21 $ 14.96 $ 15.15 $ 12.99 $ 12.14 $ 9.78
- ---------------------------------------------------- ---------- ---------- ---------- ---------- ---------- --------
Total return(a) 35.99% 9.49% 28.53% 15.61% 31.03% 0.61%
- ---------------------------------------------------- ---------- ---------- ---------- ---------- ---------- --------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,488,364 $1,830,032 $1,650,234 $1,261,008 $1,050,011 $765,073
- ---------------------------------------------------- ---------- ---------- ---------- ---------- ---------- --------
Ratio of expenses to average net assets 0.67%(b) 0.67% 0.68% 0.70% 0.71% 0.72%
- ---------------------------------------------------- ---------- ---------- ---------- ---------- ---------- --------
Ratio of net investment income (loss) to average
net assets (0.04)%(b) 0.23% 0.11% 0.29% 0.33% 1.04%
- ---------------------------------------------------- ---------- ---------- ---------- ---------- ---------- --------
Portfolio turnover rate 46% 83% 88% 118% 126% 122%
==================================================== ========== ========== ========== ========== ========== ========
</TABLE>
(a) Does not deduct sales charges and is not annualized for periods less than
one year.
(b) Ratios are annualized and based on average net assets of $2,248,169,257.
NOTE 9 -- SUBSEQUENT EVENT
In May, 1999, the Board of Directors chose not to renew the sub-advisory
agreement with TradeStreet and therefore the sub-advisory agreement will
terminate effective June 30, 1999.
12
<PAGE> 15
<TABLE>
<CAPTION>
BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
<S> <C> <C>
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman Chairman Suite 100
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Director
ACE Limited; Carol F. Relihan A I M Advisors, Inc.
Formerly Director, President, and Senior Vice President and Secretary 11 Greenway Plaza
Chief Executive Officer Suite 100
COMSAT Corporation Gary T. Crum Houston, TX 77046
Senior Vice President
Owen Daly II TRANSFER AGENT
Director Dana R. Sutton
Cortland Trust Inc. Vice President and Treasurer Boston Financial Data Services, Inc.
P.O. Box 8300
Edward K. Dunn Jr. Melville B. Cox Boston, MA 02266-8300
Chairman, Mercantile Mortgage Corp.; Vice President
Formerly Vice Chairman and President, CUSTODIAN
Mercantile-Safe Deposit & Trust Co.; and Mary J. Benson
President, Mercantile Bankshares Assistant Vice President and State Street Bank and Trust Company
Assistant Treasurer 225 Franklin Street
Jack Fields Boston, MA 02110
Chief Executive Officer Sheri Morris
Texana Global, Inc.; Assistant Vice President and COUNSEL TO THE FUND
Formerly Member Assistant Treasurer
of the U.S. House of Representatives Ballard Spahr
Renee A. Friedli Andrews & Ingersoll, LLP
Carl Frischling Assistant Secretary 1735 Market Street
Partner Philadelphia, PA 19103
Kramer, Levin, Naftalis & Frankel LLP P. Michelle Grace
Assistant Secretary COUNSEL TO THE DIRECTORS
Robert H. Graham
President and Chief Executive Officer Jeffrey H. Kupor Kramer, Levin, Naftalis & Frankel LLP
A I M Management Group Inc. Assistant Secretary 919 Third Avenue
New York, NY 10022
Prema Mathai-Davis Nancy L. Martin
Chief Executive Officer, YWCA of the U.S.A.; Assistant Secretary DISTRIBUTOR
Commissioner, New York City Dept. for the
Aging; and member of the Board of Directors, Ofelia M. Mayo A I M Distributors, Inc.
Metropolitan Transportation Authority of Assistant Secretary 11 Greenway Plaza
New York State Suite 100
Lisa A. Moss Houston, TX 77046
Lewis F. Pennock Assistant Secretary
Attorney
Kathleen J. Pflueger
Louis S. Sklar Assistant Secretary
Executive Vice President
Hines Interests Samuel D. Sirko
Limited Partnership Assistant Secretary
Stephen I. Winer
Assistant Secretary
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