<PAGE> 1
[AIM LOGO APPEARS HERE]
[GRAPHIC COLLAGE APPEARS HERE]
AIM LIMITED MATURITY
TREASURY SHARES
ANNUAL REPORT
JULY 31, 1995
<PAGE> 2
AIM LIMITED MATURITY TREASURY SHARES
For shareholders who seek high monthly income free from state taxes while
maintaining relative stability of principal by investing only in U.S. Treasury
Notes with maturities of three years or less.
ABOUT FUND PERFORMANCE AND DATA THROUGHOUT THIS REPORT:
o Unless otherwise indicated, Fund results were computed at net asset value
without deducting a sales charge.
o When sales charges are included in performance figures, those figures
reflect the maximum 1.00% sales charge. Total return reflects reinvestment
of all distributions.
o The 30-day yield calculation, which is based on maximum offering price,
reflects the yield to maturity of the bonds in the portfolio, and includes
both interest and amortization of any discount or premium to the face
value of the bonds.
o The annualized distribution rate reflects the Fund's most recent monthly
dividend distribution multiplied by 12 and divided by the most recent
month-end maximum offering price.
o The Fund's investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
o Past performance cannot guarantee comparable future results.
o The Fund's portfolio is subject to change, and there is no assurance the
Fund will continue to hold any particular security.
o Standard & Poor's is a well-known credit rating agency that monitors the
credit quality of bonds and other financial instruments, including mutual
funds. Funds are rated from highest credit quality (AAA) to lowest credit
quality (CCC) and lowest risk (aaa) to highest risk (ccc).
o An investment cannot be made in an index. Index results reflect reinvestment
of distributions and do not reflect sales charges.
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
For periods ended 7/31/95
Inception (12/15/87) 6.72%
Five Years 6.08
One Year 5.30
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT 12/15/87-7/31/95
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Measurement Period AIM Limited Maturity Lipper Short U.S. Consumer
12/15/87 - 7/31/95 Treasury Shares(1) Treasury Fund Category(2) Price Index(1)
<S> <C> <C> <C>
12/15/87 $10,000 $10,000 $10,000
7/88 10,283 10,430 10,269
7/89 11,239 11,522 10,780
7/90 12,101 12,333 11,300
7/91 13,185 13,419 11,802
7/92 14,436 14,911 12,175
7/93 15,106 15,785 12,513
7/94 15,442 16,046 12,860
7/95 16,423 17,143 13,215
</TABLE>
Past performance cannot guarantee comparable future results.
- --------------------------------------------------------------------------------
(1) Source: Towers Data Systems HYPO(R).
(2) Source: Lipper Analytical Services, Inc.
Limited Maturity Treasury Shares Retail Class performance figures are historical
and reflect reinvestment of all distributions, changes in net asset value, and
deduction of the Retail Class's 1.00% maximum sales charge. 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.
The Lipper Short U.S. Treasury Fund Category represents the average
performance of short-term U.S. Treasury mutual funds tracked by Lipper
Analytical Services, Inc., an independent mutual fund performance monitor.
The Consumer Price Index is a measure of change in consumer prices as
determined by the U.S. Bureau of Labor Statistics.
<PAGE> 3
CHAIRMAN'S LETTER
Dear Shareholder:
AIM Limited Maturity Treasury Shares Retail Class
continued its consistent, disciplined investment strategy
[PHOTO of] during the fiscal year ended July 31, 1995. The Fund
Charles T. Bauer, purchased mainly two-year U.S. Treasury Notes, holding
Chairman of them until they had one year to maturity, then selling
the Board of them and reinvesting the proceeds in more two-year
the Fund, Treasuries.
APPEARS HERE] By adhering to this carefully defined strategy,
AIM Limited Maturity Treasury Shares Retail Class
continued to provide competitive monthly income
coupled with extremely low share price volatility.
Total return for the fiscal year ended July 31, 1995 was 6.36%, including
reinvested dividends of $0.54 per share. This return outpaced the performance
of the two-year U.S. Treasury Note, which delivered total returns of 6.10%
during the same period.
As of July 31, 1995, 30-day yield for AIM Limited Maturity Treasury Shares
Retail Class was 5.30%. Its 30-day distribution rate was 5.97% at net asset
value. Net asset value of a share remained relatively stable, closing the
period at $10.03, up from $9.96 a year earlier.
The Fund provided a potential haven of stability during a period of interest
rate volatility. The year covered by this report was one of stark contrasts.
The bond market turned around from a period of negative performance to become
decidedly bullish during the first half of 1995. The Federal Reserve Bank Board
completed a year-long run-up in short-term interest rates designed to forestall
a threatened surge in inflation. Then in early July, it eased monetary policy in
light of a possible recession, lowering the Federal Funds rate by 0.25%. A
discussion of the economy, your Fund's portfolio strategy, and our outlook for
the months ahead appears in this report's MANAGEMENT'S DISCUSSION & ANALYSIS,
which begins on the following page.
In addition to interest rate volatility, the markets sustained such shocks as
the bankruptcies of Orange County, California, and Britain's Barings PLC. Yet
AIM Limited Maturity Treasury Shares Retail Class enjoys a volatility rating of
aaa, the highest a bond fund can be awarded by Standard & Poor's Corporation.
In addition, the Fund continues to earn the highest possible credit quality
rating of AAAf from Standard & Poor's. The rating is based on an annual
analysis of the portfolio's credit quality, composition, and management, and a
weekly portfolio review.
We are pleased to send you this report on AIM Limited Maturity Treasury
Shares Retail Class, whose consistent investment management has, we believe,
contributed to AIM's growth. During the year covered by this report, total
assets under AIM's management increased more than one-third, from approximately
$26 billion to $35.7 billion. While part of this growth can be attributed to
favorable market conditions, it also reflects the addition of almost 370,000 new
shareholder accounts during the same period.
If you have any questions concerning your AIM account, remember that you can
now access information on current yield and total return of your AIM Fund in
addition to data on your individual account by calling 800-246-5463 at any
time. Or if you prefer, you can speak with a customer service representative by
calling AIM Client Services at 800-959-4246 during normal business hours.
Respectfully submitted,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
<PAGE> 4
DISCUSSION & ANALYSIS
-------------
At the end of the
Fund's fiscal year,
inflation appeared
to be contained and
the economy
headed for a period
of unspectacular yet
solid growth.
-------------
FUND REMAINS DISCIPLINED, CONSISTENT AS
ECONOMY AND FINANCIAL MARKETS VARY
During the first half of the fiscal year ended July 31, 1995, the U.S. economy
was growing at a rate most market participants considered unsustainable.
During the fourth quarter of 1994, it grew at a 5.1% annualized rate. The
Federal Reserve Bank Board pursued a restrictive monetary policy to ward off
anticipated inflation. In early February 1995, the Federal Reserve Board raised
the Federal Funds rate a final time to 6%, up from 4.25% as of July 31, 1994.
The goal: a "soft landing" of moderate economic growth without recession.
As 1995 unfolded, evidence mounted that the strategy was working. During the
first quarter of the year, the economy delivered an annualized growth rate of
2.7%.
News of moderating economic activity was tonic for the financial markets.
Longer-term interest rates began to decline. As of July 31, 1995, a 30-year
U.S. Treasury Bond yielded 6.85%, down from 7.70% six months earlier. Bond
prices rallied.
During the second quarter of 1995, economic growth dropped to an annualized
rate of just 1.1%. By then, many were voicing concern that the economic
slowdown could be both more abrupt and more pronounced than desirable. Economic
data seemed contradictory. For example, personal income declined 0.2% during
May, but the housing market boomed with sales of new single-family homes rising
12.5%.
At the end of the Fund's fiscal year, inflation appeared to be contained
and the economy headed for a period of unspectacular yet solid growth. July
data remain preliminary but encouraging. Producer prices for finished consumer
goods, those ready to be shipped to wholesalers or retailers, were unchanged
in July; during the first seven months of 1995, producer prices had risen at
an annual 1.8% rate. Capacity utilization dropped slightly in July, another
indication the inflation threat may have ended. Industrial output rose; the
increase was a mere 0.1%, but it was the first such rise in five months.
YOUR INVESTMENT PORTFOLIO
AIM Limited Maturity Treasury Shares Retail Class uses a strategy developed
after a lengthy study by A I M Capital Management, Inc., which analyzed risk
and return characteristics, adjusted for market price volatility, of various
maturities of U.S. Treasury securities over a 15-year period. The result: Over
a full market cycle, the most favorable risk/return trade-off generally occurs
in the one- to two-year maturity range. In most markets, this is the area of
steepest slope in the yield curve.
YIELD CURVE--U.S.TREASURY ISSUES AS OF 7/31/95
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Maturity Yield %
<S> <C>
3 mo 5.572
6 mo 5.586
- -------------------------------
1 yr 5.645 Area of
2 yr 5.866 Investment
3 yrs 5.985 Focus
- ------------------------------- Source: Bloomberg
5 yrs 6.151
10 yrs 6.424
30 yrs 6.844
</TABLE>
On average, this one- to two-year sector of the yield curve has provided
85% to 95% of the yield of the entire Treasury curve. This part of the curve
See important Fund disclosure on inside front cover.
2
<PAGE> 5
made up 87% of the yield of the entire curve at the close of the fiscal year
covered by this report.
Because two-year U.S. Treasury notes are coupon-bearing securities, they tend
to appreciate slightly in price as they "roll down the yield curve" to a lower
interest-rate environment. This provides built-in potential for capital gains
when interest rates are falling. The strategy of a "laddered maturity
structure" also provides a built-in cushion against volatility when interest
rates are rising.
The "laddered maturity structure" means that approximately 8% of the
portfolio matures each month from months 13 to 24. Each month approximately 8%
of the portfolio approaches the mark of having one year remaining to maturity.
At that point, those one-year notes are sold and the proceeds rolled back into
the two-year range. AIM believes managing the portfolio in this manner ensures
maximum portfolio exposure to the area of the yield curve our studies indicate
is the most attractive.
Because this strategy results in a portfolio with a duration of 1.4 years,
the impact on the Fund of interest rate changes such as those that occurred
during this fiscal year is generally tempered. Duration is a widely used
measure of a bond fund's reaction to changes in interest rates. If a bond fund
has a duration of 1.4 years, it should gain approximately 1.4% in value if
interest rates drop one percentage point; conversely, it should lose 1.4% in
value if interest rates rise one percentage point.
The investment strategy of AIM Limited Maturity Treasury Shares maintains a
short duration by design. The Fund is managed for liquidity and relative
stability of net asset value. Historically, the Fund has not had a negative
total return for a fiscal or a calendar year since its inception in 1987, and
the rolling 12-month net asset value of a Fund share has never deviated more
than 1.71%.
NET ASSET VALUE AS OF JULY 31, 1988-1995
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Measurement
Period Net Asset
7/88-7/95 Value
<S> <C>
7/88 $ 9.84
7/89 9.88
7/90 9.82
7/91 9.95
7/92 10.21
7/93 10.20
7/94 9.96
7/95 10.03
</TABLE>
The purpose of this chart is to illustrate the
relative stability of the Fund.
OUTLOOK FOR THE FUTURE
When the Federal Reserve Bank Board lowered the Federal Funds rate by 0.25% in
July, such major banks as Chase Manhattan and Citibank lowered their prime
lending rates. A more accommodative monetary policy by the Federal Reserve
should spur economic growth, as even a modest reduction in interest rates can
save corporations and consumers billions of dollars in borrowing costs.
In the past, an initial rate cut such as July's was typically followed by
further cuts. However, the Federal Reserve broke with that tradition, leaving
the Federal Funds rate unchanged after its August meeting, presumably because
of the most recent evidence of tamed inflation and modest economic growth. July
data suggested that economic growth was accelerating, but not too sharply.
Early consensus estimates for third quarter 1995 growth are in the 2.0% to 2.5%
range, exactly where the Federal Reserve would like growth to be.
Whatever market conditions prevail, AIM Limited Maturity Treasury Shares will
remain committed to its use of a laddered schedule of maturities.
See important Fund disclosure on inside front cover.
3
<PAGE> 6
FINANCIALS
SCHEDULE OF INVESTMENTS
July 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
MATURITY (000S) VALUE
<S> <C> <C> <C>
U. S. TREASURY SECURITIES
U. S. TREASURY NOTES-98.55%
6.25% 08/31/96 $ 33,760 $ 33,922,723
- ------------------------------------------------------------------------------------------------
6.50% 09/30/96 32,480 32,749,259
- ------------------------------------------------------------------------------------------------
6.875% 10/31/96 32,800 33,227,384
- ------------------------------------------------------------------------------------------------
7.25% 11/30/96 32,635 33,225,041
- ------------------------------------------------------------------------------------------------
7.50% 12/31/96 32,725 33,472,439
- ------------------------------------------------------------------------------------------------
7.50% 01/31/97 33,000 33,786,720
- ------------------------------------------------------------------------------------------------
6.875% 02/28/97 32,590 33,100,034
- ------------------------------------------------------------------------------------------------
6.625% 03/31/97 33,185 33,593,507
- ------------------------------------------------------------------------------------------------
6.50% 04/30/97 32,780 33,124,846
- ------------------------------------------------------------------------------------------------
6.125% 05/31/97 32,700 32,832,762
- ------------------------------------------------------------------------------------------------
5.625% 06/30/97 32,725 32,590,500
- ------------------------------------------------------------------------------------------------
5.875% 07/31/97 32,500 32,511,700
- ------------------------------------------------------------------------------------------------
Total U.S. Treasury Securities 398,136,915
- ------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS-98.55% 398,136,915
- ------------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-1.45% 5,873,459
- ------------------------------------------------------------------------------------------------
NET ASSETS-100.00% $404,010,374
================================================================================================
</TABLE>
See Notes to Financial Statements.
4
<PAGE> 7
FINANCIALS
STATEMENT OF ASSETS AND LIABILITIES
July 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $394,125,287) $398,136,915
- --------------------------------------------------------------------------------------------
Cash 18,054
- --------------------------------------------------------------------------------------------
Receivables for:
Fund shares sold 2,041,751
- --------------------------------------------------------------------------------------------
Interest 5,497,050
- --------------------------------------------------------------------------------------------
Investment in deferred compensation plan 7,430
- --------------------------------------------------------------------------------------------
Other assets 195,658
- --------------------------------------------------------------------------------------------
Total assets 405,896,858
- --------------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Fund shares reacquired 786,696
- --------------------------------------------------------------------------------------------
Dividends 947,839
- --------------------------------------------------------------------------------------------
Deferred compensation 7,430
- --------------------------------------------------------------------------------------------
Accrued advisory fees 67,358
- --------------------------------------------------------------------------------------------
Accrued distribution fees 34,365
- --------------------------------------------------------------------------------------------
Accrued transfer agent fees 19,330
- --------------------------------------------------------------------------------------------
Accrued operating expenses 23,466
- --------------------------------------------------------------------------------------------
Total liabilities 1,886,484
- --------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $404,010,374
============================================================================================
</TABLE>
<TABLE>
<CAPTION>
INSTITUTIONAL AIM
SHARES SHARES FUND
<S> <C> <C> <C>
NET ASSETS: $129,530,358 $274,480,016 $404,010,374
============================================================================================
Shares outstanding, $0.01 par value per share 12,915,909 27,369,326 40,285,235
============================================================================================
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE $10.03
============================================================================================
OFFERING PRICE PER SHARE:
(Net asset value of $10.03 divided by 99.00%) $10.13
============================================================================================
</TABLE>
See Notes to Financial Statements.
5
<PAGE> 8
FINANCIALS
STATEMENT OF OPERATIONS
For the year ended July 31, 1995
<TABLE>
<CAPTION>
INSTITUTIONAL AIM
SHARES SHARES FUND
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $7,406,926 $16,714,505 $24,121,431
- -------------------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 247,821 561,628 809,449
- -------------------------------------------------------------------------------------------------
Administrative service fees 20,670 61,529 82,199
- -------------------------------------------------------------------------------------------------
Custodian fees 7,205 9,215 16,420
- -------------------------------------------------------------------------------------------------
Transfer agent fees 2,064 196,628 198,692
- -------------------------------------------------------------------------------------------------
Trustees' fees and expenses 2,380 5,774 8,154
- -------------------------------------------------------------------------------------------------
Distribution fees -- 421,183 421,183
- -------------------------------------------------------------------------------------------------
Other 60,872 170,765 231,637
- -------------------------------------------------------------------------------------------------
Total expenses 341,012 1,426,722 1,767,734
- -------------------------------------------------------------------------------------------------
Net investment income $7,065,914 $15,287,783 22,353,697
- -------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) on sales of investment securities (7,239,070)
- -------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 9,384,912
- -------------------------------------------------------------------------------------------------
Net gain on investment securities 2,145,842
- -------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $24,499,539
=================================================================================================
</TABLE>
See Notes to Financial Statements.
6
<PAGE> 9
FINANCIALS
STATEMENT OF CHANGES IN NET ASSETS
For the year ended July 31, 1995 and
the eleven months ended July 31, 1994
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
OPERATIONS:
Net investment income $ 22,353,697 $ 18,105,773
- --------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities (7,239,070) (2,745,439)
- --------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities 9,384,912 (8,181,235)
- --------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 24,499,539 7,179,099
- --------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Institutional Shares (7,065,914) (6,248,089)
- --------------------------------------------------------------------------------------------
AIM Shares (15,287,783) (11,857,684)
- --------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAINS ON
INVESTMENT SECURITIES -- (4,076,018)
- --------------------------------------------------------------------------------------------
SHARE TRANSACTIONS-NET:
Institutional Shares (6,229,532) 9,581,280
- --------------------------------------------------------------------------------------------
AIM Shares (56,819,839) (9,292,096)
- --------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (60,903,529) (14,713,508)
- --------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 464,913,903 479,627,411
- --------------------------------------------------------------------------------------------
End of period $404,010,374 $464,913,903
============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $410,024,906 $473,074,277
- --------------------------------------------------------------------------------------------
Undistributed realized gain (loss) on sales of investment
securities (10,026,160) (2,787,090)
- --------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities 4,011,628 (5,373,284)
- --------------------------------------------------------------------------------------------
$404,010,374 $464,913,903
============================================================================================
</TABLE>
See Notes to Financial Statements.
7
<PAGE> 10
FINANCIALS
NOTES TO FINANCIAL STATEMENTS
July 31, 1995
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Investment Securities Funds (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company. The Trust is organized as a Delaware business
trust consisting of one portfolio, the Limited Maturity Treasury Portfolio (the
"Fund"). The Fund currently offers two different classes of shares: the AIM
Limited Maturity Treasury Shares (the "AIM Shares") and the Institutional
Shares. Matters affecting each class are voted on exclusively by such
shareholders.
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements.
A. Security Valuations--Debt obligations that are issued or guaranteed by the
U.S. Treasury are valued on the basis of prices provided by an independent
pricing service. Prices provided by the pricing service may be determined
without exclusive reliance on quoted prices, and may reflect appropriate
factors such as yield, type of issue, coupon rate and maturity date.
Securities for which market prices are not provided by the pricing service
are valued at the mean between last bid and asked prices based upon quotes
furnished by independent sources. Securities for which market quotations are
not readily available are valued at fair value as determined in good faith by
or under the supervision of the Trust's officers in a manner specifically
authorized by the Board of Trustees. Securities with a remaining maturity of
60 days or less are valued at amortized cost which approximates market value.
B. Securities Transactions and Investment Income--Securities transactions are
accounted for on a trade date basis. Interest income, adjusted for
amortization of discounts on investments, is earned from settlement date and
is recorded on the accrual basis. It is the policy of the Fund not to
amortize bond premiums for financial reporting purposes. Interest income is
allocated to each class daily, based upon each class' pro-rata share of the
total shares of the Fund outstanding. Realized gains and losses from
securities transactions are recorded on the identified cost basis.
C. Dividends and Distributions to Shareholders--It is the policy of the Fund to
declare daily dividends from net investment income. Such dividends are paid
monthly. Net realized short-term capital gains, if any, are distributed
quarterly. Net realized long-term capital gains, if any, are distributed
annually.
D. Federal Income Taxes--The Fund intends to comply with the requirements of the
Internal Revenue Code necessary to qualify as a regulated investment company
and, as such, will not be subject to federal income taxes on otherwise
taxable income (including net realized capital gains) which is distributed to
shareholders. Therefore, no provision for federal income taxes is recorded in
the financial statements. The Fund has a capital loss carryforward (which may
be carried forward to offset future taxable capital gains, if any) of
$5,819,679, which expires, if not previously utilized, in the year 2003.
E. Expenses--Operating expenses directly attributable to a class of shares are
charged to that class' operations. Expenses which are applicable to more than
one class, e.g., advisory fees, are allocated between them.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM") with respect to the Fund. Under the terms of the master
investment advisory agreement, the Fund pays AIM an advisory fee at the annual
rate of 0.20% of the first $500 million of the Fund's average daily net assets
plus 0.175% of the Fund's average daily net assets in excess of $500 million.
This agreement requires AIM to reduce its fee or, if necessary, make payments to
the extent required to satisfy any expense limitations imposed by the securities
laws or regulations thereunder of any state in which the Fund shares are
qualified for sale.
8
<PAGE> 11
FINANCIALS
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES-(continued)
The Fund, pursuant to a master 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 July 31, 1995, the Fund reimbursed
AIM $58,818 for such services.
During the year ended July 31, 1995, the Fund paid A I M Institutional Fund
Services, Inc. ("AIFS") $3,349 for shareholder and transfer agency services.
Effective July 1, 1995, AIFS became the exclusive transfer agent of the
Institutional Shares of the Fund. Effective November 1, 1994, A I M Fund
Services, Inc. ("AFS") became the transfer agent for the AIM Shares and was paid
$91,753 for such services for the nine months ended July 31, 1995.
The Trust has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the AIM
Shares and a master distribution agreement with Fund Management Company ("FMC")
to serve as the distributor for the Institutional Shares. The Trust has adopted
a Plan pursuant to Rule 12b-1 under the 1940 Act (the "Plan") with respect to
the AIM Shares. The Fund pays AIM Distributors compensation at an annual rate of
0.15% of the average net assets attributable to the AIM Shares. The Plan is
designed to compensate AIM Distributors for certain promotional and other sales
related costs, and to implement a program which provides periodic payments to
selected dealers and financial institutions who furnish continuing personal
shareholder services to their customers who purchase and own AIM Shares of the
Fund. Any amounts not paid as a service fee under such Plan would constitute an
asset-based sales charge. The Plan also imposes a cap on the total amount of
sales charges, including asset-based sales charges, that may be paid by the
Fund. During the year ended July 31, 1995, the AIM Shares paid AIM Distributors
$421,183 as compensation under the Plan.
AIM Distributors received commissions of $89,885 during the year ended July
31, 1995 from sales of AIM Shares. Such commissions are not an expense of the
Fund. They are deducted from, and are not included in, proceeds from sales of
AIM shares. Certain officers and trustees of the Trust are officers and
directors of AIM, AIM Distributors, FMC, AFS and AIFS.
The Fund paid legal fees of $2,245 for services rendered by Reid & Priest as
counsel to the Board of Trustees. In September 1994, the firm Kramer, Levin,
Naftalis, Nessen, Kamin & Frankel was appointed as counsel to the Board of
Trustees. The Fund paid legal fees of $1,044 for services rendered by that firm
as counsel. A member of that firm is a trustee of the Trust and, prior to
September 1994, was a member of Reid & Priest.
9
<PAGE> 12
FINANCIALS
NOTE 3-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended July 31, 1995 was
$488,664,643 and $599,080,810, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of July 31, 1995 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $4,010,459
- ----------------------------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (94,232)
- ----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities $3,916,227
======================================================================================================================
</TABLE>
Cost of investments for tax purposes is $394,220,688.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid or accrued to each trustee who is not
an "interested person" of AIM. The Trust may invest trustees' fees, if so
elected by a trustee, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 5-SHARE INFORMATION
Changes in the AIM Shares outstanding during the year ended July 31, 1995 and
the eleven months ended July 31, 1994 were as follows:
<TABLE>
<CAPTION>
1995 1994
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold 15,641,151 $ 155,346,148 13,894,980 $ 140,244,403
- -------------------------------------------------------------------------------------- ----------------------------
Issued as reinvestment of dividends 1,083,758 10,758,338 910,943 9,102,831
- -------------------------------------------------------------------------------------- ----------------------------
Reacquired (22,488,544) (222,924,325) (15,751,905) (158,639,330)
- -------------------------------------------------------------------------------------- ----------------------------
(5,763,635) $ (56,819,839) (945,982) $ (9,292,096)
====================================================================================== ============================
</TABLE>
10
<PAGE> 13
FINANCIALS
NOTE 6-FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share of AIM Shares
outstanding during the year ended July 31, 1995, the eleven months ended July
31, 1994, each of the years in the five-year period ended August 31, 1993 and
the period December 15, 1987 (date operations commenced) through August 31,
1988.
<TABLE>
<CAPTION>
JULY 31, AUGUST 31,
--------------------- --------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988
-------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 9.96 $ 10.24 $ 10.21 $ 10.01 $ 9.79 $ 9.78 $ 9.80 $ 9.92
- -------------------------- -------- --------- --------- --------- --------- --------- --------- ---------
Income from investment
operations:
Net investment income 0.54 0.35 0.42 0.58 0.72 0.77 0.84 0.52
- -------------------------- -------- --------- --------- --------- --------- --------- --------- ---------
Net gains (losses) on
securities (both
realized and unrealized 0.07 (0.20) 0.05 0.29 0.22 0.01 (0.02) (0.12)
- -------------------------- -------- --------- --------- --------- --------- --------- --------- ---------
Total from investment
operations 0.61 0.15 0.47 0.87 0.94 0.78 0.82 0.40
- -------------------------- -------- --------- --------- --------- --------- --------- --------- ---------
Less distributions:
Dividends from net
investment income (0.54) (0.35) (0.42) (0.58) (0.72) (0.77) (0.84) (0.52)
- -------------------------- -------- --------- --------- --------- --------- --------- --------- ---------
Distributions from net
realized capital gains -- (0.08) (0.02) (0.09) -- -- -- --
- -------------------------- -------- --------- --------- --------- --------- --------- --------- ---------
Total distributions (0.54) (0.43) (0.44) (0.67) (0.72) (0.77) (0.84) (0.52)
- -------------------------- -------- --------- --------- --------- --------- --------- --------- ---------
Net asset value, end of
period $ 10.03 $ 9.96 $ 10.24 $ 10.21 $ 10.01 $ 9.79 $ 9.78 $ 9.80
========================== ======== ========= ========= ========= ========= ========= ========= =========
Total return(a) 6.36% 1.52% 4.65% 8.93% 9.95% 8.32% 8.71% 4.11%
========================== ======== ========= ========= ========= ========= ========= ========= =========
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $274,480 $ 329,942 $ 348,937 $ 260,454 $ 131,880 $ 79,871 $ 70,781 $ 62,342
========================== ======== ========= ========= ========= ========= ========= ========= =========
Ratio of expenses to
average net assets 0.51%(b) 0.47%(c) 0.46% 0.48% 0.54% 0.50%(d) 0.45%(e) 0.35%(c)(e)
========================== ======== ========= ========= ========= ========= ========= ========= =========
Ratio of net investment
income to average
net assets 5.44%(b) 3.75%(c) 4.07% 5.60% 7.25% 7.90%(d) 8.59%(e) 7.02%(c)(e)
========================== ======== ========= ========= ========= ========= ========= ========= =========
Portfolio turnover rate 120.01% 120.40% 122.99% 119.62% 214.74% 192.46% 219.53% 140.83%
========================== ======== ========= ========= ========= ========= ========= ========= =========
Borrowings for the period:
Amount of debt outstanding
at end of period
(000s omitted) -- -- -- -- -- -- $ 9,943 $ 19,232
- -------------------------- -------- --------- --------- --------- --------- --------- --------- ---------
Average amount of debt
outstanding during the
period (000s omitted)(f) -- -- -- -- -- $ 5,101 $ 14,301 $ 4,110
- -------------------------- -------- --------- --------- --------- --------- --------- --------- ---------
Average number of shares
outstanding during the
period (000s omitted)(f) 28,337 34,101 30,416 18,378 10,559 7,389 7,295 2,429
- -------------------------- -------- --------- --------- --------- --------- --------- --------- ---------
Average amount of debt per
share during the period -- -- -- -- -- $ 0.69 $ 1.96 $ 1.69
- -------------------------- -------- --------- --------- --------- --------- --------- --------- ---------
</TABLE>
(a) Does not deduct sales charges and for periods less than one year, total
return is not annualized.
(b) Ratios are based on average net assets of $280,789,286.
(c) Annualized.
(d) After waiver of advisory fees.
(e) After waiver of advisory fees and expense reimbursements.
(f) Averages computed on a daily basis.
11
<PAGE> 14
AUDITOR'S REPORT
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders of
AIM Investment Securities Funds
We have audited the accompanying statement of assets and liabilities of the
Limited Maturity Treasury Portfolio (a series of AIM Investment Securities
Funds), including the schedule of investments, as of July 31, 1995, and the
related statement of operations for the year then ended, the statements of
changes in net assets for the year then ended and the eleven months ended July
31, 1994, and the financial highlights for the year then ended, the eleven
months ended July 31, 1994, each of the years in the five-year period ended
August 31, 1993 and the period December 15, 1987 (date operations commenced)
through August 31, 1988. 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 July
31, 1995, by correspondence with the custodian. 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 the
Limited Maturity Treasury Portfolio as of July 31, 1995, the results of its
operations for the year then ended, the changes in its net assets for the year
then ended and the eleven months ended July 31, 1994, and the financial
highlights for the year then ended, the eleven months ended July 31, 1994, each
of the years in the five-year period ended August 31, 1993 and the period
December 15, 1987 (date operations commenced) through August 31, 1988 in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
September 1, 1995
Houston, Texas
12
<PAGE> 15
TRUSTEES & OFFICERS
<TABLE>
<CAPTION>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
<S> <C> <C>
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman and Chief Executive Officer Chairman Suite 1919
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Director, President, and
Chief Executive Officer John J. Arthur A I M Advisors, Inc.
COMSAT Corporation Senior Vice President and Treasurer 11 Greenway Plaza
Suite 1919
Owen Daly II Gary T. Crum Houston, TX 77046
Director Senior Vice President
Cortland Trust Inc. TRANSFER AGENT
Carol F. Relihan
Carl Frischling Vice President and Secretary A I M Fund Services, Inc.
Partner P.O. Box 4739
Kramer, Levin, Naftalis, Melville B. Cox Houston, TX 77210-4739
Nessen, Kamin & Frankel Vice President
CUSTODIAN
Robert H. Graham Karen Dunn Kelley
President and Chief Operating Officer Vice President The Bank of New York
A I M Management Group Inc. 110 Washington Street, 8th Floor
Dana R. Sutton New York, NY 10286
John F. Kroeger Vice President
Formerly, Consultant and Assistant Secretary COUNSEL TO THE FUND
Wendell & Stockel Associates, Inc.
P. Michelle Grace Ballard Spahr
Lewis F. Pennock Assistant Secretary Andrews & Ingersoll
Attorney 1735 Market Street
Nancy L. Martin Philadelphia, PA 19103
Ian W. Robinson Assistant Secretary
Consultant; Former Executive COUNSEL TO THE TRUSTEES
Vice President and Ofelia M. Mayo
Chief Financial Officer Assistant Secretary Kramer, Levin, Naftalis,
Bell Atlantic Management Nessen, Kamin & Frankel
Services, Inc. Kathleen J. Pflueger 919 Third Avenue
Assistant Secretary New York, NY 10022
Louis S. Sklar
Executive Vice President Samuel D. Sirko DISTRIBUTOR
Hines Interests Assistant Secretary
Limited Partnership A I M Distributors, Inc.
Stephen I. Winer 11 Greenway Plaza
Assistant Secretary Suite 1919
Houston, TX 77046
Mary J. Benson
Assistant Treasurer AUDITORS
KPMG Peat Marwick LLP
NationsBank Building
700 Louisiana
Houston, TX 77002
</TABLE>
This report may be distributed only to current shareholders or to persons who
have received a current prospectus of the Fund.
<PAGE> 16
A I M Distributors, Inc. ---------------
[AIM LOGO 11 Greenway Plaza, Suite 1919 BULK RATE
APPEARS HERE] Houston, Texas 77046 U.S. POSTAGE
PAID
Houston, TX
THE AIM FAMILY OF FUNDS(R) Permit No. 2332
---------------
AGGRESSIVE GROWTH
AIM Aggressive Growth Fund*
AIM Constellation Fund
AIM Global Aggressive Growth Fund
GROWTH
AIM Global Growth Fund
AIM Growth Fund
AIM International Equity Fund
AIM Value Fund
AIM Weingarten Fund
GROWTH AND INCOME
AIM Balanced Fund
AIM Charter Fund
INCOME AND GROWTH [FULL PAGE PHOTO OF
AIM Global Utilities Fund** AIM MANAGEMENT GROUP
HIGH CURRENT INCOME OFFICE BUILDING]
AIM High Yield Fund
CURRENT INCOME
AIM Global Income Fund
AIM Income Fund
CURRENT TAX-FREE INCOME
AIM Municipal Bond Fund
AIM Tax-Exempt Bond Fund of Conn.
AIM Tax-Free Intermediate Shares
CURRENT INCOME AND HIGH DEGREE OF SAFETY
AIM Government Securities Fund
HIGH DEGREE OF SAFETY AND CURRENT INCOME
AIM Limited Maturity Treasury Shares
STABILITY, LIQUIDITY, AND CURRENT INCOME
AIM Money Market Fund
STABILITY, LIQUIDITY, AND CURRENT TAX-FREE INCOME
AIM Tax-Exempt Cash Fund
*AIM Aggressive Growth Fund was closed to new investors on
July 18, 1995. **On May 1, 1995, AIM Utilities broadened its investment
strategy to permit up to 80% of its total assets to be invested in foreign
securities, and was renamed AIM Global Utilities Fund. For more complete
information about any AIM Fund(s), including sales charges and expenses,
ask your financial consultant or securities dealer for a free prospectus(es).
Please read the prospectus(es) carefully before you invest or send money.
