<PAGE> 1
[AIM LOGO]
AIM Limited Maturity
Treasury Shares
[Collage of Financial Images]
Semiannual Report
January 31, 1995
<PAGE> 2
FUNDAMENTALS
FUND OBJECTIVE
AIM Limited Maturity Treasury Shares seeks liquidity with minimum fluctuation
of principal value, and, consistent with this objective, the highest return
achievable. The Fund seeks to achieve this objective by investing in an
actively managed portfolio of U.S. Treasury notes and other direct
obligations of the U.S. Treasury. Fund shares are not insured or guaranteed
by the U.S. Government or any agency thereof.
PORTFOLIO DATA
PORTFOLIO COMPOSITION
U.S. Treasury Notes: 100%
Number of Holdings: 12
Exempt from State Income Tax in All 50 States
Fully Taxable at the Federal Level
Average Maturity: 1.54 Years
Net Asset Value
Year-End 1987-1994; 1/31/95
[GRAPH]
<TABLE>
<S> <C>
12/87 9.93
9.84
12/88 9.74
9.88
12/89 9.81
9.82
12/90 9.9
9.95
12/91 10.21
10.21
12/92 10.15
10.2
12/93 10.12
9.96
12/94 9.78
1/95 9.86
</TABLE>
This table represents a summary of the Fund's portfolio as of January 31,
1995, the close of the six-month reporting period. There is no guarantee that
the Fund will continue to hold any one particular security. Past performance
cannot guarantee comparable future results.
<TABLE>
<CAPTION>
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
Average Annual Total Returns*
(at maximum offering price)
<S> <C>
Six Months 0.50%
One Year 0.56
Five Years 6.05
Since Inception (12/15/87) 6.51
</TABLE>
[GRAPH]
<TABLE>
<CAPTION>
AIM Limited Maturity Lipper Short U.S. Treasury Consumer Price
Treasury Shares Fund Category Index
<S> <C> <C> <C>
12/15/87 9,900 10,000 10,000
7/88 10,283 10,000 10,269
7/89 11,239 10,430 10,780
7/90 12,101 11,522 11,300
7/91 13,185 12,333 11,802
7/92 14,436 13,419 12,175
7/93 15,106 14,911 12,513
7/94 15,442 15,790 12,860
1/95 15,675 16,229 12,972
</TABLE>
Past performance cannot guarantee comparable future results.
*AIM Limited Maturity Treasury Shares Retail Class performance figures are
historical and reflect reinvestment of all dividends and capital gains
distributions, changes in the 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. Source: Towers Data Systems
HYPO(Registration Mark).
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.
Source: Lipper Analytical Services, Inc.
The Consumer Price Index is a measure of change in consumer prices as
determined by the U.S. Bureau of Labor Statistics (BLS). Source: BLS.
An investment cannot be made in the index listed. Index results do not
reflect sales charges.
<PAGE> 3
CHAIRMAN'S LETTER
Dear Shareholder:
Brisk economic activity, rising interest rates, and ongoing
inflation concerns all converged in 1994 and early 1995 to
drive bond markets to disappointing performance. Returns on
short- and intermediate-term fixed-income securities were
seriously affected.
[PHOTO During the six-month period ended January 31, 1995, for
Charles T. example, the Lipper Short U.S. Treasury Fund Category delivered
Bauer, total return of 1.34 percent. That category is the average
Chairman of performance of short-term U.S. Treasury mutual funds tracked by
the Board of Lipper Analytical Services, Inc., an independent mutual fund
the Fund] performance monitor. The two-year U.S. Treasury Note delivered
total return of 1.44 percent, and the Lehman Brothers One- to
Three-Year Government Index, the average of U.S. government bonds
with maturities of one to three years, produced total return of
1.47 percent. Total return assumes reinvestment of all dividends.
AIM Limited Maturity Treasury Shares Retail Class outpaced all of these
benchmarks, closing the reporting period ended January 31, 1995, with a total
return of 1.51 percent, including reinvested dividends of 24.8 cents per share
and not deducting the Retail Class's maximum sales charge of 1.00 percent.
The Fund's SEC 30-day yield as of January 31, 1995, based on the
maximum offering price, was 6.94 percent. The SEC 30-day yield calculation
reects the yield to maturity of the securities in the portfolio, and includes
both interest and amortization of any discount or premium to the face value of
the securities. The Fund's 30-day distribution rate as of January 31, 1995, was
5.54 percent. The distribution rate at the maximum offering price reflects the
Fund's most recent monthly dividend distribution multiplied by 12 and divided
by the most recent month-end maximum offering price.
Net assets of AIM Limited Maturity Treasury Shares Retail Class were
$265.6 million as of January 31, 1995. The Fund's net asset value (NAV)
remained stable. As of January 31, 1995, NAV was $9.86, down slightly from
$9.96 as of July 31, 1994.
Given the considerable volatility in financial markets the past several
months, it is worth noting that the Fund continues to receive the highest
possible credit quality rating of AAAf from Standard & Poor's Corporation
(S&P). S&P is an independent organization that monitors the credit quality of
$1.3 trillion of bonds and other financial instruments, including mutual funds.
S&P ratings are based upon an annual analysis of the Portfolio's credit
quality, composition, and management, and weekly portfolio review.
As always, we are ready to respond to your questions or comments about
this report. Please call Client Services at (800) 959-4246 during normal
business hours. For automated account information 24 hours a day, call the AIM
Investor Line toll-free at (800) 246-5463.
Respectfully submitted,
/s/ Charles T. Bauer
Charles T. Bauer
Chairman
<PAGE> 4
DISCUSSION & ANALYSIS
------------------------------------
The Fund followed its highly disciplined investment strategy, maintaining
a laddered schedule of maturities between 13 and 24 months.
------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS
The U.S. economy expanded rapidly throughout 1994. Gross Domestic Product
advanced at a 4.6 percent annual rate in the fourth quarter of the year. The
Federal Reserve Board has taken the position that economic growth in excess
of 2.5 percent is inflationary and not sustainable. Therefore, the Fed
continued its restrictive monetary policy, raising short-term interest rates
twice during the six-month period covered by this report. By January 31, the
Federal Funds Rate stood at 5.50 percent, up from 4.25 percent as of July 31,
1994.
In January 1995 evidence began to surface that the Fed's policy was
succeeding in slowing the economy. In spite of Christmas shopping, retail sales
had advanced only 0.2 percent in December; in January they grew by the same
small percentage. Building permits fell by 8.6 percent in January, housing
starts by 9.8 percent, and the Fed's index of industrial production rose only
0.4 percent, less than half the gain during December 1994.
The rise in short-term interest rates considerably flattened the yield
curve as investors anticipated further tightening by the Fed. Two-year notes
started the period at 6.00 percent and traded as high as 7.73 percent as
inflation concerns grew. By the end of the reporting period, two-year notes
were at 7.24 percent, reflecting a calming of investors' fears.
YOUR INVESTMENT PORTFOLIO
Despite rising interest rates and resulting market volatility, the Fund
followed its highly disciplined investment strategy, maintaining a laddered
schedule of maturities between 13 and 24 months. Historically, the strategy
has served the Fund well. AIM Limited Maturity Treasury Shares has never had
a negative total return over a six-month period since its inception in
December of 1987, and the rolling 12-month net asset value of a Fund share
has never deviated more than 1.74 percent. Of course, past performance cannot
guarantee comparable future results.
Fund management continues to buy newly auctioned two-year U.S. Treasury
Notes and hold them until they have one year to maturity. Since this leads to a
weighted average maturity of 1.5 years, the impact on the portfolio from
interest rate fluctuations is often tempered. The Fund's Retail Class produced a
total return of 1.51 percent for the six months ended January 31, outperforming
the Lipper Short U.S. Treasury Funds Average's 1.34 percent total return. Total
return assumes reinvestment of all dividends and capital gains and does not
deduct the Retail Class's maximum sales charge of 1.00 percent.
The Fund also retained its AAAf credit quality rating, the highest
available from Standard & Poor's Corporation (S&P), the independent
credit-quality monitor.
OUTLOOK FOR THE FUTURE
It is possible, based on January's economic performance, that the Fed has
succeeded in engineering a "soft landing" by slowing growth of the U.S.
economy, but it is still too early to tell.
On January 31, the day the reporting period ended, the Fed began a
two-day meeting widely expected to lead to at least one more increase in
short-term rates. Fund management remains condent in its use of a laddered
schedule of maturities to moderate the influence of any forthcoming rate rise.
YIELD CURVE COMPARISON
U.S. TREASURY ISSUES
[GRAPH]
<TABLE>
<CAPTION>
8/1/94 1/31/95
<S> <C> <C>
3 mo 4.374 5.99
6 mo 4.868 6.403
1 yr 5.366 6.781
2 yrs 5.9999 7.235
3 yrs 6.272 7.343
5 yrs 6.737 7.502
10 yrs 7.109 7.577
30 yrs 7.394 7.696
</TABLE>
Source: Wall Street Journal
2
<PAGE> 5
FOR CONSIDERATION
Investing According to Your Personal Financial Objectives
ASSET ALLOCATION
Every mutual fund investor would like to invest in a market that only goes
up--a tide that floats all ships. The truth is, markets also decline. This year,
concerns about inflation, higher interest rates, higher taxes, and a weak U.S.
dollar have taken a toll on financial markets. But market changes do not affect
all investments the same way--some investments may benefit from a market trend
when others do not.
And market changes are not the only factors an investor must manage.
There are a number of important considerations with every investment including
investment risk, and investment risk takes many forms:
o The prices of some investments will fluctuate according to changes in the
market.
o The value of some investments, such as fixed-income securities, will rise
and fall as interest rates change.
o When interest rates fall, investors face the possibility that investment
income cannot be reinvested at higher rates previously available.
o Inflation can cause the value of some investments to erode as the cost of
living increases.
o Investments valued in U.S. dollars will rise and fall according to
the dollar's value against other world currencies. This is easily discernible
in direct foreign investments. However, the changing value of the U.S.
dollar, in fact, affects all investments.
To manage these changing conditions, investors have learned to
diversify their assets across a wide variety of investments. For most
investors, mutual funds offer convenient and affordable methods to diversify
their assets. For as little as $500, an investor has access to a portfolio of
hundreds of professionally selected securities.
When you invest in more than one fund, you increase the level of
diversification. You also gain another important benefit. Since mutual funds are
managed according to specific investment objectives, such as growth or income,
you can invest in mutual funds with different investment objectives to create a
personalized investment plan which suits your unique financial objectives. This
investment strategy is called asset allocation.
Mutual fund investors tend to seek growth, or current income, or some
combination of both. Generally, investors who choose to assume more investment
risk get the potential for a higher return. With asset allocation, you can
fine-tune your investment plan to be more conservative, or more aggressive,
depending on your personal financial goals and risk tolerances.
Your investment consultant can assist you in developing an asset
allocation strategy and select the appropriate investments to help you meet
your long-term investment goals. Your financial consultant is familiar with
your particular situation and is your best source with important investment
decisions.
3
<PAGE> 6
FOR CONSIDERATION
A Weak Dollar Affects Investors in Many Ways
WHAT HAPPENS WHEN THE VALUE OF THE DOLLAR FALLS?
The value of the U.S. dollar has declined to lower and still lower levels
relative to major world currencies. In June 1994, the dollar fell below 100
Japanese yen, its lowest level against that currency since World War II. Over
the months since, the dollar has continued to test new lows, and analysts see
no sign of a meaningful rebound in the near future.
What does it mean when the value of the dollar falls? While it may seem
far removed from your private world, the weak dollar can affect you in many
ways:
o Long-term interest rates may rise whether the Federal Reserve Board raises
short-term rates or not. Consider that a 1.0 percentage point increase in
mortgage rates adds $108 to the monthly payment on a $150,000 mortgage.
o U.S. stock and bond markets tend to fall as investors sell dollars and
dollar-denominated financial assets. That affects every investor's
holdings: For every 1 point drop in the unmanaged Standard & Poor's
Composite Index of 500 stocks (S&P 500), $7.3 billion in stock value
disappears. (The S&P 500 is widely accepted by investors as
representative of the stock market in general.)
o Companies doing business overseas may be exposed to big swings in their
bottom line as a result of currency movements. But for those who are
receiving cash flow denominated in yen, francs, or pounds, the dollar's
decline could be a boon.
o Prices for imported goods and services could rise. Japanese automakers,
already struggling to earn money on U.S. sales, have either to raise prices
more than 5 percent all at once or to bump them at least that much in
several steps over the coming months in order to compensate for the rise
in the value of the yen. That could prompt U.S. automakers to raise
prices -- a move that could push inflation higher.
o If inflation kicks in, it could derail the modest economic recovery causing
interest rates to rise even higher and financial markets to fall. Consumer
spending could slow and unemployment could rise.
While it is important to consider these factors, it is equally
important to maintain a long-term perspective. The dollar, like all financial
instruments, moves in cycles of successive advances and declines. Of course,
there is a convenient way to help manage the uncertainty created by fluctuating
market cycles. Consider the advantages of professional investment management
and diversication provided by mutual funds.
Your financial consultant can help you select the most appropriate
mutual funds to meet your investment goals. For more complete information about
any of AIM's funds, including sales charges and expenses, ask your financial
consultant for a free prospectus. Please read the prospectus carefully before
you invest or send money.
HOW MANY YEN A DOLLAR WOULD BUY
[GRAPH]
<TABLE>
<CAPTION>
Dollar vs. Yen
<S> <C>
2/94 106.30
3/94 105.10
4/94 103.48
5/94 103.75
6/94 102.53
7/94 98.45
8/94 99.94
9/94 98.77
10/94 98.35
11/94 99.08
12/94 99.68
1/95 98.58
2/95 96.80
</TABLE>
Values represented are month-end figures. Source: Federal Reserve
<PAGE> 7
FINANCIALS
SCHEDULE OF INVESTMENTS
January 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
MATURITY (000S) VALUE
<S> <C> <C> <C>
U. S. TREASURY SECURITIES
U. S. TREASURY NOTES-98.75%
4.625% 02/29/96 $32,245 $ 31,489,177
------------------------------------------------------------------------------------------------
5.125% 03/31/96 32,125 31,469,329
------------------------------------------------------------------------------------------------
5.50% 04/30/96 32,115 31,534,682
------------------------------------------------------------------------------------------------
5.875% 05/31/96 31,910 31,750,450
------------------------------------------------------------------------------------------------
6.00% 06/30/96 32,250 31,786,890
------------------------------------------------------------------------------------------------
6.125% 07/31/96 31,850 31,412,700
------------------------------------------------------------------------------------------------
6.25% 08/31/96 31,610 31,189,587
------------------------------------------------------------------------------------------------
6.50% 09/30/96 32,150 31,814,033
------------------------------------------------------------------------------------------------
6.875% 10/31/96 32,150 31,981,534
------------------------------------------------------------------------------------------------
7.25% 11/30/96 32,285 32,305,017
------------------------------------------------------------------------------------------------
7.50% 12/31/96 32,400 32,562,324
------------------------------------------------------------------------------------------------
7.50% 01/31/97 32,500 32,657,624
------------------------------------------------------------------------------------------------
Total U.S. Treasury Securities 381,953,347
------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS-98.75% 381,953,347
------------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-1.25% 4,823,871
------------------------------------------------------------------------------------------------
NET ASSETS-100.00% $386,777,218
================================================================================================
</TABLE>
See Notes to Financial Statements.
5
<PAGE> 8
FINANCIALS
STATEMENT OF ASSETS AND LIABILITIES
January 31, 1995
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $385,348,023) $381,953,347
----------------------------------------------------------------------------------------
Cash 979,432
----------------------------------------------------------------------------------------
Receivables for:
Investments sold
----------------------------------------------------------------------------------------
Fund shares sold 873,362
----------------------------------------------------------------------------------------
Interest 4,876,697
----------------------------------------------------------------------------------------
Investment in deferred compensation plan 1,543
----------------------------------------------------------------------------------------
Other assets 178,372
----------------------------------------------------------------------------------------
Total assets 388,862,753
----------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Fund shares reacquired 1,062,826
----------------------------------------------------------------------------------------
Dividends 885,450
----------------------------------------------------------------------------------------
Deferred compensation 1,543
----------------------------------------------------------------------------------------
Accrued advisory fees 65,723
----------------------------------------------------------------------------------------
Accrued administrative service fees 4,370
----------------------------------------------------------------------------------------
Accrued distribution fees 49,133
----------------------------------------------------------------------------------------
Accrued transfer agent fees 7,970
----------------------------------------------------------------------------------------
Accrued operating expenses 8,520
----------------------------------------------------------------------------------------
Total liabilities 2,085,535
----------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $386,777,218
========================================================================================
</TABLE>
<TABLE>
<CAPTION>
INSTITUTIONAL AIM
SHARES SHARES FUND
<S> <C> <C> <C>
NET ASSETS: $121,173,340 $265,603,878 $386,777,218
===========================================================================================
Shares outstanding, $0.01 par value per
share 12,289,825 26,938,475 39,228,300
===========================================================================================
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE $9.86
===========================================================================================
OFFERING PRICE PER SHARE:
(Net asset value of $9.86 / 99.00%) $9.96
===========================================================================================
</TABLE>
See Notes to Financial Statements.
6
<PAGE> 9
FINANCIALS
STATEMENT OF OPERATIONS
For the six months ended January 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
INSTITUTIONAL AIM
SHARES SHARES FUND
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $3,436,205 $8,060,976 $11,497,181
-------------------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 125,860 295,478 421,338
-------------------------------------------------------------------------------------------------
Administrative service fees 8,038 36,734 44,772
-------------------------------------------------------------------------------------------------
Custodian fees 1,299 3,476 4,775
-------------------------------------------------------------------------------------------------
Transfer agent fees 2,002 81,842 83,844
-------------------------------------------------------------------------------------------------
Trustees' fees and expenses 1,286 3,164 4,450
-------------------------------------------------------------------------------------------------
Distribution fees -- 221,572 221,572
-------------------------------------------------------------------------------------------------
Other 24,281 85,950 110,231
-------------------------------------------------------------------------------------------------
Total expenses 162,766 728,216 890,982
-------------------------------------------------------------------------------------------------
Net investment income $3,273,439 $7,332,760 10,606,199
-------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) on sales of investment securities (6,442,357)
-------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 1,978,608
-------------------------------------------------------------------------------------------------
Net gain (loss) on investment securities (4,463,749)
-------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 6,142,450
=================================================================================================
</TABLE>
See Notes to Financial Statements.
7
<PAGE> 10
FINANCIALS
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended January 31, 1995 and
the eleven months ended July 31, 1994
(Unaudited)
<TABLE>
<CAPTION>
JANUARY 31, JULY 31,
1995 1994
<S> <C> <C>
OPERATIONS:
Net investment income $ 10,606,199 $ 18,105,773
--------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities (6,442,357) (2,745,439)
--------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities 1,978,608 (8,181,235)
--------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 6,142,450 7,179,099
--------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Institutional Shares (3,273,444) (6,248,089)
--------------------------------------------------------------------------------------------
AIM Shares (7,332,755) (11,857,684)
--------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAINS ON
INVESTMENT SECURITIES -- (4,076,018)
--------------------------------------------------------------------------------------------
SHARE TRANSACTIONS-NET:
Institutional Shares (12,524,366) 9,581,280
--------------------------------------------------------------------------------------------
AIM Shares (61,148,570) (9,292,096)
--------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (78,136,685) (14,713,508)
--------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 464,913,903 479,627,411
--------------------------------------------------------------------------------------------
End of period $386,777,218 $464,913,903
============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $399,401,341 $473,074,277
--------------------------------------------------------------------------------------------
Undistributed realized gain (loss) on sales of investment
securities (9,229,447) (2,787,090)
--------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities (3,394,676) (5,373,284)
--------------------------------------------------------------------------------------------
$386,777,218 $464,913,903
============================================================================================
</TABLE>
See Notes to Financial Statements.
8
<PAGE> 11
FINANCIALS
NOTES TO FINANCIAL STATEMENTS
January 31, 1995
(Unaudited)
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.
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.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for certain costs incurred in providing accounting and
shareholder services to the Fund. During the six months ended
9
<PAGE> 12
FINANCIALS
NOTE 2-(continued)
January 31, 1995, the Fund reimbursed AIM $47,231 for such services. Effective
September 16, 1994, A I M Institutional Fund Services, Inc. ("AIFS") became a
transfer agent to the Institutional Shares and was reimbursed $617 for such
services during the period ended January 31, 1995. Effective November 1, 1994,
A I M Fund Services, Inc. ("AFS") became the transfer agent for the AIM Shares
and was paid $15,383 for such services for the three months ended January 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 six months ended January 31, 1995, the AIM Shares paid AIM
Distributors $221,572 as compensation under the Plan.
AIM Distributors received commissions of $30,277 during the six months ended
January 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 shares. Certain officers and trustees of the Trust are officers and
directors of AIM, AIM Distributors, FMC, AFS and AIFS.
During the six months ended January 31, 1995, 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 $650 for services rendered by that firm as counsel. A member of that
firm is a trustee of the Trust.
10
<PAGE> 13
FINANCIALS
NOTE 3-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the six months ended January 31, 1995 was
$248,285,099 and $365,555,187, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of January 31, 1995 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $ 295,289
------------------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (3,945,402)
------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment securities $(3,650,113)
============================================================================================================
</TABLE>
Cost of investments for tax purposes is $385,603,460.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid or accrued to each trustee who is not
an "interested person" of the Trust. 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 six months ended January 31,
1995 and the eleven months ended July 31, 1994 were as follows:
<TABLE>
<CAPTION>
January 31, 1995 July 31, 1994
---------------------------- ----------------------------
Shares Amount Shares Amount
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold 7,822,926 $ 77,285,006 13,894,980 $ 140,244,403
-------------------------------------------------------------------------------------- ----------------------------
Issued as reinvestment of dividends 522,648 5,155,580 910,943 9,102,831
-------------------------------------------------------------------------------------- ----------------------------
Reacquired (14,540,060) (143,589,156) (15,751,905) (158,639,330)
-------------------------------------------------------------------------------------- ----------------------------
(6,194,486) $ (61,148,570) (945,982) $ (9,292,096)
====================================================================================== ============================
</TABLE>
11
<PAGE> 14
FINANCIALS
NOTE 6-FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share of AIM Shares
outstanding during the six months ended January 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>
JANUARY 31, 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 0.25 0.35 0.42 0.58 0.72 0.77 0.84 0.52
--------------------- -------------- --------- --------- --------- --------- --------- --------- ---------
Net gains (losses)
on securities
(both realized and
unrealized) (0.10) (0.20) 0.05 0.29 0.22 0.01 (0.02) (0.12)
--------------------- -------------- --------- --------- --------- --------- --------- --------- ---------
Total from
investment
operations 0.15 0.15 0.47 0.87 0.94 0.78 0.82 0.40
--------------------- -------------- --------- --------- --------- --------- --------- --------- ---------
Less distributions:
Dividends from net
investment income (0.25) (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 (0.25) (0.43) (0.44) (0.67) (0.72) (0.77) (0.84) (0.52)
--------------------- -------------- --------- --------- --------- --------- --------- --------- ---------
Net asset value, end
of period $ 9.86 $ 9.96 $ 10.24 $ 10.21 $ 10.01 $ 9.79 $ 9.78 $ 9.80
===================== ============== ========= ========= ========= ========= ========= ========= =========
Total return(a) 1.51% 1.52% 4.65% 8.93% 9.95% 8.32% 8.71% 4.11%
===================== ============== ========= ========= ========= ========= ========= ========= =========
Ratios/supplemental
data:
Net assets, end of
period (000s
omitted) $265,604 $ 329,942 $ 348,937 $ 260,454 $ 131,880 $ 79,871 $ 70,781 $ 62,342
===================== ============== ========= ========= ========= ========= ========= ========= =========
Ratio of expenses to
average net assets 0.49%(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 4.96%(b) 3.75%(c) 4.07% 5.60% 7.25% 7.90%(d) 8.59%(e) 7.02%(c)(e)
===================== ============== ========= ========= ========= ========= ========= ========= =========
Portfolio turnover
rate 59.12% 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) 34,534 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 annualized and based on average net assets of $293,020,866.
(c) Annualized.
(d) After waiver of advisory fees.
(e) After waiver of advisory fees and expense reimbursements.
(f) Averages computed on a daily basis.
12
<PAGE> 15
TRUSTEES & OFFICERS
BOARD OF TRUSTEES
Charles T. Bauer, CFA
Chairman and Chief Executive Officer
A I M Management Group Inc.
Bruce L. Crockett
Director, President, and Chief Executive Officer
COMSAT Corporation
Owen Daly II
Director
Cortland Trust Inc.
Carl Frischling
Partner
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
Robert H. Graham
President
A I M Management Group Inc.
John F. Kroeger
Formerly, Consultant
Wendell & Stockel Associates, Inc.
Lewis F. Pennock
Attorney
Ian W. Robinson
Consultant; Former Executive
Vice President and Chief Financial Officer
Bell Atlantic Management Services, Inc.
Louis S. Sklar
Executive Vice President
Hines Interests Limited Partnership
OFFICERS
Charles T. Bauer, CFA
Chairman
Robert H. Graham
President
John J. Arthur, CPA
Senior Vice President and Treasurer
Gary T. Crum
Senior Vice President
William H. Kleh
Senior Vice President
Carol F. Relihan
Vice President and Secretary
Gary Beauchamp
Vice President
Melville B. Cox
Vice President
Karen Dunn Kelley
Vice President
Dana R. Sutton
Vice President and Assistant Treasurer
Meggan M. Walsh
Vice President
Nancy L. Martin, CPA
Assistant Secretary
Kathleen J. Pueger
Assistant Secretary
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
Mary J. Benson, CPA
Assistant Treasurer
OFFICE OF THE FUND
11 Greenway Plaza
Suite 1919
Houston, TX 77046
INVESTMENT ADVISOR
A I M Advisors, Inc.
11 Greenway Plaza
Suite 1919
Houston, TX 77046
TRANSFER AGENT
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-4739
CUSTODIAN
The Bank of New York
110 Washington Street, 8th Floor
New York, NY 10286
DISTRIBUTOR
A I M Distributors, Inc.
11 Greenway Plaza
Suite 1919
Houston, TX 77046
LEGAL COUNSEL TO FUND
Ballard Spahr Andrews & Ingersoll
1735 Market Street, 51st Floor
Philadelphia, PA 19103-7599
LEGAL COUNSEL TO TRUSTEES
Kramer, Levin, Naftalis, Nessen,
Kamin & Frankel
919 Third Avenue
New York, NY 10022
13
<PAGE> 16
[AIM Logo] BULK RATE
A I M Distributors, Inc. U.S. POSTAGE
11 Greenway Plaza PAID
Houston, Texas 77046 Houston, TX
Permit No. 2332
The AIM Family of Funds [Register Mark]
AGGRESSIVE GROWTH
AIM Aggressive Growth Fund*
AIM Constellation Fund
AIM Global Aggressive Growth Fund
GROWTH [Artwork - a Picture of
AIM Global Growth Fund an Office Building]
AIM Growth Fund
AIM International Equity Fund
AIM Value Fund
AIM Weingarten Fund AIM
[Logo] Management
GROWTH AND INCOME Group
AIM Balanced Fund
AIM Charter Fund
INCOME AND GROWTH
AIM Utilities Fund
HIGH CURRENT INCOME
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 May 2, 1994.
For more complete information about any AIM Fund, including sales charges
and expenses, ask your investment broker or securities dealer for a free
prospectus(es). Please read the prospectus(es) carefully before you invest or
send money. This report may be distributed only to current shareholders or
to persons who have received a current prospectus of the Fund.
