<PAGE> 1
[AIM LOGO APPEARS HERE]
LETTER
TO OUR
SHAREHOLDERS
September 7, 1995
Dear Shareholder:
Limited Maturity Treasury Portfolio Institutional Shares
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 them
Chairman of until they had one year to maturity, then selling them and
the Board of reinvesting the proceeds in more two-year Treasuries.
the Fund, By adhering to this carefully defined strategy, your
APPEARS HERE] Fund continued to provide competitive monthly income
coupled with extremely low share price volatility. Total
return for the Institutional Shares for the fiscal year
was 6.61%, including reinvested dividends of $0.57 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.
Your Fund's 30-day yield as of July 31, 1995, was 5.55%. Its 30-day
distribution rate was 6.22%. The 30-day yield calculation 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. The
annualized distribution rate reflects the Fund's most recent monthly dividend
distribution multiplied by 12 and divided by the most recent month-end 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 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
Limited Maturity Treasury Portfolio Institutional Shares enjoys a volatility
rating of aaa, the highest a bond fund can be awarded by Standard & Poor's
Corporation, an independent organization that monitors the credit quality of
bonds and other financial instruments, including mutual funds. In addition, your
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.
Funds are rated from highest quality (AAA) to lowest credit quality (CCC) and
lowest risk (aaa) to highest risk (ccc) by Standard & Poor's.
We are pleased to send you this report on Limited Maturity Treasury Portfolio
Institutional Shares, and as always, we are ready to respond to your questions
or comments. Please call one of our representatives at 800-659-1005.
Respectfully submitted,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
<PAGE> 2
MANAGEMENT'S
DISCUSSION AND
ANALYSIS
During the first half of the fiscal year ended July 31, 1995, the U.S. economy
was booming. In the fourth quarter of 1994, it grew at a 5.1% annualized rate,
a rate most market participants considered unsustainable. The Federal Reserve
Bank Board pursued a restrictive monetary policy, raising interest rates to
ward off anticipated inflation. In early February 1995, the Federal Reserve
raised the Federal Funds rate a final time, leaving short-term interest rates
near 6%, up from 4.25% as of July 31, 1994. The goal was the so-called "soft
landing," in which economic growth moderated but not to the point of recession.
As 1995 unfolded, evidence began to accumulate that the Federal Reserve's
strategy was working. During the first quarter of the year, the economy
delivered an annualized growth rate of 2.7%.
News that economic activity was moderating, thereby dampening the threat of
inflation, was a tonic for the financial markets. While the Federal Funds rate
remained steady, longer-term interest rates began to decline. As of July 31,
1995, for example, the yield on a 30-year U.S. Treasury Bond was 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. The word
"recession" began to supplant the phrase "soft landing" when the business press
attempted to forecast what lay ahead. Economic data seemed contradictory. For
example, while the Conference Board, a business research organization, reported
a sharp decline in consumer confidence during May, Dun & Bradstreet Corp. found
corporate executives more optimistic than they had been earlier in the year.
Personal income declined 0.2% during May, but the housing market boomed with
sales of new single-family homes up 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. For example, 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
Limited Maturity Treasury Portfolio Institutional Shares continued to practice
its consistent, disciplined investment strategy. The Fund is managed so that
approximately 8% of its 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. This is called a "laddered maturity structure." It is
designed to ameliorate the effects of interest rate volatility.
The Fund purchases newly auctioned two-year U.S. Treasury Notes and holds
them until they have one year to maturity. Since this 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 1%; conversely, it should
lose 1.4% in value if interest rates rise 1%.
2
<PAGE> 3
The investment strategy of Limited Maturity Treasury Portfolio Institutional
Shares maintains a short duration by design. The Fund is managed for liquidity
and relative stability of net asset value. While past performance is no
guarantee of comparable future results, 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%.
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 from the highest point in more than four years. A more
accommodative monetary policy by the Federal Reserve should spur continued
growth in the economy, as even a modest reduction in interest rates can save
corporations and consumers billions of dollars in borrowing costs.
At the time, market watchers speculated whether the Federal Reserve would
lower rates again. In the past, an initial rate cut such as the 0.25%
reduction in July was typically followed by further cuts. However, the Federal
Reserve broke with that tradition by 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. Most market participants anticipate a
period of relative stability for interest rates.
Whatever market conditions prevail, Limited Maturity Treasury Portfolio
Institutional Shares will remain committed to its use of a laddered schedule of
maturities.
3
<PAGE> 4
INDEX
COMPARISON
GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
7/13/87-7/31/95
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Measurement Limited Maturity
Period Treasury Portfolio Lipper Short U.S. Consumer Price
7/13/87 - 7/31/95 Institutional Shares(1) Treasury Fund category(2) Index(1)
<S> <C> <C> <C>
7/87 $ 9,995 $10,000 $10,000
7/88 10,623 10,768 10,413
7/89 11,625 11,896 10,931
7/90 12,532 12,733 11,459
7/91 13,682 13,855 11,968
7/92 15,005 15,395 12,346
7/93 15,736 16,298 12,689
7/94 16,123 16,567 13,040
7/95 17,188 17,700 13,401
</TABLE>
Past performance cannot guarantee comparable future results.
- -------------------------------
AVERAGE ANNUAL TOTAL RETURNS
For periods ended July 31, 1995
Inception (7/13/87) 6.95%
5 Years 6.52
1 Year 6.61
- -------------------------------
(1) Source: Towers Data Systems HYPO(R).
(2) Source: Lipper Analytical Services, Inc.
Limited Maturity Treasury Portfolio Institutional Shares' performance figures
are historical and reflect reinvestment of all distributions and changes in net
asset value. The Fund's investment return and principal value will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost. Past performance cannot guarantee comparable future results.
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. An
investment cannot be made in an index. Results shown reflect reinvestment of
dividends and do not reflect sales charges.
The Consumer Price Index is a measure of change in consumer prices as
determined by the U.S. Bureau of Labor Statistics.
4
<PAGE> 5
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.
5
<PAGE> 6
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.
6
<PAGE> 7
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.
7
<PAGE> 8
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.
8
<PAGE> 9
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.
9
<PAGE> 10
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
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.
10
<PAGE> 11
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 Institutional Shares outstanding during the year ended July 31,
1995 and the eleven months ended July 31, 1994 were as follows:
<TABLE>
<CAPTION>
July 31, 1995 July 31, 1994
---------------------------- ----------------------------
Shares Amount Shares Amount
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold 1,443,720 $ 14,412,733 19,308,147 $ 196,223,146
- -------------------------------------------------------------------------------- ----------------------------
Issued as reinvestment of dividends 113,174 1,124,015 66,081 664,163
- -------------------------------------------------------------------------------- ----------------------------
Reacquired (2,194,873) (21,776,280) (18,584,169) (187,306,029)
- -------------------------------------------------------------------------------- ----------------------------
(637,979) $ (6,229,532) 790,059 $ 9,581,280
================================================================================ ============================
</TABLE>
11
<PAGE> 12
NOTE 6-FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share of Institutional
Shares outstanding during the year ended July 31, 1995, the eleven months ended
July 31, 1994, each of the years in the six-year period ended August 31, 1993
and the period July 13, 1987 (date operations commenced) through August 31,
1987.
<TABLE>
<CAPTION>
JULY 31, AUGUST 31,
---------------------- --------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987
--------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <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 $ 10.00
- -------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Income from
investment
operations:
Net investment
income 0.57 0.37 0.44 0.60 0.73 0.79 0.85 0.73 0.09
- -------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
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) (0.08)
- -------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total from
investment
operations 0.64 0.17 0.49 0.89 0.95 0.80 0.83 0.61 0.01
- -------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Less distributions:
Dividends from net
investment income (0.57) (0.37) (0.44) (0.60) (0.73) (0.79) (0.85) (0.83) (0.09)
- -------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Distributions from
net realized
capital gains -- (0.08) (0.02) (0.09) -- -- -- -- --
- -------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Total
distributions (0.57) (0.45) (0.46) (0.69) (0.73) (0.79) (0.85) (0.73) (0.09)
- -------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Net asset value, end
of period $ 10.03 $ 9.96 $ 10.24 $ 10.21 $ 10.01 $ 9.79 $ 9.78 $ 9.80 $ 9.92
==================== ========= ========= ========= ========= ========= ========= ========= ========= =========
Total return(a) 6.61% 1.72% 4.88% 9.14% 10.08% 8.52% 8.87% 6.34% 0.14%
==================== ========= ========= ========= ========= ========= ========= ========= ========= =========
Ratios/supplemental
data:
Net assets, end of
period (000s
omitted) $129,530 $134,971 $130,690 $ 89,352 $ 25,528 $ 10,378 $ 16,065 $ 35,310 $ 4,202
==================== ========= ========= ========= ========= ========= ========= ========= ========= =========
Ratio of expenses to
average net assets 0.28%(b) 0.25%(c) 0.24% 0.28% 0.41%(d) 0.31%(e) 0.31%(f) 0.31%(f) 0.25%(c)(f)
==================== ========= ========= ========= ========= ========= ========= ========= ========= =========
Ratio of net
investment income
to average net
assets 5.70%(b) 3.98%(c) 4.30% 5.76% 7.36%(d) 8.12%(e) 8.69%(f) 7.46%(f) 6.98%(c)(f)
==================== ========= ========= ========= ========= ========= ========= ========= ========= =========
Portfolio turnover
rate 120.01% 120.40% 122.99% 119.62% 214.74% 192.46% 219.53% 140.83% 28.29%
==================== ========= ========= ========= ========= ========= ========= ========= ========= =========
Borrowings for the
period:
Amount of debt
outstanding at
end of period
(000s omitted) -- -- -- -- -- -- $ 2,257 $ 10,892 --
- -------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Average amount of
debt outstanding
during the period
(000s omitted)(g) -- -- -- -- -- $ 834 $ 3,562 $ 3,754 --
- -------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Average number of
shares
outstanding
during the period
(000s omitted)(g) 12,540 16,864 9,785 6,097 1,477 1,208 1,817 2,118 390
- -------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Average amount of
debt per share
during the period -- -- -- -- -- $ 0.69 $ 1.96 $ 1.69 --
- -------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
</TABLE>
(a) For periods less than one year, the total return is not annualized.
(b) Ratios are based on average net assets of $123,910,861.
(c) Annualized.
(d) After expense reimbursements.
(e) After waiver of advisory fees and expense reimbursements.
(f) After waiver of advisory fees.
(g) Averages computed on a daily basis.
12
<PAGE> 13
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 six-year period ended August 31,
1993 and the period July 13, 1987 (date operations commenced) through August 31,
1987. 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 six-year period ended August 31, 1993 and the period July
13, 1987 (date operations commenced) through August 31, 1987 in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
September 1, 1995
Houston, Texas
13
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14
<PAGE> 15
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15
<PAGE> 16
<TABLE>
<S> <C> <C>
TRUSTEES
Charles T. Bauer John F. Kroeger
Bruce L. Crockett Lewis F. Pennock AIM Investment
Owen Daly II Ian W. Robinson Securities Funds
Carl Frischling Louis S. Sklar
Robert H. Graham
OFFICERS
Charles T. Bauer Chairman
Robert H. Graham President
John J. Arthur Sr. Vice President & Treasurer Limited Maturity
Gary T. Crum Sr. Vice President Treasury Portfolio
Carol F. Relihan Vice President & Secretary ------------------
Melville B. Cox Vice President Institutional ANNUAL
Karen Dunn Kelley Vice President Shares REPORT
Dana R. Sutton Vice President & Assistant Treasurer
P. Michelle Grace Assistant Secretary
Nancy L. Martin Assistant Secretary
Ofelia M. Mayo Assistant Secretary
Kathleen J. Pflueger Assistant Secretary
Samuel D. Sirko Assistant Secretary
Stephen I. Winer Assistant Secretary July 31, 1995
Mary J. Benson Assistant Treasurer
INVESTMENT ADVISOR
A I M Advisors, Inc.
11 Greenway Plaza, Suite 1919
Houston, TX 77046
800-347-1919
DISTRIBUTOR
Fund Management Company
11 Greenway Plaza, Suite 1919
Houston, TX 77046
800-659-1005
CUSTODIAN
The Bank of New York
110 Washington Street, 8th Floor
New York, NY 10286
LEGAL COUNSEL TO FUND
Ballard Spahr Andrews & Ingersoll
1735 Market Street
Philadelphia, PA 19103-7599
LEGAL COUNSEL TO TRUSTEES
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
919 Third Avenue
New York, NY 10022
TRANSFER AGENT
A I M Institutional Fund Services, Inc.
11 Greenway Plaza, Suite 1919
Houston, TX 77046
AUDITORS
KPMG Peat Marwick LLP
NationsBank Building
700 Louisiana
Houston, TX 77002 [AIM LOGO APPEARS HERE]
FUND MANAGEMENT COMPANY
This report may be distributed only to current
shareholders or to persons who have received a
current Fund prospectus.
</TABLE>
