<PAGE> 1
[AIM LOGO APPEARS HERE] AIM LIMITED
MATURITY
TREASURY SHARES
SEMIANNUAL REPORT JANUARY 31, 1997
<PAGE> 2
[PHOTO FROM COVER]
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Limited Maturity Treasury Shares' performance figures are historical
and reflect reinvestment of all distributions and changes in net asset
value. Unless otherwise indicated, the Fund's performance is computed at
net asset value without a sales charge. When sales charges are included in
performance figures, those figures reflect the maximum 1.00% sales charge.
o The 30-day yield is calculated on the basis of a formula defined by the
SEC. The formula is based on the portfolio's potential earnings from
dividends, interest, yield-to-maturity or yield-to-call of the bonds in the
portfolio, net of all expenses and expressed on an annualized basis.
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 The Fund's portfolio composition is subject to change and there is no
assurance the Fund will continue to hold any particular security.
o Past performance cannot guarantee comparable future results.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o Standard & Poor's Corporation (S&P) is a widely known credit rating agency.
S&P's ratings are historical and are based on an annual analysis of the
Fund's credit quality, composition and management. Funds are rated from the
highest quality (AAA) to lowest quality (CCC).
o Government securities, such as U.S. Treasury bills, notes, and bonds, offer
a high degree of safety and are guaranteed as to the timely payment of
principal and interest if held to maturity. Fund shares are not insured and
their value and yield will vary with market conditions.
MUTUAL FUNDS, ANNUITIES, AND OTHER INVESTMENTS
ARE NOT INSURED BY THE FDIC OR ANY OTHER GOVERNMENT AGENCY;
ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR GUARANTEED BY,
ANY BANK OR ANY AFFILIATE; AND ARE SUBJECT TO INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
------------------------------------
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.
------------------------------------
This report may be distributed only to current shareholders
or to persons who have received a current prospectus of the Fund.
<PAGE> 3
The Chairman's Letter
Dear Fellow Shareholder:
As we begin 1997, the parallels to last year are striking.
The economy is growing at a moderate rate, corporate
earnings remain healthy, and inflation is modest. Such
an environment is ideal for financial investments.
[PHOTO OF Still, many suggest, as we do, that 1997 will be
Charles T. marked by continued uncertainty and short-term volatility.
Bauer, And as the market's performance continues to exceed
Chairman of historical averages, some advise that a correction is
the Board of overdue.
THE FUND, We believe the best way to achieve your investment
APPEARS HERE] goals in uncertain markets is to follow a few basic
strategies. First, you should keep a long-term
outlook. If you leave your money invested over the long
term, you can help avoid the results of the volatility
that generally accompanies financial markets over the
short term. Those who try to "time the market"--move money in and out of the
market based on some gauge of future market performance--tend to be less
successful than investors using disciplined, long-term investment strategies.
That's because no one, not even expert market watchers, can consistently
predict what the market will do next.
Another strategy, diversification, may help you cushion the effects of a
volatile market and enhance your return potential. A mutual fund is already
diversified because it invests in many securities. You can diversify even
further by placing some of your assets in several different types of domestic
and international funds that may include stocks, bonds, and money market
securities.
Finally, no matter what your investment goals or time horizon, it makes good
sense to review your portfolio regularly with your financial consultant. In
rapidly changing markets, you need an investment professional on your side who
can explain what is happening and how your portfolio may be affected.
Your financial consultant can help you create and follow a regular
investment plan--investing a certain amount of money at regular intervals--that
can help you stay on track regardless of day-to-day market activity.
In 1997, and in the years ahead, we at AIM plan to meet the challenge of
changing financial markets through the consistent application of disciplined
investment strategies that have served our shareholders well for more than 20
years. We are pleased that AIM funds, overall, have turned in attractive, and
often impressive, performance when measured against benchmark indexes and peer
group performance.
We appreciate the trust you have placed in us and we look forward to our
continued close association. If you have any 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 at 800-246-5463. We also invite you to visit AIM's award-winning Web site
at http://www.aimfunds.com.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
---------------------------------------
In rapidly changing markets,
you need
an investment professional
on your side
who can explain
what is happening and
how your portfolio may be affected.
---------------------------------------
<PAGE> 4
The Managers' Overview
FUND BENEFITS FROM DISCIPLINED APPROACH
- -------------------------------------------------------------------------------
A roundtable discussion with the Fund management team for AIM Limited Maturity
Treasury Shares for the six-month period ended January 31, 1997.
Q. HOW DID AIM LIMITED MATURITY TREASURY SHARES PERFORM DURING THE REPORTING
PERIOD?
A. The Fund continued to provide steady monthly income exempt from state
income taxes while maintaining a stable share price.
As of January 31, 1997, the Fund's 30-day yield was 5.25%, when
calculated on maximum offering price. The Fund posted a six-month total
return of 3.29%. During the reporting period, net asset value per share
remained within a range of $9.95 to $10.06.
The Fund had an average quality rating of AAAf, the highest such rating
assigned by Standard & Poor's Corporation (S&P), a widely known credit-
rating agency.
Q. WHAT WERE THE MAJOR TRENDS IN THE FIXED-INCOME MARKETS DURING THE PERIOD?
A. Volatility dominated the fixed-income markets. The yield on the two-year
U.S. Treasury note ranged from a high of 6.40% early in September to a
low of 5.58% late in November. At the end of the reporting period, the
yield of the two-year Treasury note was 5.92%.
Q. WHAT WAS BEHIND THE VOLATILITY?
A. In August and September, fixed-income investors were concerned that the
Federal Reserve Board might raise interest rates to slow economic growth
and forestall inflation. That caused bond prices to fall and yields
to rise.
However, the Fed left interest rates unchanged as evidence mounted that
the economy was growing at a reasonable rate and inflation was mild. The
bond market staged a rally in September that continued into December until
inflation concerns resurfaced, sending bond prices lower and yields higher.
Bond prices continued to decline in January until the release of reassuring
economic data toward the end of the month sparked another market rally.
Q. IN SUCH AN ENVIRONMENT, DID YOU MANAGE THE FUND DIFFERENTLY?
A. Despite the volatility in fixed-income markets, the Fund adhered to its
disciplined strategy of remaining focused on the one- to two-year maturity
range of the yield curve. The yield curve is a representation of the yields
of fixed-income securities of the same quality with short-, intermediate-,
and long-term maturities. Yields tend to increase along with maturities as
investors demand higher interest rates for assuming longer-term risk.
A I M Capital Management, Inc. conducted a comprehensive study covering
the period from 1973 to 1992 which showed that the most favorable
return/risk ratio is in the one- to two-year maturity range of the yield
curve, the point where it tends to steepen. For example, Treasury notes in
this maturity range tend to have approximately 80-90% of the yield of the
30-year
Stability of Net Asset Value
January 1988-1997
<TABLE>
<S> <C> <C> <C>
12/87 9.93 7/92 10.21
1/88 9.99 10/92 10.17
4/88 9.92 1/93 10.20
7/88 9.84 4/93 10.24
10/88 9.86 7/93 10.20
1/89 9.74 10/93 10.17
4/89 9.72 1/94 10.15
7/89 9.88 4/94 9.95
10/89 9.83 7/94 9.96
1/90 9.76 10/94 9.89
4/90 9.68 1/95 9.86
7/90 9.82 4/95 9.95
10/90 9.84 7/95 10.03
1/91 9.92 10/95 10.05
4/91 9.95 1/96 10.12
7/91 9.95 4/96 9.98
10/91 10.09 7/96 9.97
1/92 10.15 10/96 10.05
4/92 10.11 1/97 10.03
</TABLE>
Source: Towers Data Systems HYPO--Registered Trademark--. The Fund's average
annual total returns for the one- and five-year periods ended 12/31/96, and
since inception (12/15/87) were 4.73%, 4.98%, and 6.65%, respectively. There is
no guarantee the Fund will maintain a constant NAV. Investment return and
principal value will vary so that you may have a gain or a loss when you sell
shares. Past performance cannot guarantee comparable future results.
See important Fund & index disclosures inside front cover.
2
<PAGE> 5
Treasury bond, but only about one-quarter to one-third of the risk. The
Fund maintains a laddered maturity structure within this one- to two-year
segment of the yield curve.
Q. HOW IS A LADDERED MATURITY STRUCTURE MAINTAINED?
A. The Fund purchases two-year U.S. Treasury notes and holds them for
13 months. They are then sold, and the proceeds are used to purchase new
two-year U.S. Treasury notes. About 8% of the Fund's portfolio is turned
over every month. Consequently, the Fund consistently remains invested
over the entire stretch of the one- to two-year maturity range of the
yield curve. This strategy helps the Fund maintain share price stability,
as shown in the chart on page 2.
Q. HOW DOES THIS APPROACH ENHANCE PRICE STABILITY?
A. It keeps the duration of the Fund relatively short. Funds with shorter
durations tend to be less sensitive to market fluctuations in price. As of
January 31, 1997, the Fund had a duration of 1.4 years. Maintaining a short
duration has been responsible for the Fund's stability. Since its inception
in 1987, the Fund has generated a positive return for every fiscal year.
Q. WHAT IS YOUR MARKET OUTLOOK?
A. The pace of economic growth will be the key to financial market
performance in 1997. At the close of 1996, economic growth appeared to have
settled at an annual rate of 2.4%. In recent testimony before the House
Budget Committee, Fed Chairman Alan Greenspan said, "We believe that the
most likely prospect is for continued sustainable economic growth
accompanied by low and stable inflation."
While the economy is growing at a reasonable rate without measurable
inflation, analysts anticipate that an increase in interest rates may be
likely over the near term. However, if this positive environment can be
sustained, the results should be favorable for all investors. Should
economic performance deviate from current expectations, the Fund's
disciplined approach to investing should perform well even in more volatile
times.
Yield Curve -- U.S. Treasury Securities
AIM Limited Maturity Treasury Shares has generated a positive total return for
every fiscal year since its inception in 1987. One reason is that it uses a
strategy of "rolling down the yield curve" to take advantage of potential price
appreciation. The most favorable risk/return ratio tends to be in the one- to
two-year maturity range of the yield curve. The Fund purchases two-year U.S.
Treasury notes and holds them for 13 months. At that point, they are sold and
the proceeds are used to purchase new two-year notes. Over time, this strategy
has helped to reduce volatility and enhance portfolio exposure to the most
attractive part of the yield curve.
As of 1/31/97
<TABLE>
<S> <C>
3 Months 5.142%
6 Months 5.273
1 Year 5.567 )
2 Year 5.917 ) Area of Investment Focus
3 Years 6.038 )
5 Years 6.254
10 Years 6.503
30 Years 6.794
</TABLE>
Source: Bloomberg.
See important Fund & Index disclosures inside front cover.
3
<PAGE> 6
SCHEDULE OF INVESTMENTS
January 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET
MATURITY (000S) VALUE
<S> <C> <C> <C>
U.S. TREASURY SECURITIES
U.S. TREASURY NOTES-99.27%
5.125% 02/28/98 $34,550 $ 34,353,756
- -------------------------------------------------------------------------------------------------------
6.125% 03/31/98 33,625 33,790,435
- -------------------------------------------------------------------------------------------------------
5.875% 04/30/98 33,100 33,162,228
- -------------------------------------------------------------------------------------------------------
6.00% 05/31/98 34,000 34,108,460
- -------------------------------------------------------------------------------------------------------
6.25% 06/30/98 34,330 34,557,608
- -------------------------------------------------------------------------------------------------------
6.25% 07/31/98 33,300 33,520,779
- -------------------------------------------------------------------------------------------------------
6.125% 08/31/98 33,300 33,453,180
- -------------------------------------------------------------------------------------------------------
6.00% 09/30/98 33,350 33,432,041
- -------------------------------------------------------------------------------------------------------
5.875% 10/31/98 34,250 34,246,233
- -------------------------------------------------------------------------------------------------------
5.625% 11/30/98 34,300 34,148,737
- -------------------------------------------------------------------------------------------------------
5.75% 12/31/98 33,810 33,732,913
- -------------------------------------------------------------------------------------------------------
5.875% 01/31/99 33,400 33,376,620
- -------------------------------------------------------------------------------------------------------
Total U.S. Treasury Securities 405,882,990
- -------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS-99.27% 405,882,990
- -------------------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-0.73% 2,967,455
- -------------------------------------------------------------------------------------------------------
NET ASSETS-100.00% $408,850,445
=======================================================================================================
</TABLE>
See Notes to Financial Statements.
4
<PAGE> 7
STATEMENT OF ASSETS AND LIABILITIES
January 31, 1997
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost
$404,897,126) $ 405,882,990
- --------------------------------------------------------
Cash 816
- --------------------------------------------------------
Receivables for:
Fund shares sold 778,166
- --------------------------------------------------------
Interest 5,052,942
- --------------------------------------------------------
Investment in deferred compensation plan 16,938
- --------------------------------------------------------
Other assets 120,325
- --------------------------------------------------------
Total assets 411,852,177
- --------------------------------------------------------
LIABILITIES:
Payables for:
Fund shares reacquired 2,029,305
- --------------------------------------------------------
Dividends 715,081
- --------------------------------------------------------
Deferred compensation 16,938
- --------------------------------------------------------
Accrued advisory fees 71,339
- --------------------------------------------------------
Accrued distribution fees 50,009
- --------------------------------------------------------
Accrued transfer agent fees 42,310
- --------------------------------------------------------
Accrued operating expenses 76,750
- --------------------------------------------------------
Total liabilities 3,001,732
- --------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES
OUTSTANDING $ 408,850,445
========================================================
</TABLE>
<TABLE>
<CAPTION>
INSTITUTIONAL AIM
SHARES SHARES FUND
<S> <C> <C> <C>
NET ASSETS: $44,563,960 $364,286,485 $408,850,445
==================================================================
Shares outstanding,
$0.01 par value per
share 4,444,371 36,330,348 40,774,719
==================================================================
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>
STATEMENT OF OPERATIONS
For the six months ended January 31, 1997
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $12,495,613
- -------------------------------------------------------
EXPENSES:
Advisory fees 431,679
- -------------------------------------------------------
Administrative service fees 33,388
- -------------------------------------------------------
Custodian fees 22,096
- -------------------------------------------------------
Transfer agent fees - Institutional Shares 2,887
- -------------------------------------------------------
Transfer agent fees - AIM Shares 180,550
- -------------------------------------------------------
Trustees' fees and expenses 5,284
- -------------------------------------------------------
Distribution fees (See note 2) 275,637
- -------------------------------------------------------
Other 136,058
- -------------------------------------------------------
Total expenses 1,087,579
- -------------------------------------------------------
Less: Expenses paid indirectly (3,082)
- -------------------------------------------------------
Net expenses 1,084,497
- -------------------------------------------------------
Net investment income 11,411,116
- -------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Realized gain (loss) on sales of
investment securities (573,799)
- -------------------------------------------------------
Unrealized appreciation of investment
securities 3,267,146
- -------------------------------------------------------
Net gain on investment securities 2,693,347
- -------------------------------------------------------
Net increase in net assets resulting from
operations $14,104,463
=======================================================
</TABLE>
See Notes to Financial Statements.
5
<PAGE> 8
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended January 31, 1997 and the year ended July 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
JANUARY 31, JULY 31,
1997 1996
<S> <C> <C>
OPERATIONS:
Net investment income $ 11,411,116 $ 25,817,371
- --------------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment securities (573,799) 3,022,827
- --------------------------------------------------------------------------------------------
Net unrealized (depreciation) appreciation of investment
securities 3,267,146 (6,292,910)
- --------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 14,104,463 22,547,288
- --------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Institutional Shares (1,758,703) (8,084,170)
- --------------------------------------------------------------------------------------------
AIM Shares (9,652,413) (17,733,201)
- --------------------------------------------------------------------------------------------
SHARE TRANSACTIONS-NET:
Institutional Shares (99,588,985) 14,818,211
- --------------------------------------------------------------------------------------------
AIM Shares 3,230,278 86,957,303
- --------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (93,665,360) 98,505,431
- --------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 502,515,805 404,010,374
- --------------------------------------------------------------------------------------------
End of period $408,850,445 $ 502,515,805
============================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $415,441,713 $ 511,800,420
- --------------------------------------------------------------------------------------------
Undistributed realized gain (loss) on sales of investment
securities (7,577,132) (7,003,333)
- --------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities 985,864 (2,281,282)
- --------------------------------------------------------------------------------------------
$408,850,445 $ 502,515,805
============================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
January 31, 1997
(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 investment objective of the Fund is to seek liquidity with minimum
fluctuation in principal value and, consistent with this investment objective,
the highest total return achievable. 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. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of these financial statements and
the reported amount of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
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 or are questionable 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. Distributions from
6
<PAGE> 9
net realized capital gains, if any, are recorded on ex-dividend date and are
paid 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
$6,725,562, which expires, if not previously utilized, through the year 2004.
E. Expenses--Distribution and transfer agency fees directly attributable to a
class of shares are charged to that class' operations. All other expenses are
allocated between the classes.
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.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to reimburse AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the six months ended January 31, 1997,
the Fund reimbursed AIM $33,388 for such services.
The Fund, pursuant to a transfer agent and service agreement, has agreed to
pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agency and
shareholder services to the AIM Shares. During the six months ended January 31,
1997, AFS was paid $81,963 for such services. During the six months ended
January 31, 1997, the Fund paid A I M Institutional Fund Services, Inc. ("AIFS")
$2,887 pursuant to a transfer agency and shareholder services agreement with
respect to the Institutional Shares.
The Fund received deductions in transfer agency fees payable to AFS of $2,846
from dividends received on balances in cash management bank accounts. In
addition, pricing service expenses in the amount of $236 were paid through
directed brokerage commissions paid by the Fund. The above arrangements resulted
in a reduction in the Fund's total expenses of $3,082 during the six months
ended January 31, 1997.
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 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, 1997, the Fund paid AIM Distributors $275,637 as compensation
under the Plan.
AIM Distributors received commissions of $70,810 during the six months ended
January 31, 1997 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.
During the six months ended January 31, 1997, the Fund paid legal fees of
$3,713 for services rendered by Kramer, Levin, Naftalis & Frankel as counsel to
the Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by The Chase Manhattan Bank. The Fund may borrow up to
the lesser of (i) $325,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. Interest on
borrowings under the line of credit is payable on maturity or prepayment date.
During the six months ended January 31, 1997, the Fund did not borrow under the
line of credit agreement.
NOTE 4-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, 1997 was
$265,619,537 and $359,203,560, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis as, of January 31, 1997 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $ 1,199,348
- ---------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities (285,205)
- ---------------------------------------------------------
Net unrealized appreciation of investment
securities $ 914,143
=========================================================
Cost of investments for tax purposes is $404,968,847.
</TABLE>
NOTE 5-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.
7
<PAGE> 10
NOTE 6-SHARE INFORMATION
Changes in shares outstanding during the six months ended January 31, 1997 and
the year ended July 31, 1996 were as follows:
<TABLE>
<CAPTION>
JANUARY 31, 1997 JULY 31, 1996
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold:
AIM shares 10,702,190 $ 107,026,942 25,131,827 $ 252,267,687
- ---------------------------------------------------------------------------------------------------------------------
Institutional shares 1,272,979 12,735,864 5,925,940 59,531,203
- ---------------------------------------------------------------------------------------------------------------------
Issued as a reinvestment of dividends:
AIM shares 770,734 7,936,295 1,451,553 14,553,507
- ---------------------------------------------------------------------------------------------------------------------
Institutional shares 14,359 143,470 113,885 1,142,722
- ---------------------------------------------------------------------------------------------------------------------
Reacquired:
AIM shares (11,152,926) (111,732,959) (17,942,356) (179,863,891)
- ---------------------------------------------------------------------------------------------------------------------
Institutional shares (11,231,886) (112,468,319) (4,566,815) (45,855,714)
- ---------------------------------------------------------------------------------------------------------------------
(9,624,550) $ (96,358,707) 10,114,034 $ 101,775,514
=====================================================================================================================
</TABLE>
NOTE 7-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of AIM Shares outstanding
during the six months ended January 31, 1997, each of the years in the two-year
period ended July 31, 1996, 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,
JANUARY 31, ------------------------------ ------------------------------
1997 1996 1995 1994 1993 1992 1991
----------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.97 $ 10.03 $ 9.96 $ 10.24 $ 10.21 $ 10.01 $ 9.79
- ------------------------------------------- --------- -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.27 0.55 0.54 0.35 0.42 0.58 0.72
- ------------------------------------------- --------- -------- -------- -------- -------- -------- --------
Net gains (losses) on securities (both
realized and unrealized) 0.06 (0.06) 0.07 (0.20) 0.05 0.29 0.22
- ------------------------------------------- --------- -------- -------- -------- -------- -------- --------
Total from investment operations 0.33 0.49 0.61 0.15 0.47 0.87 0.94
- ------------------------------------------- --------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.27) (0.55) (0.54) (0.35) (0.42) (0.58) (0.72)
- ------------------------------------------- --------- -------- -------- -------- -------- -------- --------
Distributions from net realized capital
gains -- -- -- (0.08) (0.02) (0.09) --
- ------------------------------------------- --------- -------- -------- -------- -------- -------- --------
Total distributions (0.27) (0.55) (0.54) (0.43) (0.44) (0.67) (0.72)
- ------------------------------------------- --------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 10.03 $ 9.97 $ 10.03 $ 9.96 $ 10.24 $ 10.21 $ 10.01
=========================================== ========= ======== ======== ======== ======== ======== ========
Total return(a) 3.29% 4.98% 6.36% 1.52% 4.65% 8.93% 9.95%
=========================================== ========= ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 364,286 $359,048 $274,480 $329,942 $348,937 $260,454 $131,880
=========================================== ========= ======== ======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.54%(b)(c) 0.54% 0.51% 0.47%(d) 0.46% 0.48% 0.54%
=========================================== ========= ======== ======== ======== ======== ======== ========
Ratio of net investment income to average
net assets 5.27%(b) 5.45% 5.44% 3.75%(d) 4.07% 5.60% 7.25%
=========================================== ========= ======== ======== ======== ======== ======== ========
Portfolio turnover rate 61% 117% 120% 120% 123% 120% 215%
=========================================== ========= ======== ======== ======== ======== ======== ========
Borrowings for the period:
Amount of debt outstanding at end of
period (000s omitted) -- -- -- -- -- -- --
- ------------------------------------------- --------- -------- -------- -------- -------- -------- --------
Average amount of debt outstanding during
the period (000s omitted)(g) -- -- -- -- -- -- --
- ------------------------------------------- --------- -------- -------- -------- -------- -------- --------
Average number of shares outstanding
during the period (000s omitted)(g) 36,385 32,350 28,337 34,101 30,416 18,378 10,559
- ------------------------------------------- --------- -------- -------- -------- -------- -------- --------
Average amount of debt per share during
the period -- -- -- -- -- -- --
- ------------------------------------------- --------- -------- -------- -------- -------- -------- --------
<CAPTION>
AUGUST 31,
------------------------------
1990 1989 1988
-------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of period $ 9.78 $ 9.80 $ 9.92
- ------------------------------------------- ------- ------- -------
Income from investment operations:
Net investment income 0.77 0.84 0.52
- ------------------------------------------- ------- ------- -------
Net gains (losses) on securities (both
realized and unrealized) 0.01 (0.02) (0.12)
- ------------------------------------------- ------- ------- -------
Total from investment operations 0.78 0.82 0.40
- ------------------------------------------- ------- ------- -------
Less distributions:
Dividends from net investment income (0.77) (0.84) (0.52)
- ------------------------------------------- ------- ------- -------
Distributions from net realized capital
gains -- -- --
- ------------------------------------------- ------- ------- -------
Total distributions (0.77) (0.84) (0.52)
- ------------------------------------------- ------- ------- -------
Net asset value, end of period $ 9.79 $ 9.78 $ 9.80
=========================================== ======= ======== ========
Total return(a) 8.32% 8.71% 4.11%
=========================================== ======= ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $79,871 $70,781 $62,342
=========================================== ======= ======== ========
Ratio of expenses to average net assets 0.50%(e) 0.45%(f) 0.35%(d)(f)
=========================================== ======= ======== ========
Ratio of net investment income to average
net assets 7.90%(e) 8.59%(f) 7.02%(d)(f)
=========================================== ======= ======== ========
Portfolio turnover rate 193% 220% 141%
=========================================== ======= ======== ========
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)(g) $ 5,101 $14,301 $ 4,110
- ------------------------------------------- ------- ------- -------
Average number of shares outstanding
during the period (000s omitted)(g) 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 $364,520,172.
(c) Ratio includes expenses paid indirectly. Excluding expenses paid indirectly,
the ratio of expenses to average net assets would have remained the same.
(d) Annualized.
(e) After waiver of advisory fees.
(f) After waiver of advisory fees and expense reimbursements.
(g) Averages computed on a daily basis.
NOTE 8-SUBSEQUENT EVENT
On February 28, 1997, A I M Management Group Inc. ("AIM Management") merged with
and into a direct wholly-owned subsidiary of INVESCO plc. AIM Management is the
parent company of the Fund's advisor.
8
<PAGE> 11
Trustees & Officers
<TABLE>
<S> <C> <C>
BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
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
Formerly 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 Carol F. Relihan Houston, TX 77046
Director Senior Vice President and Secretary
Cortland Trust Inc. TRANSFER AGENT
Gary T. Crum
Carl Frischling Senior Vice President A I M Fund Services, Inc.
Partner P. O. Box 4739
Kramer, Levin, Naftalis & Frankel Melville B. Cox Houston, TX 77210-4739
Vice President
Robert H. Graham CUSTODIAN
President and Chief Operating Officer Karen Dunn Kelly
A I M Management Group Inc. Vice President The Bank of New York
90 Washington Street, 11th Floor
John F. Kroeger Dana R. Sutton New York, NY 10286
Formerly Consultant Vice President and Assistant Treasurer
Wendell & Stockel Associates, Inc. COUNSEL TO THE FUND
P. Michelle Grace
Lewis F. Pennock Assistant Secretary Ballard Spahr
Attorney Andrews & Ingersoll
David L. Kite 1735 Market Street
Ian W. Robinson Assistant Secretary Philadelphia, PA 19103
Consultant; Formerly Executive
Vice President and Nancy L. Martin COUNSEL TO THE TRUSTEES
Chief Financial Officer Assistant Secretary
Bell Atlantic Management Kramer, Levin, Naftalis & Frankel
Services, Inc. Ofelia M. Mayo 919 Third Avenue
Assistant Secretary New York, NY 10022
Louis S. Sklar
Executive Vice President Kathleen J. Pflueger DISTRIBUTOR
Hines Interests Assistant Secretary
Limited Partnership A I M Distributors, Inc.
Samuel D. Sirko 11 Greenway Plaza
Assistant Secretary Suite 1919
Houston, TX 77046
Stephen I. Winer
Assistant Secretary
Mary J. Benson
Assistant Treasurer
</TABLE>
<PAGE> 12
<TABLE>
<S> <C>
THE AIM FAMILY OF FUNDS--REGISTERED
TRADEMARK--
AGGRESSIVE GROWTH
AIM Aggressive Growth Fund*
AIM Capital Development Fund
AIM Constellation Fund
AIM Global Aggressive Growth Fund
GROWTH
AIM Blue Chip Fund
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
[PHOTO OF BUILDING]
INCOME AND GROWTH
AIM Global 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 CT
AIM Tax-Free Intermediate Shares
CURRENT INCOME AND HIGH DEGREE OF SAFETY
AIM Intermediate Government 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
A I M Management Group Inc. has pro-
vided leadership in the mutual fund
industry since 1976 and manages
approximately $70 billion in assets
for more than 3.5 million share-
holders, including individual *AIM Aggressive Growth Fund was closed
investors, corporate clients, and to new investors on July 18, 1995.
financial institutions as of March 6, For more complete information about
1997. The AIM Family of Funds any AIM Fund(s), including sales
- --Registered Trademark-- is charges and expenses, ask your
distributed nationwide, and AIM today financial consultant or securities
ranks among the nation's top 15 dealer for a free prospectus(es).
mutual fund companies in assets under Please read the prospectus(es)
management, according to Lipper carefully before you invest or
Analytical Services, Inc. send money.
----------------
BULK RATE
[AIM LOGO APPEARS HERE] U.S. POSTAGE
PAID
HOUSTON, TEXAS
A I M Distributors, Inc. Permit No. 100
11 Greenway Plaza, Suite 100 ----------------
Houston, TX 77046
</TABLE>
