<PAGE> 1
<TABLE>
<S> <C>
TRUSTEES
Charles T. Bauer John F. Kroeger
Bruce L. Crockett Lewis F. Pennock
Owen Daly II Ian W. Robinson AIM Investment
Carl Frischling Louis S. Sklar Securities Funds
Robert H. Graham
OFFICERS
Charles T. Bauer Chairman
Robert H. Graham President
John J. Arthur Sr. Vice President & Treasurer
Gary T. Crum Sr. Vice President Limited Maturity
Carol F. Relihan Sr. Vice President & Secretary Treasury Portfolio
Melville B. Cox Vice President -------------------------------------
Karen Dunn Kelley Vice President Institutional SEMI-
Dana R. Sutton Sr. Vice President & Assistant Treasurer Shares
P. Michelle Grace Assistant Secretary ANNUAL
David L. Kite Assistant Secretary
Nancy L. Martin Assistant Secretary REPORT
Ofelia M. Mayo Assistant Secretary
Kathleen J. Pflueger Assistant Secretary
Samuel D. Sirko Assistant Secretary
Stephen I. Winer Assistant Secretary
Mary J. Benson Assistant Treasurer
INVESTMENT ADVISOR
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046
800-347-1919
DISTRIBUTOR JANUARY 31, 1997
Fund Management Company
11 Greenway Plaza, Suite 100
Houston, TX 77046
800-659-1005
CUSTODIAN
The Bank of New York
90 Washington Street, 11th 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, & Frankel
919 Third Avenue
New York, NY 10022
TRANSFER AGENT
A I M Institutional Fund Services, Inc.
11 Greenway Plaza, Suite 100 [LOGO APPEARS HERE]
Houston, TX 77046
This report may be distributed only to current
shareholders or to persons who have received
a current Fund prospectus. Fund Management Company
</TABLE>
<PAGE> 2
[AIM LOGO APPEARS HERE]
LETTER TO OUR SHAREHOLDERS
January 31, 1997
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
[PHOTO of investments.
Charles T. Still, many suggest, as we do, that 1997 will be marked
Bauer, by continued uncertainty and short-term volatility. And as
Chairman of the market's performance continues to exceed historical
the Board of averages, some advise that a correction is overdue.
the Fund, We believe the best way to achieve your investment goals
APPEARS HERE] 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. Second, diversify to help you cushion the
effects of a volatile market and enhance your return potential.
Finally, no matter what your investment goals or time horizon, it makes good
sense to review your portfolio regularly.
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, we invite you to call Institutional Customer Services at 800-659-1005
during normal business hours.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
<PAGE> 3
The Managers' Overview
FUND BENEFITS FROM DISCIPLINED APPROACH
A roundtable discussion with the Fund management team for
Limited Maturity Treasury Portfolio Institutional Shares for the six-month
period ended January 31, 1997.
- -------------------------------------------------------------------------------
Q. HOW DID LIMITED MATURITY TREASURY PORTFOLIO INSTITUTIONAL 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 5.53%. The Fund posted a
six-month cumulative total return of 3.42%. 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. S&P's ratings are historical and are based on an analysis of the Fund's
credit quality, composition and management.
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. 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.
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 (7/13/87) were 5.01%, 5.23%, and 6.80%, 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.
2
<PAGE> 4
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 to maintain share price stability, as
shown in the chart on page 2.
Q. HOW DOES THE FUND'S INVESTMENT APPROACH ENHANCE PRICE STABILITY?
A. Maintaining a short duration (1.4 years as of January 31, 1997) has been
responsible for the Fund's stability. Since its inception in 1987, the
Fund has generated a positive total 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 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.
Stability of Net Asset Value
As of 1/31/97
AIM Limited Maturity Treasury Portfolio Institutional 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.
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
Source: Bloomberg.
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. Fund shares are not insured and their value and yield will vary
with market conditions.
3
<PAGE> 5
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> 6
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>
* There is no sales charge or 12b-1 fee on sales of Institutional Shares.
See Notes to Financial Statements.
5
<PAGE> 7
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.
6
<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>
7
<PAGE> 9
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 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.
8
<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.
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.
9
<PAGE> 11
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.
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>
10
<PAGE> 12
NOTE 7-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Institutional 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,
and each of the years in the six-year period ended August 31, 1993.
<TABLE>
<CAPTION>
JULY 31, AUGUST 31,
JANUARY 31, ------------------------------ -----------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990
----------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <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 $ 9.78
- ------------------------------------- ------- -------- -------- -------- -------- ------- ------- -------
Income from investment operations:
Net investment income 0.27 0.58 0.57 0.37 0.44 0.60 0.73 0.79
- ------------------------------------- ------- -------- -------- -------- -------- ------- ------- -------
Net gains (losses) on securities
(both realized and unrealized) 0.06 (0.06) 0.07 (0.20) 0.05 0.29 0.22 0.01
- ------------------------------------- ------- -------- -------- -------- -------- ------- ------- -------
Total from investment operations 0.33 0.52 0.64 0.17 0.49 0.89 0.95 0.80
- ------------------------------------- ------- -------- -------- -------- -------- ------- ------- -------
Less distributions:
Dividends from net investment income (0.27) (0.58) (0.57) (0.37) (0.44) (0.60) (0.73) (0.79)
- ------------------------------------- ------- -------- -------- -------- -------- ------- ------- -------
Distributions from net realized
capital gains -- -- -- (0.08) (0.02) (0.09) -- --
- ------------------------------------- ------- -------- -------- -------- -------- ------- ------- -------
Total distributions (0.27) (0.58) (0.57) (0.45) (0.46) (0.69) (0.73) (0.79)
- ------------------------------------- ------- -------- -------- -------- -------- ------- ------- -------
Net asset value, end of period $ 10.03 $ 9.97 $ 10.03 $ 9.96 $ 10.24 $ 10.21 $ 10.01 $ 9.79
===================================== ======= ======== ======== ======== ======== ======= ======= =======
Total return(a) 3.42% 5.27% 6.61% 1.72% 4.88% 9.14% 10.08% 8.52%
===================================== ======= ======== ======== ======== ======== ======= ======= =======
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $44,564 $143,468 $129,530 $134,971 $130,690 $89,352 $25,528 $10,378
===================================== ======= ======== ======== ======== ======== ======= ======= =======
Ratio of expenses to average net
assets 0.30%(b)(c) 0.27% 0.28% 0.25%(c) 0.24% 0.28% 0.41%(d) 0.31%(e)
===================================== ======= ======== ======== ======== ======== ======= ======= =======
Ratio of net investment income to
average net assets 5.50%(b)(c) 5.72% 5.70% 3.98%(c) 4.30% 5.76% 7.36%(d) 8.12%(e)
===================================== ======= ======== ======== ======== ======== ======= ======= =======
Portfolio turnover rate 61% 117% 120% 120% 123% 120% 215% 192%
===================================== ======= ======== ======== ======== ======== ======= ======= =======
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) -- -- -- -- -- -- -- $ 834
- ------------------------------------- ------- -------- -------- -------- -------- ------- ------- -------
Average number of shares outstanding
during the period (000s
omitted)(g) 6,354 13,982 12,540 16,864 9,785 6,097 1,477 1,208
- ------------------------------------- ------- -------- -------- -------- -------- ------- ------- -------
Average amount of debt per share
during the period -- -- -- -- -- -- -- $ 0.69
- ------------------------------------- ------- -------- -------- -------- -------- ------- ------- -------
<CAPTION>
AUGUST 31,
-------------------
1989 1988
-------- --------
<S> <C> <C>
Net asset value, beginning of period $ 9.80 $ 9.92
- ------------------------------------- ------- -------
Income from investment operations:
Net investment income 0.85 0.73
- ------------------------------------- ------- -------
Net gains (losses) on securities
(both realized and unrealized) (0.02) (0.12)
- ------------------------------------- ------- -------
Total from investment operations 0.83 0.61
- ------------------------------------- ------- -------
Less distributions:
Dividends from net investment income (0.85) (0.83)
- ------------------------------------- ------- -------
Distributions from net realized
capital gains -- --
- ------------------------------------- ------- -------
Total distributions (0.85) (0.73)
- ------------------------------------- ------- -------
Net asset value, end of period $ 9.78 $ 9.80
- ------------------------------------- ------- -------
Total return(a) 8.87% 6.34%
- ------------------------------------- ------- -------
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $16,065 $35,310
- ------------------------------------- ------- -------
Ratio of expenses to average net
assets 0.31%(f) 0.31%(f)
- ------------------------------------- ------- -------
Ratio of net investment income to
average net assets 8.69%(f) 7.46%(f)
- ------------------------------------- ------- -------
Portfolio turnover rate 220% 141%
- ------------------------------------- ------- -------
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) 3,562 3,754
- ------------------------------------- ------- -------
Average number of shares outstanding
during the period (000s
omitted)(g) 1,817 2,118
- ------------------------------------- ------- -------
Average amount of debt per share
during the period $ 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 $63,639,659.
(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.
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.
11
