<PAGE> 1
[AIM LOGO APPEARS HERE]
LETTER
TO OUR
SHAREHOLDERS
January 31, 1998
Dear Fellow Shareholder:
It has been an eventful six months in securities markets.
[PHOTO OF Market sentiment focused on the potential negative impact
Charles T. of Asia's financial crisis, which began to unfold shortly
Bauer, before the opening of the six-month period covered by this
Chairman of report. As consensus remained elusive about how serious or
the Board of widespread this impact would be, stock markets the world
THE FUND over experienced continued volatility and uncertainty. In
APPEARS HERE] such an environment, U.S. Treasury markets typically serve
as relative safe havens, and once again they fulfilled this
role. Yields on these securities declined as their market
value climbed.
The Fund performed well in this environment, producing
attractive current yield and total return. On the following
pages, your Fund's managers discuss Fund performance in
greater detail, describe their investment strategies, and
offer their outlook for the future.
In uncertain times like these, disciplined strategies such as those
practiced by the AIM Limited Maturity Treasury Fund remain the most promising
approach to investing. We also encourage you to review your portfolio regularly
to make sure your chosen investments still suit your goals, risk tolerance, and
time horizon.
We are pleased to send you this report on AIM Limited Maturity Treasury
Fund. Please contact Institutional Customer Services at 800-659-1005 during
normal business hours if you have any questions or comments.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
<PAGE> 2
The Managers' Overview
TREASURY MARKET RALLY BOOSTS FUND
A roundtable discussion with the Fund management team for AIM Limited Maturity
Treasury Fund--Institutional Class about the six-month period ended January 31,
1998.
- -------------------------------------------------------------------------------
Q. IT WAS A GOOD SIX MONTHS FOR FIXED-INCOME INVESTMENTS. HOW DID THE FUND
PERFORM DURING THE REPORTING PERIOD?
A. The period was particularly good for U.S. Treasury issues. The Fund
stayed right in step with this trend, once again providing attractive
current income, exempt from state taxes. In addition, the Fund preserved
the relative stability of its net asset value.
As of January 31, 1998, the 30-day yield of AIM Limited Maturity
Treasury Fund-Institutional Class was 5.37%. Cumulative total return was
3.27% for the six-month period ended January 31, 1998. Net asset value per
share remained within a range of $10.03 and $10.13 during the reporting
period.
Q. WHY DID BONDS PERFORM SO WELL?
A. The low-inflation and falling interest-rate environment that defined
much of 1997 provided nearly an ideal climate for bonds. For the 12-month
period ended January 31, 1998, the consumer price index rose just 1.6%,
the smallest increase in 11 years. After raising interest rates in March
of 1997, the Federal Reserve Board (the Fed) left monetary policy
unchanged for the remainder of 1997. Borrowing costs actually declined as
the year progressed, as it became evident that inflation was not a serious
threat.
Bonds were given a boost in the summer by the agreement to balance
the federal budget and again in the fall by the turmoil that hit world
stock markets. Following the Asian currency devaluations, global stock
markets plunged in October. Investors began shifting more assets into
bonds, especially into U.S. Treasury securities.
Q. HOW DID THE ASIAN CRISIS AFFECT U.S. TREASURY SECURITIES?
A. U.S. Treasury securities were one of the chief beneficiaries of the
economic turmoil in Asia. When stock markets plummeted worldwide,
investors in search of quality began shifting their assets into U.S.
Treasury issues. Foreign investors increased their presence on the U.S.
Treasury scene, seeking a safe haven for their investments. Foreign
demand remained strong because U.S. Treasury securities offered
significantly higher interest rates than foreign-government issues. The
increasing number of Treasury market participants sent the prices of U.S.
Treasury securities higher and their yields lower.
Q. CLEARLY, THERE WAS A BIG INCREASE IN DEMAND IN THE TREASURY MARKET. WHAT
WAS HAPPENING TO SUPPLY?
A. At the same time that demand was increasing, the supply of U.S. Treasury
issues was diminishing, pushing prices even higher. The federal
government is seeing greater in-flows of
================================================================================
YIELD CURVE - U.S. TREASURY SECURITIES
As of 1/31/98
- --------------------------------------------------------------------------------
3 months 5.183%
6 months 5.219
1 year 5.215 ) AREA OF INVESTMENT FOCUS
2 years 5.308 ) POINTS TO 1-3 YEARS
3 years 5.324 )
5 years 5.377
10 years 5.512
30 years 5.805
================================================================================
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.
2
<PAGE> 3
tax receipts, a result of higher corporate profits and personal incomes.
With decreased borrowing needs, there has been a reduction in U.S.
Treasury security issuance. The balanced budget agreement was another
factor leading to a trimmer supply. We expect U.S. Treasury supply to
continue to shrink in 1998.
Q. WHAT WAS YOUR STRATEGY IN THIS ENVIRONMENT?
A. The Fund maintained its disciplined investment strategy, focusing on the
one- to two-year maturity range of the yield curve. Fund managers
implement a laddered maturity structure within this segment of the yield
curve. This means that the Fund invests in two-year notes, which are held
until they approach the 13-month maturity level. Then they are sold, and
the assets are reinvested in new two-year Treasuries.
Q. YIELDS HAVE BEEN FALLING ON TREASURY NOTES. GIVEN THE FUND'S STRATEGY,
DOES THIS SITUATION PRESENT ANY CHALLENGES?
A. The rally in the U.S. Treasury market was reflected in the yield on the
two-year U.S. Treasury note, which fell from 5.72% at the beginning of
the period to 5.31% at its end. Overall, the yield curve has experienced
a significant flattening, with the average spread in yields between the
30-year bond and the two-year notes falling to just 50 basis points as of
January 31, 1998. In fact, toward the end of 1997, we actually saw an
inverted yield curve.
Because of its laddered maturity structure, the Fund may experience
a decline in yields over the next few months. However, we remain
confident in our strategy. Our approach exposes the portfolio to the most
attractive part of the yield curve and renders the Fund less sensitive to
market price fluctuations. When yields begin to rise again, the Fund
should be able to buy its way out of lower-yielding notes.
Q. WHAT IS YOUR MARKET OUTLOOK?
A. In a sense, we are in a brave new economic world. The U.S. economy is
growing at a healthy pace, but with very low inflation and nearly full
employment. While no one can be certain how long such conditions can
persist, many market participants expect prudent policy from the Fed,
with interest rates staying at or near their current levels. Moreover,
the continuing problems in Asia could slow economic growth and add fuel
to the strong rally in the U.S. Treasury market. In this environment, we
continue to be optimistic about U.S. Treasury issues.
================================================================================
STABILITY OF NET ASSET VALUE
1/31/88 - 1/31/98
- --------------------------------------------------------------------------------
1/88 $9.99
1/89 9.74
1/90 9.76
1/91 9.92
1/92 10.15
1/93 10.20
1/94 10.15
1/95 9.86
1/96 10.12
1/97 10.03
1/98 10.11
================================================================================
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
AS OF 1/31/98
- --------------------------------------------------------------------------------
10 years 6.74%
5 years 5.29
1 year 6.64
================================================================================
================================================================================
FOR PERIODS ENDED 12/31/97
(most recent calendar quarter)
- --------------------------------------------------------------------------------
10 years 6.78%
5 years 5.30
1 year 6.22
================================================================================
Source: Towers Data Systems HYPO--Registerd Trademark--. 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 loss when you sell shares. Past
performance cannot guarantee comparable future results.
3
<PAGE> 4
SCHEDULE OF INVESTMENTS
January 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
MATURITY AMOUNT VALUE
<S> <C> <C> <C>
U.S. TREASURY SECURITIES
U.S. TREASURY NOTES-106.76%
5.875% 1/31/99 $36,400,000 $ 36,618,764
- --------------------------------------------------------------------------------------------
5.875% 2/28/99 36,150,000 36,383,529
- --------------------------------------------------------------------------------------------
6.25% 3/31/99 35,350,000 35,742,738
- --------------------------------------------------------------------------------------------
6.375% 4/30/99 35,300,000 35,764,195
- --------------------------------------------------------------------------------------------
6.25% 5/31/99 36,425,000 36,870,478
- --------------------------------------------------------------------------------------------
6.00% 6/30/99 35,300,000 35,645,234
- --------------------------------------------------------------------------------------------
5.875% 7/31/99 36,200,000 36,497,564
- --------------------------------------------------------------------------------------------
5.875% 8/31/99 35,800,000 36,112,534
- --------------------------------------------------------------------------------------------
5.75% 9/30/99 36,100,000 36,351,978
- --------------------------------------------------------------------------------------------
5.625% 10/31/99 35,750,000 35,923,745
- --------------------------------------------------------------------------------------------
5.625% 11/30/99 36,000,000 36,187,560
- --------------------------------------------------------------------------------------------
5.625% 12/31/99 36,000,000 36,200,880
- --------------------------------------------------------------------------------------------
5.375% 1/31/00 36,500,000 36,551,465
- --------------------------------------------------------------------------------------------
Total U.S. Treasury Securities 470,850,664
- --------------------------------------------------------------------------------------------
TOTAL INVESTMENTS-106.76% 470,850,664
- --------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-(6.76)% (29,812,990)
- --------------------------------------------------------------------------------------------
NET ASSETS-100.00% $441,037,674
============================================================================================
</TABLE>
See Notes to Financial Statements.
4
<PAGE> 5
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $466,934,133) $ 470,850,664
- ----------------------------------------------------------------------------
Cash 14,049
- ----------------------------------------------------------------------------
Receivables for:
Fund shares sold 2,085,338
- ----------------------------------------------------------------------------
Interest 7,606,856
- ----------------------------------------------------------------------------
Investment in deferred compensation plan 23,565
- ----------------------------------------------------------------------------
Other assets 77,212
- ----------------------------------------------------------------------------
Total assets 480,657,684
- ----------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 36,461,826
- ----------------------------------------------------------------------------
Fund shares reacquired 2,124,029
- ----------------------------------------------------------------------------
Dividends 644,191
- ----------------------------------------------------------------------------
Deferred compensation 23,565
- ----------------------------------------------------------------------------
Accrued administrative service fees 4,757
- ----------------------------------------------------------------------------
Accrued advisory fees 75,006
- ----------------------------------------------------------------------------
Accrued distribution fees 49,568
- ----------------------------------------------------------------------------
Accrued transfer agent fees 31,707
- ----------------------------------------------------------------------------
Accrued operating expenses 205,361
- ----------------------------------------------------------------------------
Total liabilities 39,620,010
- ----------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $ 441,037,674
============================================================================
</TABLE>
<TABLE>
<CAPTION>
INSTITUTIONAL
CLASS A CLASS FUND
<S> <C> <C> <C>
NET ASSETS $388,242,970 $52,794,704 $441,037,674
==============================================================================================
Shares outstanding, $0.01 par value per share 38,398,629 5,221,584 43,620,213
==============================================================================================
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE $ 10.11
==============================================================================================
OFFERING PRICE PER SHARE:
(Net asset value of $10.11 divided by 99.00%)* $ 10.21
==============================================================================================
</TABLE>
* There is no sales charge or 12b-1 fee on sales of Institutional Class shares.
See Notes to Financial Statements.
5
<PAGE> 6
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JANUARY 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $12,963,755
- -------------------------------------------------------------------------
EXPENSES:
Advisory fees 437,779
- -------------------------------------------------------------------------
Administrative service fees 28,374
- -------------------------------------------------------------------------
Custodian fees 22,466
- -------------------------------------------------------------------------
Transfer agent fees-Class A 161,679
- -------------------------------------------------------------------------
Transfer agent fees-Institutional Class 2,282
- -------------------------------------------------------------------------
Trustees' fees and expenses 27,476
- -------------------------------------------------------------------------
Distribution fees-Class A 290,305
- -------------------------------------------------------------------------
Other 153,536
- -------------------------------------------------------------------------
Total expenses 1,123,897
- -------------------------------------------------------------------------
Less: Expenses paid indirectly (1,946)
- -------------------------------------------------------------------------
Net expenses 1,121,951
- -------------------------------------------------------------------------
Net investment income 11,841,804
- -------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN FROM INVESTMENT SECURITIES:
Net realized gain from investment securities 462,572
- -------------------------------------------------------------------------
Net unrealized appreciation of investment securities 1,422,600
- -------------------------------------------------------------------------
Net gain on investment securities 1,885,172
- -------------------------------------------------------------------------
Net increase in net assets resulting from operations $13,726,976
=========================================================================
</TABLE>
See Notes to Financial Statements.
6
<PAGE> 7
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JANUARY 31, 1998 AND THE YEAR ENDED JULY 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
JANUARY 31, JULY 31,
1998 1997
------------ --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 11,841,804 $ 22,525,910
- ---------------------------------------------------------------------------------------
Net realized gain (loss) on sales of investment
securities 462,572 (328,964)
- ---------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities 1,422,600 4,775,213
- ---------------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 13,726,976 26,972,159
- ---------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT
INCOME:
Class A (10,419,222) (19,613,259)
- ---------------------------------------------------------------------------------------
Institutional Class (1,422,582) (2,912,651)
- ---------------------------------------------------------------------------------------
SHARE TRANSACTIONS-NET:
Class A (3,227,839) 27,226,897
- ---------------------------------------------------------------------------------------
Institutional Class 3,703,118 (95,511,728)
- ---------------------------------------------------------------------------------------
Net increase (decrease) in net assets 2,360,451 (63,838,582)
- ---------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 438,677,223 502,515,805
- ---------------------------------------------------------------------------------------
End of period $441,037,674 $ 438,677,223
=======================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $443,990,868 $ 443,515,589
- ---------------------------------------------------------------------------------------
Undistributed realized gain (loss) on sales of
investment securities (6,869,725) (7,332,297)
- ---------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 3,916,531 2,493,931
- ---------------------------------------------------------------------------------------
$441,037,674 $ 438,677,223
=======================================================================================
</TABLE>
See Notes to Financial Statements.
7
<PAGE> 8
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1998
(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 AIM Limited Maturity Treasury Fund (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 Class A shares and the Institutional Class. Matters
affecting each class are voted on exclusively by such shareholders.
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. 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 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 $7,172,445, which expires, if not previously utilized,
through the year 2005.
E. Expenses -- Distribution and transfer agency expenses directly attributable
to a class of shares are charged to that class' operations. All other
expenses which are attributable to more than one class are allocated between
the classes.
8
<PAGE> 9
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, 1998,
the Fund reimbursed AIM $28,374 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 Fund. On September 20, 1997, the Board of Trustees
of the Fund approved the appointment of AFS as transfer agent of the
Institutional Class effective December 29, 1997. During the six months ended
January 31, 1998, AFS was paid $86,889 with respect to Class A shares, and for
the period December 29, 1997 through January 31, 1998, AFS was paid $440 with
respect to the Institutional Class. Prior to effective date of the agreement
with AFS, the Fund paid A I M Institutional Fund Services, Inc. $1,842 pursuant
to a transfer agency and shareholder services agreement with respect to the
Institutional Class for the period August 1, 1997 through December 28, 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
Class A shares and a master distribution agreement with Fund Management Company
("FMC") to serve as the distributor for the Institutional Class. The Trust has
adopted a Plan pursuant to Rule 12b-1 under the 1940 Act (the "Plan") with
respect to the Class A shares. The Fund pays AIM Distributors compensation at an
annual rate of 0.15% of the average daily net assets attributable to the Class A
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 Class A shares of
the Fund. Any amounts not paid as a service fee under the 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, 1998, the Fund paid AIM
Distributors $290,305 as compensation under the Plan.
AIM Distributors received commissions of $6,130 during the six months ended
January 31, 1998 from sales of Class A shares. Such commissions are not an
expense of the Fund. They are deducted from, and are not included in, proceeds
from sales of Class A shares. Certain officers and trustees of the Trust are
officers and directors of AIM, AIM Distributors, FMC and AFS.
During the six months ended January 31, 1998, the Fund paid legal fees of
$2,334 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-INDIRECT EXPENSES
The Fund received reductions in transfer agency fees from AFS (an affiliate of
AIM) of $1,946 under an expense offset arrangement. The effect of the above
arrangement resulted in a reduction of the Fund's total expenses of $1,946
during the six months ended January 31, 1998.
9
<PAGE> 10
NOTE 4-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) $500,000,000 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, 1998, the Fund did not borrow under the
line of credit agreement. The funds which are parties to the line of credit are
charged a commitment fee of 0.05% on the unused balance of the committed line.
The commitment fee is allocated among such funds based on their respective
average net assets for the period.
NOTE 5-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, 1998 was
$278,313,096 and $243,919,088, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis as, of January 31, 1998 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of
investment securities $3,865,036
- ------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of
investment securities 0
- ------------------------------------------------------------------------------
Net unrealized appreciation of
investment securities $3,865,036
==============================================================================
</TABLE>
Cost of investments for tax purposes is $466,985,628.
NOTE 6-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 7-SHARE INFORMATION
Changes in shares outstanding during the six months ended January 31, 1998 and
the year ended July 31, 1997 were as follows:
<TABLE>
<CAPTION>
JANUARY 31, 1998 JULY 31, 1997
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold:
Class A 11,569,826 $ 116,259,156 22,795,689 $ 228,371,816
- --------------------------------------------------------------------------------------
Institutional Class 876,896 8,825,360 2,663,678 26,662,958
- --------------------------------------------------------------------------------------
Issued as a reinvestment of dividends:
Class A 852,019 8,740,480 1,600,608 16,029,270
- --------------------------------------------------------------------------------------
Institutional Class 2,352 23,670 16,172 161,587
- --------------------------------------------------------------------------------------
Reacquired:
Class A (12,741,886) (128,227,475) (21,687,977) (217,174,189)
- --------------------------------------------------------------------------------------
Institutional Class (511,317) (5,145,912) (12,215,116) (122,336,273)
- --------------------------------------------------------------------------------------
47,890 $ 475,279 (6,826,946) $ (68,284,831)
======================================================================================
</TABLE>
10
<PAGE> 11
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Institutional Class
outstanding during the six month period ended January 31, 1998, each of the
years in the three-year period ended July 31, 1997, the eleven months ended July
31, 1994 and each of the years in the two-year period ended August 31, 1993.
<TABLE>
<CAPTION>
JULY 31, AUGUST 31,
JANUARY 31, ----------------------------------------- -------------------
1998 1997 1996 1995 1994 1993 1992
----------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 10.07 $ 9.97 $ 10.03 $ 9.96 $ 10.24 $ 10.21 $ 10.01
- ----------------------------------- -------- -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.28 0.56 0.58 0.57 0.37 0.44 0.60
- ----------------------------------- -------- -------- -------- -------- -------- -------- --------
Net gains (losses) on securities
(both realized and unrealized) 0.04 0.10 (0.06) 0.07 (0.20) 0.05 0.29
- ----------------------------------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations 0.32 0.66 0.52 0.64 0.17 0.49 0.89
- ----------------------------------- -------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment
income (0.28) (0.56) (0.58) (0.57) (0.37) (0.44) (0.60)
- ----------------------------------- -------- -------- -------- -------- -------- -------- --------
Distributions from net realized
gains -- -- -- -- (0.08) (0.02) (0.09)
- ----------------------------------- -------- -------- -------- -------- -------- -------- --------
Total distributions (0.28) (0.56) (0.58) (0.57) (0.45) (0.46) (0.69)
- ----------------------------------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 10.11 $ 10.07 $ 9.97 $ 10.03 $ 9.96 $ 10.24 $ 10.21
=================================== ======== ======== ======== ======== ======== ======== ========
Total return(a) 3.27% 6.79% 5.27% 6.61% 1.72% 4.88% 9.14%
=================================== ======== ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $ 52,795 $ 48,866 $143,468 $129,530 $134,971 $130,690 $ 89,352
=================================== ======== ======== ======== ======== ======== ======== ========
Ratio of expenses to average net
assets 0.31%(b)(c) 0.31% 0.27% 0.28% 0.25%(d) 0.24% 0.28%
=================================== ======== ======== ======== ======== ======== ======== ========
Ratio of net investment income to
average net assets 5.81%(b) 5.56% 5.72% 5.70% 3.98%(d) 4.30% 5.76%
=================================== ======== ======== ======== ======== ======== ======== ========
Portfolio turnover rate 53% 130% 117% 120% 120% 123% 120%
=================================== ======== ======== ======== ======== ======== ======== ========
</TABLE>
(a) Total returns are not annualized for the periods less than one year.
(b) Ratios are annualized and based on average net assets of $50,291,865.
(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.
11
<PAGE> 12
<TABLE>
<S> <C> <C>
TRUSTEES
AIM Investment
Charles T. Bauer Robert H. Graham Securities Funds
Bruce L. Crockett John F. Kroeger
Owen Daly II Lewis F. Pennock
Jack Fields Ian w. Robinson
Carl Frischling Louis S. Sklar
OFFICERS
Charles T. Bauer Chairman
Robert H. Graham President
John J. Arthur Sr. Vice President & Treasurer
Gary T. Crum Sr. Vice President A I M Limited Maturity
Carol F. Relihan Sr. Vice President & Secretary Treasury Fund
Melville B. Cox Vice President -----------------------------
Karen Dunn Kelley Vice President Institutional
Dana R. Sutton Vice President & Assistant Treasurer Class SEMI-
P. Michelle Grace Assistant Secretary ANNUAL
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 January 31, 1998
INVESTMENT ADVISOR
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046
800-347-1919
DISTRIBUTOR
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 Fund Services, Inc.
P.O. Box 4739 [LOGO APPEARS HERE]
Houston, TX 77210-4739 Fund Management Company
This report may be distributed only to current shareholders or
to persons who have received a current Fund prospectus.
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