<PAGE> 1
Dear Fellow Shareholder:
As the period covered by this report opened, markets were in
[PHOTO OF the midst of a serious loss of confidence stemming from
Charles T. global financial crises and widespread decline in U.S.
Bauer, corporate earnings growth. From July until October, a major
Chairman of market correction for equities bolstered U.S. Treasury
the Board of issues, whose safety attracts investors in doubtful times.
THE FUND The reporting period would bring two particularly serious
APPEARS HERE] financial shocks, first the debt default by Russia, and
later the currency devaluation by Brazil. The result was
another six months of market volatility here and abroad.
JANUARY 31, 1999 Investors flocked to securities perceived as safe and
liquid, especially U.S. Treasuries. Even high-quality
corporate bonds went out of favor, and high-yield bonds
plummeted. Beginning in late September, the U.S. Federal
Reserve Board intervened to pump liquidity and confidence
into markets. Numerous interest rate cuts in other countries
followed. Investors responded favorably, and by the close of
the reporting period, bond market volatility had generally
subsided.
On the pages that follow, your Funds managers offer detailed discussion
of how markets behaved, how they managed the portfolio in light of recent
volatility, and what they foresee for markets and your Fund.
YEAR 2000 CONCERN
Many of our shareholders have asked us about AIM's year 2000 readiness status.
We appreciate these concerns, and we take the year 2000 issue seriously. AIM
has devoted considerable effort to creating a comprehensive plan for assessing,
correcting and testing our in-house systems. We will also participate in an
industry-wide testing effort scheduled to begin in March. But no matter how
well we prepare and test, no one can know for sure what the year 2000 will
bring. Our industrys systems are connected in complex ways to many third
parties, and there may be unforeseen problems when the year 2000 actually
arrives. Though we cannot predict what all those problems might be, we are
working with our business recovery team to develop contingency plans
appropriate for a variety of year 2000 scenarios.
We are pleased to send you this report on AIM Limited Maturity Treasury
Fund. Please contact Institutional Customer Service at 800-659-1005 during
normal business hours if you have any questions.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
<PAGE> 2
THE MANAGERS' OVERVIEW
FUND PROVIDES SAFE HAVEN IN VOLATILE MARKETS
A roundtable discussion with the Fund management team for AIM Limited
Maturity Treasury Fund Institutional Class about the six-month period ended
January 31, 1999.
- -------------------------------------------------------------------------------
Q. HOW DID AIM LIMITED MATURITY TREASURY FUND INSTITUTIONAL CLASS PERFORM
DURING THE REPORTING PERIOD, GIVEN THE TURBULENCE IN THE MARKETS?
A. The Fund held true to its investment discipline and provided attractive
current income. Despite the ups and downs in both fixed-income and equity
markets, the Funds net asset value remained relatively stable.
As of January 31, 1999, the Funds 30-day SEC yield at maximum offering
price was 3.96%. Cumulative total return for the six-month period ended
January 31, 1999, was 3.35%. The Funds net asset value (NAV) per share
remained within a range of $10.07 and $10.27 during the reporting period.
Q. WHAT WAS THE MARKET ENVIRONMENT LIKE DURING THE REPORTING PERIOD?
A. After experiencing the effects of the Asian financial crisis early in 1998,
U.S. markets succumbed to another wave of the "Asian contagion" during the
summer.
A number of events converged to create the sharp downturn. Currency
devaluations occurred in Thailand, Malaysia, Indonesia and Korea. A
lingering recession gripped Japan. Crippled by overwhelming debt, Russia
effectively defaulted on much of its government debt. Fears of a global
credit crunch then spread to Latin America.
Investor sentiment in the face of this global instability caused a
capital flight to safe havens as preservation of capital quickly became the
leading investment objective. In an attempt to calm the nerves of
investors, the Federal Reserve Board (the Fed) cut the federal funds rate
by 0.25% on September 29. Few people were assuaged by the action. Two
weeks later, in an unusual inter-meeting move, the Fed lowered the
federal funds rate and the discount rate by 0.25%, igniting a fierce
market rally. Both rates were lowered by 0.25% again in November.
Widespread speculation that the U.S. economy would slow down at the
end of 1998 was never borne out.
===============================================================================
Yield Curve -- U.S. Treasury Securities
As of 1/31/99
- -------------------------------------------------------------------------------
3 mo. 4.457
6 mo. 4.454
1 yr. 4.497
2 yrs. 4.566
5 yrs. 4.542
10 yrs. 4.651
30 yrs. 5.091
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 if held to maturity. Fund shares are not insured and their value
and yield will vary with market conditions.
===============================================================================
2
<PAGE> 3
Instead, inflation increased at its slowest pace in almost 40 years during
the fourth quarter, and the economy grew at an annual rate of 6.1% during
the same period, beating most forecasts. The Fed elected to leave interest
rates unchanged at its last two policy meetings during the reporting
period, appearing to adopt a "wait" and see attitude.
Q. HOW DID THE MARKET ENVIRONMENT AFFECT U.S. TREASURY SECURITIES?
A. The "flight to quality" meant that investors pulled their money out of
nearly any market that was perceived to be a risky investment. As a result,
demand for U.S. investment-grade bonds, particularly Treasuries, rose
sharply. The price of U.S. Treasury securities climbed, sending their yields
to historic lows.
Since that time, U.S. markets have remained rather unsettled, due
partially to domestic political uncertainty and mixed corporate earnings
reports. Thus, the demand for short-term Treasuries remains robust.
Q. WHAT WAS YOUR STRATEGY DURING THIS PERIOD?
A. A "flight to quality" often greatly affects the shorter-term Treasury
securities because they are the most liquid securities. However, increased
demand for the Treasury securities in which the Fund invests did not affect
our strategy. We use a laddered portfolio approach, buying two-year
Treasury notes every month and selling them after one year, a strategy
called "rolling down the yield curve". This generally results in NAV and
yield stability, so our strategy does not change based on market
conditions.
Q. WHAT IS YOUR OUTLOOK FOR THE NEAR TERM?
A. In 1998, the Consumer Price Index rose just 1.6%, its lowest annual
increase since 1986, and unemployment is now at a 28-year low. Clearly, the
U.S. economy is still showing steady growth, and there is little evidence
to suggest that this growth will either accelerate or decelerate rapidly.
Therefore, we believe interest rates should remain fairly steady. But
because many foreign economies are slowing, we think overseas interest
rates will probably continue to fall. Based on these factors, U.S.
Treasuries should continue to see demand from both domestic and foreign
investors in 1999 because U.S. Treasuries continue to offer investors what
we believe is the highest quality, most liquid vehicle available in the
financial markets.
===============================================================================
AVERAGE ANNUAL TOTAL RETURNS
As of 1/31/99
10 years 6.77%
5 years 5.56
1 year 5.74
STABILITY OF NET ASSET VALUE
7/31/98 1/31/99
(line chart)
7/31/98 10.07
8/31/98 10.14
9/30/98 10.21
10/31/98 10.22
11/30/98 10.16
12/31/98 10.16
1/31/99 10.15
Source: Towers Data Systems HYPO. 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, 1999
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET
MATURITY (000s) VALUE
<S> <C> <C> <C>
U.S. TREASURY SECURITIES
U.S. TREASURY NOTES-98.60%
5.50% 02/29/00 $ 33,200 $ 33,499,132
- --------------------------------------------------------------------------------------------
5.50% 03/31/00 34,743 35,078,617
- --------------------------------------------------------------------------------------------
5.625% 04/30/00 34,700 35,105,990
- --------------------------------------------------------------------------------------------
5.50% 05/31/00 34,700 35,082,394
- --------------------------------------------------------------------------------------------
5.375% 06/30/00 34,540 34,883,673
- --------------------------------------------------------------------------------------------
5.375% 07/31/00 34,700 35,067,126
- --------------------------------------------------------------------------------------------
5.125% 08/31/00 34,830 35,085,652
- --------------------------------------------------------------------------------------------
4.50% 09/30/00 34,900 34,825,314
- --------------------------------------------------------------------------------------------
4.00% 10/31/00 34,960 34,597,465
- --------------------------------------------------------------------------------------------
4.625% 11/30/00 34,000 34,005,440
- --------------------------------------------------------------------------------------------
4.625% 12/31/00 34,500 34,518,630
- --------------------------------------------------------------------------------------------
4.50% 01/31/01 35,000 34,956,250
- --------------------------------------------------------------------------------------------
Total U. S. Treasury Securities (Cost $414,559,460) 416,705,683
============================================================================================
TOTAL INVESTMENTS-98.60% 416,705,683
============================================================================================
OTHER ASSETS LESS LIABILITIES-1.40% 5,926,765
============================================================================================
NET ASSETS-100.00% $422,632,448
============================================================================================
</TABLE>
See Notes to Financial Statements.
4
<PAGE> 5
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1999
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $414,559,460) $ 416,705,683
- ----------------------------------------------------------------------------
Cash 413,218
- ----------------------------------------------------------------------------
Receivables for:
Investments sold 31,585,010
- ----------------------------------------------------------------------------
Fund shares sold 4,680,983
- ----------------------------------------------------------------------------
Interest 6,275,765
- ----------------------------------------------------------------------------
Investment in deferred compensation plan 29,778
- ----------------------------------------------------------------------------
Other assets 73,562
- ----------------------------------------------------------------------------
Total assets 459,763,999
- ----------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 34,963,751
- ----------------------------------------------------------------------------
Fund shares reacquired 1,220,816
- ----------------------------------------------------------------------------
Dividends 492,295
- ----------------------------------------------------------------------------
Deferred compensation 29,778
- ----------------------------------------------------------------------------
Accrued advisory fees 71,140
- ----------------------------------------------------------------------------
Accrued distribution fees 74,861
- ----------------------------------------------------------------------------
Accrued transfer agent fees 68,911
- ----------------------------------------------------------------------------
Accrued operating expenses 209,999
- ----------------------------------------------------------------------------
Total liabilities 37,131,551
- ----------------------------------------------------------------------------
Net assets applicable to shares outstanding $ 422,632,448
- ----------------------------------------------------------------------------
NET ASSETS:
Class A $ 402,107,015
============================================================================
Institutional Class $ 20,525,433
============================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 39,610,083
- ----------------------------------------------------------------------------
Institutional Class 2,021,882
============================================================================
Class A:
Net asset value and redemption price per share $ 10.15
- ----------------------------------------------------------------------------
Offering price per share:
(Net asset value of $10.15 divided by 99.00%) $ 10.25
============================================================================
Institutional Class:
Net asset value and offering price per share $ 10.15
============================================================================
</TABLE>
See Notes to Financial Statements.
5
<PAGE> 6
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JANUARY 31, 1999
(UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $11,380,508
- -------------------------------------------------------------------------
EXPENSES:
Advisory fees 431,775
- -------------------------------------------------------------------------
Administrative services fees 33,132
- -------------------------------------------------------------------------
Transfer agent fees-Class A 259,598
- -------------------------------------------------------------------------
Transfer agent fees-Institutional Class 3,905
- -------------------------------------------------------------------------
Distribution fees-Class A (See Note 2) 292,229
- -------------------------------------------------------------------------
Other 95,104
- -------------------------------------------------------------------------
Total expenses 1,115,743
- -------------------------------------------------------------------------
Less: Expenses paid indirectly (2,094)
- -------------------------------------------------------------------------
Net expenses 1,113,649
- -------------------------------------------------------------------------
Net investment income 10,266,859
- -------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN FROM INVESTMENT SECURITIES:
Net realized gain from investment securities 1,870,966
- -------------------------------------------------------------------------
Net unrealized appreciation of investment securities 1,445,705
- -------------------------------------------------------------------------
Net gain from investment securities 3,316,671
- -------------------------------------------------------------------------
Net increase in net assets resulting from operations $13,583,530
=========================================================================
</TABLE>
See Notes to Financial Statements.
6
<PAGE> 7
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JANUARY 31, 1999 AND THE YEAR ENDED JULY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
JANUARY 31, JULY 31,
1999 1998
------------ --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 10,266,859 $ 22,758,619
- ---------------------------------------------------------------------------------------
Net realized gain on sales of investment securities 1,870,966 1,855,056
- ---------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of
investment securities 1,445,705 (1,793,413)
- ---------------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 13,583,530 22,820,262
- ---------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Class A (9,240,724) (20,003,878)
- ---------------------------------------------------------------------------------------
Institutional Class (1,055,543) (2,754,741)
- ---------------------------------------------------------------------------------------
SHARE TRANSACTIONS-NET:
Class A 53,938,118 (44,498,315)
- ---------------------------------------------------------------------------------------
Institutional Class (30,557,480) 1,723,996
- ---------------------------------------------------------------------------------------
Net increase (decrease) in net assets 26,667,901 (42,712,676)
- ---------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 395,964,547 438,677,223
- ---------------------------------------------------------------------------------------
End of period $422,632,448 $ 395,964,547
=======================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $424,032,642 $ 400,652,004
- ---------------------------------------------------------------------------------------
Undistributed net investment income 59,434 88,842
- ---------------------------------------------------------------------------------------
Undistributed realized gain (loss) on sales of
investment securities (3,605,851) (5,476,817)
- ---------------------------------------------------------------------------------------
Unrealized appreciation of investment securities 2,146,223 700,518
- ---------------------------------------------------------------------------------------
$422,632,448 $ 395,964,547
=======================================================================================
</TABLE>
See Notes to Financial Statements.
7
<PAGE> 8
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1999
(UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
AIM Limited Maturity Treasury Fund (the "Fund") is a series portfolio of AIM
Investment Securities Funds (the "Trust"). The Trust is a Delaware business
trust registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end series management investment company consisting of two
separate series portfolios. 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 portfolio or class are voted on exclusively by the
shareholders of such portfolio or class. The assets, liabilities and operations
of each portfolio are accounted for separately. Information presented in these
financial statements pertains only to the Fund.
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 $5,440,638, 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, 1999,
the Fund reimbursed AIM $33,132 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. During the six months ended January 31, 1999,
the Fund paid AFS $101,377 for such services.
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, 1999, the Fund paid AIM
Distributors $292,229 as compensation under the Plan.
AIM Distributors received commissions of $33,439 during the six months ended
January 31, 1999 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, 1999, the Fund paid legal fees of
$2,107 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 $2,094 under an expense offset arrangement which resulted in a reduction
of the Fund's total expenses of $2,094 during the six months ended January 31,
1999.
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) $1,000,000,000 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, 1999, 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.
9
<PAGE> 10
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, 1999 was
$376,570,142 and $355,291,326, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of January 31, 1999 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $2,458,917
- ------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (319,641)
- ------------------------------------------------------------------------
Net unrealized appreciation of investment securities $2,139,276
- ------------------------------------------------------------------------
Cost of investments for tax purposes is $414,566,407.
</TABLE>
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, 1999 and
the year ended July 31, 1998 were as follows:
<TABLE>
<CAPTION>
JANUARY 31, 1999 JULY 31, 1998
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold:
Class A 31,262,155 $ 317,899,291 22,832,451 $ 229,871,705
- -----------------------------------------------------------------------------------------
Institutional Class 194,716 1,977,974 1,450,340 14,604,304
- -----------------------------------------------------------------------------------------
Issued as a reinvestment of
dividends:
Class A 761,506 7,746,222 1,671,295 16,825,885
- -----------------------------------------------------------------------------------------
Institutional Class 1,350 13,707 4,391 44,205
- -----------------------------------------------------------------------------------------
Reacquired:
Class A (26,713,580) (271,707,395) (28,922,414) (291,195,905)
- -----------------------------------------------------------------------------------------
Institutional Class (3,200,610) (32,549,161) (1,281,958) (12,924,513)
- -----------------------------------------------------------------------------------------
2,305,537 $ 23,380,638 (4,245,895) $ (42,774,319)
=========================================================================================
</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 months ended January 31, 1999, each of the years in
the four-year period ended July 31, 1998, and the eleven months ended July 31,
1994.
<TABLE>
<CAPTION>
JULY 31,
JANUARY 31, -------------------------------------------------
1999 1998 1997 1996 1995 1994
----------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.07 $ 10.07 $ 9.97 $ 10.03 $ 9.96 $ 10.24
- --------------------------------------------- ------- ------- ------- ------- -------- --------
Income from investment operations:
Net investment income 0.25 0.56 0.56 0.58 0.57 0.37
- --------------------------------------------- ------- ------- ------- ------- -------- --------
Net gains (losses) on securities (both
realized and unrealized) 0.08 -- 0.10 (0.06) 0.07 (0.20)
- --------------------------------------------- ------- ------- ------- ------- -------- --------
Total from investment operations 0.33 0.56 0.66 0.52 0.64 0.17
- --------------------------------------------- ------- ------- ------- ------- -------- --------
Less distributions:
Dividends from net investment income (0.25) (0.56) (0.56) (0.58) (0.57) (0.37)
- --------------------------------------------- ------- ------- ------- ------- -------- --------
Distributions from net realized gains -- -- -- -- -- (0.08)
- --------------------------------------------- ------- ------- ------- ------- -------- --------
Total distributions (0.25) (0.56) (0.56) (0.58) (0.57) (0.45)
- --------------------------------------------- ------- ------- ------- ------- -------- --------
Net asset value, end of period $ 10.15 $ 10.07 $ 10.07 $ 9.97 $ 10.03 $ 9.96
============================================= ======= ======= ======= ======= ======== ========
Total return(a) 3.35% 5.66% 6.79% 5.27% 6.61% 1.72%
============================================= ======= ======= ======= ======= ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $20,525 $50,609 $48,866 $143,468 $129,530 $134,971
============================================= ======= ======= ======= ======= ======== ========
Ratio of expenses to average net assets 0.31%(b) 0.32% 0.31% 0.27% 0.28% 0.25%(c)
============================================= ======= ======= ======= ======= ======== ========
Ratio of net investment income to average net
assets 4.96%(b) 5.51% 5.56% 5.72% 5.70% 3.98%(c)
============================================= ======= ======= ======= ======= ======== ========
Portfolio turnover rate 82% 133% 130% 117% 120% 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 $41,793,488.
(c) Annualized.
11
<PAGE> 12
<TABLE>
<S> <C> <C>
TRUSTEES
Charles T. Bauer Robert H. Graham AIM INVESTMENT
Bruce L. Crockett Owen Daly II SECURITIES FUNDS
Edward K. Dunn, Jr. Lewis F. Pennock
Jack Fields Ian W. Robinson
Carl Frishling 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
Carol F. Relihan Sr. Vice President & Secretary
Melville B. Cox Vice President AIM LIMITED MATURITY
Karen Dunn Kelley Vice President TREASURY FUND
Dana R. Sutton Vice President & Assistant Treasurer
Renee A. Friedli Assistant Secretary INSTITUTIONAL CLASS
P. Michelle Grace Assistant Secretary
Jeffrey H. Kupor Assistant Secretary
Nancy L. Martin Assistant Secretary
Ofelia M. Mayo Assistant Secretary
Lisa A. Moss Assistant Secretary
Kathleen J. Pueger Assistant Secretary
Samuel D. Sirko Assistant Secretary
Stephen I. Winer Assistant Secretary
Mary J. Benson Assistant Treasurer SEMI-
Sheri Morris Assistant Treasurer ANNUAL
REPORT
INVESTMENT ADVISOR
A I M Advisors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046
800-347-1919 January 31, 1999
DISTRIBUTOR
Fund Management Company
11 Greenway Plaza, Suite 100
Houston, TX 77046
800-659-1005
CUSTODIAN [LOGO APPEARS HERE]
The Bank of New York Fund Management Company
90 Washington Street, 11th Floor
New York, NY 10286
LEGAL COUNSEL TO FUND
Ballard Spahr Andrews & Ingersoll, LLP
1735 Market Street, 51st Floor
Philadelphia, PA 19103-7599
LEGAL COUNSEL TO TRUSTEES
Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
TRANSFER AGENT
A I M Fund Services, Inc.
P.O. Box 4739
Houston, TX 77210-47392
This report may be distributed only to current shareholders or
to persons who have received a current prospectus.
LTD-SAR-2
</TABLE>
