<PAGE> 1
[AIM LOGO APPEARS HERE]
--Registered Trademark--
LETTER TO OUR SHAREHOLDERS
Dear Fellow Shareholder:
When we started AIM in 1976, we had only a table, two chairs
[PHOTO OF and a telephone. At the time, Bob Graham, Gary Crum and I
Charles T. had the idea of creating a mutual fund company that put
Bauer, people first. Our slogan, "people are the product," means
Chairman of that people--our employees and our investors--are our
the Board of company.
THE FUND Almost a quarter-century later, we've grown to more than
APPEARS HERE] eight million investors, with $176 billion in assets under
management. Over that time, the industry as a whole has
[PHOTO OF grown from $51 billion in assets to more than $7 trillion
Robert H. today. I never dreamed we would see such phenomenal growth.
Graham You are the main reason for our success, and I want you to
APPEARS HERE] know how much I appreciate your loyalty and trust over the
past 24 years.
Usually in this letter I review market activity during
the period covered by the report. This time, I'd just like
to say thank you. I am retiring as chairman of the AIM Funds effective September
30, and as chairman of AIM effective December 31, 2000. Bob Graham, whose
picture appears under mine, will succeed me as AIM's chairman and chairman of
the AIM Funds. Gary Crum will remain president of A I M Capital Management,
Inc., leading our investment division. I am enormously proud to leave AIM in
such capable hands.
I'm also very proud of our team of employees, now more than 2,500 strong.
Because of their collective commitment to excellence and ethical business
practices, AIM has earned the trust of investors and financial advisors alike.
And every employee, from portfolio managers to client services representatives,
is dedicated to serving our shareholders.
Rest assured that nothing at AIM will change because of my retirement. You
can still depend on this company to manage your money responsibly and provide
you with top-notch service. As chairman of AIM and chairman of the AIM Funds,
Bob is committed to preserving the things that have made AIM great in the past
and positioning it to succeed in the future. And Gary is dedicated to
maintaining the quality and long-term performance you've come to expect from
AIM.
In the pages that follow, the managers of your fund comment on recent market
activity, how they have managed your fund over the past year and their outlook
for the coming months. We trust you will find their comments helpful. If you
have any questions or comments, please contact Institutional Customer Service at
800-659-1005 during normal business hours.
Thank you again for the support and trust you've shown us. I feel privileged
to have helped you with your financial goals, and I wish you success in all your
endeavors.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman, A I M Advisors, Inc.
<PAGE> 2
THE MANAGERS' OVERVIEW
FUND RELISHES REVERSAL OF MARKET SENTIMENT
A roundtable discussion with the fund management team for AIM Limited Maturity
Treasury Fund--Institutional Class about the fiscal year ended July 31, 2000.
--------------------------------------------------------------------------------
HOW DID AIM LIMITED MATURITY TREASURY FUND--INSTITUTIONAL CLASS PERFORM DURING
THE FISCAL YEAR?
In a year that saw many investors chase performance and then backpedal when the
market got bumpy, the fund remained a bastion of stability, with a fairly low
level of volatility compared to the broader market. The fund's net asset value
(NAV) per share remained between $9.89 and $10.04 during the reporting period.
The fund continued to provide steady, attractive income during the fiscal
year. As of July 31, 2000, the 30-day distribution rate at NAV was 5.91%, and
the 30-day SEC yield at NAV was 6.54%. The fund finished the fiscal year with a
total return of 4.78%. Comparatively, the Lehman 1-2 Year U.S. Government Bond
Index had a return of 5.21% for the reporting period.
It's worth noting that while in 1999 many widely reported stock indexes,
such as the S&P 500, far outperformed fixed-income markets, the new year has
been a different story. For the first seven months of 2000, the fund had a total
return of 3.35% (at NAV), while the S&P 500 had a total return of -1.98%. This
performance divergence is a testament to the wisdom of diversification across
different asset types.
WHAT WERE MARKET CONDITIONS LIKE OVER THE PAST YEAR?
During much of 1999, technology dominated markets overall, even though the
sector's eye-popping returns did not translate into extraordinary performance
across the broader market. Indeed, for fixed-income markets, 1999 was one of the
worst years on record.
But the new year brought with it unprecedented stock-market volatility and a
major shift in market sentiment when some companies' sky-high valuations came
into question. Volatility drove many investors to flee the stock market and to
sit on the sidelines until things calmed down somewhat. This environment was a
boon for short-term fixed-income securities as investors shifted money into what
are traditionally seen as more stable, highly liquid investments.
YIELD CURVE--U.S.TREASURY SECURITIES
As of 7/31/00, with time to maturity
================================================================================
LINE CHART
3-6 months 6.25%
6.43%
1-2 years 6.05%
6.28%
(Area of Investment Focus)
5 years 6.15%
10 years 6.04%
30 years 5.79%
================================================================================
Government securities (such as U.S. Treasury bills, notes and bonds) offer a
high degree of safety, and they 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.
Source: Bloomberg
2
<PAGE> 3
Also shaking market confidence were interest-rate hikes implemented by the
Federal Reserve Board (the Fed) and investors' concerns regarding potential
inflation. Since June 1999, the Fed has raised interest rates six times--a total
of 175 basis points--in an effort to cool what it feared was a too-hot growth
rate for the U.S. economy. Mixed signals from leading economic indicators made
it difficult to determine when the Fed would finish its tightening cycle.
Indeed, while employment data released just days after the end of the
reporting period were weaker than expected, recent GDP data showed the economy
growing by more than 5% during the second quarter of the year. However, over the
past year market participants have increasingly accepted that the Fed would
successfully control inflation without bringing the economy to a screeching
halt. This positive outlook for Fed policy has resulted in a much healthier bond
market in 2000 than in 1999.
HOW DID YOU MANAGE THE FUND, GIVEN THE MARKET ENVIRONMENT?
We continued to abide by our proven strategy of buying two-year Treasury notes
and selling them when they have one year left to maturity. This gives the fund's
portfolio a constant average maturity of a year and a half. Our strategy has
advantages both when interest rates are rising and when they are falling.
When interest rates are rising, the prices of the two-year notes in our
portfolio tend to fall less than those of longer issues, which may also lessen
the impact of rising rates on the fund's NAV. When interest rates are falling,
the prices of the notes in which we invest rise, and because we reinvest
gradually over time, the fund's yield should not fall as quickly as the yield of
the broader market in such an environment.
HOW HAS THE TREASURY'S BUYBACK PROGRAM AFFECTED YIELDS?
During the first quarter of 2000, the U.S. Treasury announced that it will issue
fewer securities across all maturity spectrums, and it has also begun buying
back its own debt. The buyback program has been spurred by consecutive U.S.
government budget surpluses in 1998 and 1999, the first consecutive surpluses
since the 1950s. The auction cuts and the buyback program have driven yields
lower because of the supply impact--lower supply means higher prices, and higher
prices mean lower yields.
Two-year Treasury note yields reached a high of 6.93% earlier in 2000, but
the yield dropped to 6.28% by fiscal year-end on the heels of both the Fed's
perceived success at combating inflation and the Treasury supply story. Because
the buyback program has been concentrated in longer maturities (15+ years) where
auction cuts have been the most dramatic, those yields have dropped and formed
an inverted yield curve. (See chart below left.)
In years past, such a yield-curve inversion has been seen more as a
harbinger of recession than as a characteristic of a steadily growing economy.
However, all indications are that the current inversion is a reflection of the
changing dynamics of the Treasury market. The Fed also continues to watch yields
carefully, and it has announced that to maintain liquidity without roiling bond
markets, it will concentrate more of its own buying at the short end of the
yield curve, which may bring down those yields eventually.
WHAT IS YOUR OUTLOOK FOR THE FUTURE?
We know from experience that it takes time for Fed policy to trickle down
through the economy. While we think its inflation-prevention measures have
succeeded thus far, we believe that the Fed remains willing to raise rates again
should the need arise. There have been signs of economic cooling, but some
inflation risks remain because the data are mixed.
Interest rates that really affect the economy--mortgage and corporate
borrowing rates--have risen, and this should begin to slow growth to a rate that
will keep inflation at bay. While no one can say for certain whether the Fed is
finished tightening, we think that the Fed has made good inroads into preventing
inflation by slowing--not stopping--the economy, and that should be beneficial
for fixed-income markets and the fund throughout the rest of 2000.
3
<PAGE> 4
LONG-TERM PERFORMANCE
AIM LIMITED MATURITY TREASURY FUND--INSTITUTIONAL CLASS VS. BENCHMARK INDEX
The chart below compares your fund to a benchmark index, which measures the
performance of a hypothetical portfolio. It is important to understand the
difference between your fund and an index. Your fund's total return is shown
with a sales charge, and it includes fund expenses and management fees. A market
index such as the Lehman 1-2 Year U.S. Government Bond Index is not managed, and
it incurs no sales charges, expenses or fees. If you could buy all the
securities that make up a market index, you would incur expenses that would
affect your investment's return. Use of this index is intended to give you a
general idea of how your fund performed compared to the bond market.
RESULTS OF A $10,000 INVESTMENT
================================================================================
AIM Limited Maturity Lehman 1-2 year U.S.
Treasury Fund-Institutional Class Government Bond Index
--------------------------------------------------------------------------------
7/90 $10,000.00 $10,000.00
7/91 $10,917.00 $10,961.00
7/92 $11,970.00 $12,043.00
7/93 $12,557.00 $12,649.00
7/94 $12,858.00 $12,984.00
7/95 $13,709.00 $13,870.00
7/96 $14,434.00 $14,634.00
7/97 $15,415.00 $15,656.00
7/98 $16,288.00 $16,591.00
7/99 $17,026.00 $17,415.00
7/00 $17,846.00 $18,320.00
Source: Lehman Brothers. Performance figures are historical, and they reflect
the reinvestment of distributions and changes in net asset value, net of fees
and expenses. Investment return and principal value will vary, so an investor
may have a gain or loss when selling shares.
Past performance cannot guarantee comparable future results.
================================================================================
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS
OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL
PERFORMANCE SHOWN.
AVERAGE ANNUAL TOTAL RETURNS
As of 7/31/00, the close of the reporting period
================================================================================
Inception (7/13/87) 6.37%
10 years 5.96
5 years 5.41
1 year 4.78
As of 6/30/00, the most recent
calendar quarter-end
Inception (7/13/87) 6.37%
10 years 6.02
5 years 5.39
1 year 4.57
================================================================================
4
<PAGE> 5
SCHEDULE OF INVESTMENTS
JULY 31, 2000
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET
MATURITY (000) VALUE
<S> <C> <C> <C>
U.S. TREASURY SECURITIES-99.01%
U.S. TREASURY NOTES-99.01%
5.50% 08/31/01 $25,100 $ 24,862,554
--------------------------------------------------------------------------------------------
5.63% 09/30/01 25,100 24,875,857
--------------------------------------------------------------------------------------------
5.88% 10/31/01 25,100 24,938,356
--------------------------------------------------------------------------------------------
5.88% 11/30/01 25,100 24,931,328
--------------------------------------------------------------------------------------------
6.13% 12/31/01 25,100 25,007,632
--------------------------------------------------------------------------------------------
6.38% 01/31/02 25,100 25,092,470
--------------------------------------------------------------------------------------------
6.50% 02/28/02 25,100 25,144,427
--------------------------------------------------------------------------------------------
6.50% 03/31/02 25,100 25,147,188
--------------------------------------------------------------------------------------------
6.38% 04/30/02 25,100 25,099,247
--------------------------------------------------------------------------------------------
6.63% 05/31/02 25,100 25,214,707
--------------------------------------------------------------------------------------------
6.38% 06/30/02 25,100 25,115,562
--------------------------------------------------------------------------------------------
6.25% 07/31/02 24,100 24,085,058
--------------------------------------------------------------------------------------------
Total U.S. Treasury Securities (Cost $299,787,994) 299,514,386
--------------------------------------------------------------------------------------------
TOTAL INVESTMENTS-99.01% 299,514,386
--------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES-0.99% 2,999,031
--------------------------------------------------------------------------------------------
NET ASSETS-100.00% $302,513,417
============================================================================================
</TABLE>
See Notes to Financial Statements.
5
<PAGE> 6
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 2000
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (Cost $299,787,994) $299,514,386
--------------------------------------------------------------------------
Cash 1,120,488
--------------------------------------------------------------------------
Receivables for:
--------------------------------------------------------------------------
Fund shares sold 272,822
--------------------------------------------------------------------------
Interest 3,873,029
--------------------------------------------------------------------------
Investment for deferred compensation plan 40,106
--------------------------------------------------------------------------
Other assets 2,306
--------------------------------------------------------------------------
Total assets 304,823,137
--------------------------------------------------------------------------
LIABILITIES:
Payables for:
Fund shares reacquired 1,752,268
--------------------------------------------------------------------------
Dividends 358,703
--------------------------------------------------------------------------
Deferred compensation plan 40,106
--------------------------------------------------------------------------
Accrued advisory fees 48,904
--------------------------------------------------------------------------
Accrued administrative services fees 5,859
--------------------------------------------------------------------------
Accrued distribution fees 54,237
--------------------------------------------------------------------------
Accrued transfer agent fees 39,501
--------------------------------------------------------------------------
Accrued operating expenses 10,142
--------------------------------------------------------------------------
Total liabilities 2,309,720
--------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $302,513,417
==========================================================================
NET ASSETS:
Class A $300,058,098
==========================================================================
Institutional Class $ 2,455,319
==========================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 30,115,896
==========================================================================
Institutional Class 246,425
==========================================================================
Class A :
Net asset value and redemption price per share $ 9.96
--------------------------------------------------------------------------
Offering price per share:
(Net asset value of $9.96 divided by 99.00%) $ 10.06
==========================================================================
Institutional Class:
Net asset value, redemption price and offering price per
share $ 9.96
==========================================================================
</TABLE>
See Notes to Financial Statements.
6
<PAGE> 7
STATEMENT OF OPERATIONS
For the year ended July 31, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $19,783,947
-------------------------------------------------------------------------
EXPENSES:
Advisory fees 705,741
-------------------------------------------------------------------------
Administrative services fee 80,566
-------------------------------------------------------------------------
Custodian fees 11,079
-------------------------------------------------------------------------
Distribution fees -- Class A 517,076
-------------------------------------------------------------------------
Transfer agent fees -- Class A 444,091
-------------------------------------------------------------------------
Transfer agent fees -- Institutional Class 2,749
-------------------------------------------------------------------------
Trustees' fees 9,224
-------------------------------------------------------------------------
Other 104,612
-------------------------------------------------------------------------
Total expenses 1,875,138
-------------------------------------------------------------------------
Less: Expenses paid indirectly (3,920)
-------------------------------------------------------------------------
Net expenses 1,871,218
-------------------------------------------------------------------------
Net investment income 17,912,729
-------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT
SECURITIES:
Net realized gain (loss) from investment securities (4,797,259)
-------------------------------------------------------------------------
Change in net unrealized appreciation of investment
securities 2,049,768
-------------------------------------------------------------------------
Net gain (loss) on investment securities (2,747,491)
-------------------------------------------------------------------------
Net increase in net assets resulting from operations $15,165,238
-------------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
For the years ended July 31, 2000 and 1999
<TABLE>
<CAPTION>
2000 1999
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 17,912,729 $ 19,679,426
------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (4,797,259) 1,359,439
------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities 2,049,768 (3,023,894)
------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 15,165,238 18,014,971
------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Class A (17,525,848) (18,245,067)
------------------------------------------------------------------------------------------
Institutional Class (416,635) (1,523,201)
------------------------------------------------------------------------------------------
SHARE TRANSACTIONS-NET:
Class A (87,282,579) 46,655,684
------------------------------------------------------------------------------------------
Institutional Class (14,575,249) (33,718,444)
------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (104,635,073) 11,183,943
------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of year 407,148,490 395,964,547
------------------------------------------------------------------------------------------
End of year $302,513,417 $407,148,490
==========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $311,671,908 $413,559,490
------------------------------------------------------------------------------------------
Undistributed net investment income 29,754 29,754
------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment
securities (8,914,637) (4,117,378)
------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities (273,608) (2,323,376)
------------------------------------------------------------------------------------------
$302,513,417 $407,148,490
==========================================================================================
</TABLE>
See Notes to Financial Statements.
7
<PAGE> 8
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2000
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 company consisting of seven separate
series portfolios each having an unlimited number of shares of beneficial
interests. The Fund currently offers two different classes of shares: 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 Fund's investment objective is to seek liquidity with minimum
fluctuation in principal value and, consistent with this investment objective,
the highest total return achievable.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts 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 any of the above
methods are valued based upon quotes furnished by independent sources and are
valued the mean between the last bid and asked prices. 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. Short-term obligations having 60 days or less to maturity 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. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income, adjusted for amortization of discounts on investments, is
recorded on the accrual basis from settlement date. It is the policy of the
Fund not to amortize bond premiums for financial reporting purposes.
On July 31, 2000 undistributed net investment income was increased by
$29,754 and additional paid-in capital was decreased by $29,754 as a result
of reclassifications of nondeductible organizational expenses. Net assets of
the Fund were unaffected by the reclassifications discussed above.
C. Distributions -- It is the policy of the Fund to declare dividends from net
investment income daily and pay monthly. Distributions from net realized
capital gains, if any, are generally paid annually and recorded on
ex-dividend date. The Fund may elect to use a portion of the proceeds from
redemptions as distributions for Federal income tax purposes.
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 of $4,224,162 as of July 31, 2000 which may be carried forward
to
8
<PAGE> 9
offset future taxable gains, if any, which expires in varying increments, if
not previously utilized, in the year 2008.
E. Expenses -- Distribution expenses and certain transfer agency expenses
directly attributable to a class of shares are charged to those classes'
operations. All other expenses which are attributable to more than one class
are allocated between the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.20% on
the first $500 million of the Fund's average daily net assets, plus 0.175% on
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 pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. For the year ended July 31, 2000, AIM was paid
$80,566 for such services.
The Fund, pursuant to a transfer agency 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. For the year ended July 31, 2000, AFS was paid
$151,859 for such services.
The Trust has entered into master distribution agreements 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 with respect to the
Fund's Class A shares. The Fund, pursuant to the Plans, pays AIM Distributors
compensation at the annual rate of 0.15% of the Fund's average daily net assets
of 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 the appropriate
class of 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 sales charges, including asset-based sales charges that may be paid
by the Fund. For the year ended July 31, 2000, the Fund paid AIM Distributors
$517,076 as compensation under the Plan.
AIM Distributors received commissions of $57,087 from sales of the Class A
shares of the Fund during the year ended July 31, 2000. Such commissions are not
an expense of the Fund. They are deducted from, and are not included in, the
proceeds from sales of Class A shares.
Certain officers and trustees of the Trust are officers and directors of
AIM, AFS, FMC and AIM Distributors.
During the year ended July 31, 2000, the Fund paid legal fees of $3,294 for
services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Trustees. A member of that firm is a trustee of the Trust.
NOTE 3-INDIRECT EXPENSES
For the year ended July 31, 2000, the Fund received reductions in transfer
agency fees from AFS (an affiliate of AIM) of $3,920 under expense offset
arrangements which resulted in a reduction of the Fund's total expenses of
$3,920.
NOTE 4-TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by a
trustee, in mutual fund shares in accordance with a deferred compensation plan.
9
<PAGE> 10
NOTE 5-BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A. 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. During the year ended July 31, 2000,
the Fund did not borrow under the line of credit agreement. The funds which are
party to the line of credit are charged a commitment fee of 0.09% on the unused
balance of the committed line. The commitment fee is allocated among the funds
based on their respective average net assets for the period.
NOTE 6-INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the year ended July 31, 2000 was
$431,234,972 and $537,432,998, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of July 31, 2000 was as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $ 395,575
------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (874,560)
------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities $(478,985)
========================================================================
Cost of investments for tax purposes is $299,993,371.
</TABLE>
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the years ended July 31, 2000 and 1999 were
as follows:
<TABLE>
<CAPTION>
2000 1999
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold:
Class A 20,491,334 $ 204,290,029 66,719,952 $ 675,218,081
----------------------------------------------------------------------------------------------
Institutional Class 191,454 1,910,678 489,034 4,947,727
----------------------------------------------------------------------------------------------
Issued as reinvestment of
dividends:
Class A 1,468,058 14,627,764 1,524,802 15,430,990
----------------------------------------------------------------------------------------------
Institutional Class 891 11,992 1,998 20,239
----------------------------------------------------------------------------------------------
Reacquired:
Class A (30,726,141) (306,200,372) (63,662,111) (643,993,387)
----------------------------------------------------------------------------------------------
Institutional Class (1,653,776) (16,497,919) (3,809,602) (38,686,410)
----------------------------------------------------------------------------------------------
(10,228,180) $(101,857,828) 1,264,073 $ 12,937,240
==============================================================================================
</TABLE>
10
<PAGE> 11
NOTE 8-FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS
---------------------------------------------------
2000 1999 1998 1997 1996
---------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.03 $ 10.07 $ 10.07 $ 9.97 $ 10.03
-------------------------------------------- ------ ------- ------- ------- --------
Income from investment operations:
Net investment income 0.54 0.49 0.56 0.56 0.58
-------------------------------------------- ------ ------- ------- ------- --------
Net gains (losses) on securities (both
realized and unrealized) (0.07) (0.04) -- 0.10 (0.06)
-------------------------------------------- ------ ------- ------- ------- --------
Total from investment operations 0.47 0.45 0.56 0.66 0.52
-------------------------------------------- ------ ------- ------- ------- --------
Less distributions:
Dividends from net investment income (0.54) (0.49) (0.56) (0.56) (0.58)
-------------------------------------------- ------ ------- ------- ------- --------
Net asset value, end of period $ 9.96 $ 10.03 $ 10.07 $ 10.07 $ 9.97
============================================ ====== ======= ======= ======= ========
Total return 4.78% 4.55% 5.66% 6.79% 5.27%
============================================ ====== ======= ======= ======= ========
Ratios/supplemental data:
Net assets, end of year (000s omitted) $2,455 $17,131 $50,609 $48,866 $143,468
============================================ ====== ======= ======= ======= ========
Ratio of expenses to average net assets 0.29%(a) 0.31% 0.32% 0.31% 0.27%
============================================ ====== ======= ======= ======= ========
Ratio of net investment income to average
net assets 5.31%(a) 4.84% 5.51% 5.56% 5.72%
============================================ ====== ======= ======= ======= ========
Portfolio turnover rate 122% 184% 133% 130% 117%
============================================ ====== ======= ======= ======= ========
</TABLE>
(a) Ratios are based on average net assets of $8,153,267.
-------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders of
AIM Investment Securities Funds:
We have audited the accompanying statement of assets and liabilities of AIM
Limited Maturity Treasury Fund (a series of AIM Investment Securities Funds)
including the schedule of investments, as of July 31, 2000, and the related
statement of operations for the year then ended, the statements of changes in
net assets for each of the years in the two-year period then ended, and the
financial highlights for each of the years in the five-year period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of July 31, 2000, by correspondence with the custodian. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of AIM
Limited Maturity Treasury Fund as of July 31, 2000, the results of its
operations for the year then ended, the changes in its net assets for each of
the years in the two-year period then ended and the financial highlights for
each of the years in the five-year period then ended, in conformity with
accounting principles generally accepted in the United States of America.
/s/ KPMG LLP
September 1, 2000
Houston, Texas
11
<PAGE> 12
ANNUAL REPORT
AIM INVESTMENT
SECURITIES FUNDS
AIM LIMITED MATURITY
TREASURY FUND
INSTITUTIONAL
CLASS
JULY 31, 2000
<TABLE>
<CAPTION>
TRUSTEES OFFICERS INVESTMENT ADVISOR
<S> <C> <C>
Charles T. Bauer Charles T. Bauer A I M Advisors, Inc.
Bruce L. Crockett Chairman 11 Greenway Plaza, Suite 100
Owen Daly II Houston, TX 77046
Edward K. Dunn Jr. Robert H. Graham 800-347-1919
Jack M. Fields President
Carl Frischling DISTRIBUTOR
Robert H. Graham Gary T. Crum
Prema Mathai-Davis Senior Vice President Fund Management Company
Lewis F. Pennock 11 Greenway Plaza, Suite 100
Louis S. Sklar Carol F. Relihan Houston, TX 77046
Senior Vice President & Secretary 800-659-1005
Melville B. Cox CUSTODIAN
Vice President
The Bank of New York
Karen Dunn Kelley 90 Washington Street, 11th Floor
Vice President New York, NY 10286
Dana R. Sutton LEGAL COUNSEL TO FUND
Vice President & Treasurer
Ballard Spahr Andrews & Ingersoll, LLP
Renee A. Friedli 1735 Market Street, 51st Floor
Assistant Secretary Philadelphia, PA 19103-7599
P. Michelle Grace LEGAL COUNSEL TO TRUSTEES
Assistant Secretary
Kramer, Levin, Naftalis & Frankel LLP
Nancy L. Martin 919 Third Avenue
Assistant Secretary New York, NY 10022
Ofelia M. Mayo TRANSFER AGENT
Assistant Secretary
A I M Fund Services, Inc.
Lisa A. Moss P.O. Box 4739
Assistant Secretary Houston, TX 77210-47392
Kathleen J. Pflueger AUDITORS
Assistant Secretary
KPMG Peat Marwick LLP
Mary J. Benson 700 Louisiana
Assistant Vice President & Assistant Treasurer NationsBank Building
Houston, TX 77002
Sheri Morris
Assistant Vice President & Assistant Treasurer
</TABLE>
This report may be distributed only to current shareholders or
to persons who have received a current prospectus.
[FUND MANAGEMENT COMPANY LOGO APPEARS HERE]
