<PAGE> 1
Dear Fellow Shareholder:
Many investors have been disappointed in their fixed-income
[PHOTO OF investments' performance during the six months covered by
Charles T. this report. The Federal Reserve Board (the Fed) raised
Bauer, interest rates twice during the reporting period and again
Chairman of shortly after the period closed, putting downward pressure
the Board of on the prices of fixed-income investments. Nevertheless,
THE FUND there is cause for celebration of 1999 bond investments--and
APPEARS HERE] hope for 2000. For investors who stayed the course with
their fixed-income funds last year, their investment dollars
were used to purchase bonds at significant discounts, as
fixed-income securities of all types were true bargains. In
addition, yields on some fixed-income investments rose
significantly during the reporting period.
LOOKING AHEAD
Most market watchers anticipate that bond market conditions
will remain difficult through the first half of 2000, as the Fed may raise
interest rates again to try to steer the economy to a soft landing: economic
growth diminished enough to thwart inflation, but without recession. But
analysts also remind us that, historically, fixed-income markets have rebounded
the year following a down year such as 1999. If so, 2000 may be a year of
recovery for fixed-income investing.
In addition, many analysts believe bond markets have in the past fared well
on the down side of a Fed tightening cycle. If analysts are correct, the current
tightening cycle may end by mid-year, and a strong rally could follow. Assuming
economic growth and low inflation continue on their current path, there's every
reason to be optimistic about fixed-income funds.
The changeable nature of the markets reinforces our confidence in the wisdom
of investing through a financial advisor. In addition to helping you select
investments appropriate to your time horizon and risk tolerance, a financial
advisor can keep you informed about how shifting market conditions affect you
and your portfolio--and help assure that when you do alter your investments,
there's a logical reason for doing so. AIM believes every investor should be
guided by a financial professional.
FUND MANAGERS COMMENT
In the pages that follow, your fund's portfolio managers discuss how they
managed your fund during the six months ended January 31, how the markets
behaved and what they foresee for the near future. We trust you will find their
discussion informative.
If you have any questions or comments, we invite you to contact
Institutional Customer Service at 800-659-1005 during normal business hours.
Sincerely,
/s/ CHARLES T. BAUER
Charles T. Bauer
Chairman
<PAGE> 2
THE MANAGERS' OVERVIEW
FUND WEATHERS ROCKY TREASURY MARKET
A ROUNDTABLE DISCUSSION WITH THE FUND MANAGEMENT TEAM FOR AIM LIMITED MATURITY
TREASURY FUND--INSTITUTIONAL CLASS ABOUT THE SIX-MONTH PERIOD ENDED JANUARY 31,
2000.
HOW DID AIM LIMITED MATURITY TREASURY FUND--INSTITUTIONAL CLASS PERFORM DURING
THE SIX-MONTH REPORTING PERIOD?
By maintaining our disciplined investment focus, we were able to sustain a
relatively low level of volatility in the fund during the reporting period. The
fund's net asset value (NAV) per share stayed between $9.92 and $10.04 during
the last six months.
The fund continued to provide attractive income during the reporting period.
As of January 31, 2000, the 30-day distribution rate at NAV was 5.34%. The
30-day SEC yield at NAV was 5.99%.
Total return for the fund for the six months ended January 31, 2000, was
1.43%. (Had the advisor not absorbed fund expenses in the past, total returns
would have been lower.) Comparatively, the Lehman 1-2 Year U.S. Government Bond
Index had a return of 1.64% for the reporting period.
WHAT WAS THE MARKET ENVIRONMENT LIKE DURING THE REPORTING PERIOD?
The question throughout the reporting period was whether or not the U.S. Federal
Reserve Board (the Fed) would need to raise interest rates to forestall
inflation. Much was made of the historical link between low unemployment and
inflation, even though the United States (with record low unemployment and a
blazing economy) showed no visible signs of upward price pressures. Despite such
persistent fears, the U.S. economy continued to experience a near-record level
of consumer confidence. Key economic indicators showed that even in the face of
blistering economic growth, the United States remained largely inflation-free.
Acting pre-emptively, the Fed raised the key federal funds rate from 5.00%
to 5.50% with moves in August and November following its July rate hike. Each of
these moves was widely anticipated by investors because of the country's
continued economic strength. Of course, rising interest rates meant falling bond
prices, and yields
YIELD CURVE--U.S. TREASURY SECURITIES
As of 1/31/00, with time to maturity
================================================================================
3-6 months 6.08
6.29
1-3 years 6.24 AREA OF INVESTMENT FOCUS
6.59
5 years 6.69
10 years 6.67
30 years 6.49
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.
================================================================================
<PAGE> 3
across Treasury securities moved steadily upward during the reporting period,
making 1999 the second-worst year ever for the Treasury market.
Near the end of the reporting period, economic indicators pointed to a
still-benign inflation environment. Driven by rising energy costs, inflation
rose at a 2.7% pace in 1999, according to the Labor Department, more than the
1.6% increase recorded in 1998. However, the core Consumer Price Index, which
strips out fluctuating commodities prices, rose only 1.9%, its slowest gain
since 1965. Nevertheless, a slight rise in labor costs, as reported by the Labor
Department at the end of January, may be a sign of things to come.
DID YOU MANAGE THE FUND DIFFERENTLY, GIVEN THE CHALLENGING MARKET ENVIRONMENT?
We did not make any adjustments to our management strategy, and the fund
performed well over the reporting period compared to the general fixed-income
universe. The fund is designed to provide steady income at relative price
stability over time, so we employ a fixed strategy--buying two-year Treasury
notes and selling them when they have one year left to maturity. We only buy
short-maturity Treasuries that have fairly stable prices even in an environment
of rising interest rates. We think the short maturity of the fund's portfolio
helps insulate its NAV from interest-rate volatility, making its NAV less
sensitive to interest-rate fluctuations than longer-term fixed-income
securities. Further, holding the fund's securities in evenly weighted positions
provides a fairly consistent yield. The fact that the fund has produced a
positive total return every year since its inception points to the success of
our consistent strategy.
WHY HAS THE TREASURY YIELD CURVE BECOME INVERTED?
We think there are a couple of factors involved. Late in the reporting period
the yield on the 30-year Treasury bond fell below that of 10- and five-year
notes to create an inverted yield curve, shown at left. This inversion suggests
that investors are anticipating higher short-term rates in the near future,
fueled by perceived inflation fears and possible Fed actions. Some investors are
buying longer-term securities because once inflation fears have subsided and
overall interest rates start to fall, the price of long-term securities will
again rise.
A second factor affecting the yield curve is the Treasury Department's plan
to buy back $32 billion of its own 10- to 30-year debt and streamline its
auction schedule. Thirty-year bonds are to be sold only twice per year, which
has caused a perceived scarcity in the market--the old "supply and demand"
story. We think the scarcity value of the 30-year bond is overstated right now.
This environment has also made the 10-year Treasury note, which has long been
the benchmark for yields in the mortgage-backed and corporate market, more of a
general benchmark for interest rates. At any rate, we think the inverted
Treasury yield curve is likely to continue until the Fed's tightening cycle
ends.
WHAT IS YOUR SHORT-TERM OUTLOOK?
In February, after the close of the reporting period, the Fed raised the federal
funds rate to 5.75%. Most market participants saw the rate hike coming because
of numerous factors, including surging economic growth, robust consumer spending
and almost nonexistent disruption from the year-2000 date rollover. Soon after
the rate hike, the yield on the Treasury's long bond fell below that of the
two-year note for the first time since 1990.
The Fed remains concerned that low unemployment, high consumer spending and
strong stock market gains will spark a rise in inflation, which erodes a bond's
principal and coupon payments. Most market participants expect the Fed to
tighten rates by at least another 25 basis points during the first six months of
2000. We look for continued upward pressure on interest rates as a result. With
the short maturities of the securities held in the fund's portfolio, we think
the fund's NAV will not be highly sensitive to interest-rate moves.
AVERAGE ANNUAL TOTAL RETURNS
================================================================================
For periods ended 1/31/00,
the close of the reporting period
Inception (7/13/87) 6.36%
10 years 6.10
5 years 5.73
1 year 2.61
For periods ended 12/31/99, the most recent
calendar quarter end
Inception (7/13/87) 6.40%
10 years 6.12
5 years 6.00
1 year 2.88
Past performance cannot guarantee comparable future results.
================================================================================
<PAGE> 4
SCHEDULE OF INVESTMENTS
January 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET
MATURITY (000) VALUE
<S> <C> <C> <C>
U.S. TREASURY SECURITIES
U.S. TREASURY NOTES-99.46%
5.00% 02/28/01 $29,200 $ 28,777,768
- --------------------------------------------------------------------------------------------
4.875% 03/31/01 29,800 29,275,818
- --------------------------------------------------------------------------------------------
5.00% 04/30/01 29,050 28,543,368
- --------------------------------------------------------------------------------------------
5.25% 05/31/01 29,090 28,630,669
- --------------------------------------------------------------------------------------------
5.75% 06/30/01 29,740 29,426,243
- --------------------------------------------------------------------------------------------
5.50% 07/31/01 29,600 29,165,176
- --------------------------------------------------------------------------------------------
5.50% 08/31/01 29,640 29,173,170
- --------------------------------------------------------------------------------------------
5.625% 09/30/01 29,950 29,500,151
- --------------------------------------------------------------------------------------------
5.875% 10/31/01 29,100 28,753,128
- --------------------------------------------------------------------------------------------
5.875% 11/30/01 29,200 28,834,708
- --------------------------------------------------------------------------------------------
6.125% 12/31/01 29,200 28,948,296
- --------------------------------------------------------------------------------------------
6.375% 01/31/02 30,000 29,875,800
============================================================================================
Total U.S. Treasury Securities (Cost $353,018,856) 348,904,295
============================================================================================
TOTAL INVESTMENTS-99.46% 348,904,295
============================================================================================
OTHER ASSETS LESS LIABILITIES-0.54% 1,900,083
============================================================================================
NET ASSETS-100.00% $350,804,378
============================================================================================
</TABLE>
See Notes to Financial Statements.
4
<PAGE> 5
STATEMENT OF ASSETS AND LIABILITIES
January 31, 2000
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at market value (cost $353,018,856) $348,904,295
- --------------------------------------------------------------------------
Cash 77,461
- --------------------------------------------------------------------------
Receivables for:
Fund shares sold 595,082
- --------------------------------------------------------------------------
Interest 4,053,720
- --------------------------------------------------------------------------
Investment in deferred compensation plan 37,704
- --------------------------------------------------------------------------
Other assets 31,019
- --------------------------------------------------------------------------
Total assets 353,699,281
- --------------------------------------------------------------------------
LIABILITIES:
Payables for:
Fund shares reacquired 2,181,060
- --------------------------------------------------------------------------
Dividends 418,235
- --------------------------------------------------------------------------
Deferred compensation 37,704
- --------------------------------------------------------------------------
Accrued advisory fees 60,292
- --------------------------------------------------------------------------
Accrued administrative service fees 7,079
- --------------------------------------------------------------------------
Accrued distribution fees 66,656
- --------------------------------------------------------------------------
Accrued transfer agent fees 40,482
- --------------------------------------------------------------------------
Accrued operating expenses 83,395
- --------------------------------------------------------------------------
Total liabilities 2,894,903
- --------------------------------------------------------------------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING $350,804,378
==========================================================================
NET ASSETS:
Class A $347,153,173
==========================================================================
Institutional Class $ 3,651,205
==========================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE:
Class A 35,006,965
==========================================================================
Institutional Class 368,061
==========================================================================
Class A:
Net asset value and redemption price per share $ 9.92
- --------------------------------------------------------------------------
Offering price per share:
(Net asset value of $9.92 / 99.00%) $ 10.02
- --------------------------------------------------------------------------
Institutional Class:
Net asset value, redemption price and offering price per
share $ 9.92
==========================================================================
</TABLE>
See Notes to Financial Statements.
5
<PAGE> 6
STATEMENT OF OPERATIONS
For the six months ended January 31, 2000
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $10,362,285
- -------------------------------------------------------------------------
EXPENSES:
Advisory fees 390,701
- -------------------------------------------------------------------------
Administrative services fees 44,260
- -------------------------------------------------------------------------
Transfer agent fees-Class A 213,202
- -------------------------------------------------------------------------
Transfer agent fees-Institutional Class 1,064
- -------------------------------------------------------------------------
Distribution fees-Class A (see Note 2) 283,106
- -------------------------------------------------------------------------
Other 72,012
- -------------------------------------------------------------------------
Total expenses 1,004,345
- -------------------------------------------------------------------------
Less: Expenses paid indirectly (2,126)
- -------------------------------------------------------------------------
Net expenses 1,002,219
- -------------------------------------------------------------------------
Net investment income 9,360,066
- -------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES:
Net realized gain (loss) from investment securities (2,510,796)
- -------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities (1,791,186)
- -------------------------------------------------------------------------
Net gain (loss) from investment securities (4,301,982)
- -------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 5,058,084
=========================================================================
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
For the six months ended January 31, 2000 and the year ended July 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
JANUARY 31, JULY 31,
2000 1999
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 9,360,066 $ 19,679,426
- ------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (2,510,796) 1,359,439
- ------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities (1,791,186) (3,023,894)
- ------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 5,058,084 18,014,971
- ------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Class A (9,040,912) (18,245,067)
- ------------------------------------------------------------------------------------------
Institutional Class (328,535) (1,523,201)
- ------------------------------------------------------------------------------------------
SHARE TRANSACTIONS-NET:
Class A (38,668,543) 46,655,684
- ------------------------------------------------------------------------------------------
Institutional Class (13,364,206) (33,718,444)
- ------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (56,344,112) 11,183,943
- ------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 407,148,490 395,964,547
- ------------------------------------------------------------------------------------------
End of period $350,804,378 $407,148,490
==========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $361,526,741 $413,559,490
- ------------------------------------------------------------------------------------------
Undistributed net investment income 20,373 29,754
- ------------------------------------------------------------------------------------------
Undistributed realized gain (loss) on sales of investment
securities (6,628,174) (4,117,378)
- ------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment
securities (4,114,562) (2,323,376)
- ------------------------------------------------------------------------------------------
$350,804,378 $407,148,490
==========================================================================================
</TABLE>
See Notes to Financial Statements.
6
<PAGE> 7
NOTES TO FINANCIAL STATEMENTS
January 31, 2000
(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 company consisting of two separate
series portfolios. 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 this investment objective, the
highest total return achievable.
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 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 the above method are
valued based upon quotes furnished by independent sources and are valued at
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 as 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.
C. Distributions -- It is the policy of the Fund to declare daily dividends
from net investment income. Such distributions are paid 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 of fund share 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 $2,924,409 as of July 31,
1999 which may be carried forward to offset future taxable gains, if any,
which expires in varying increments, if not previously utilized, in the year
2005.
7
<PAGE> 8
E. Expenses -- Distribution expenses 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
among 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 six months ended January 31, 2000, AIM
was paid $44,260 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 six months ended January 31, 2000, AFS
was paid $106,489 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 Plan, 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 six months ended
January 31, 2000, the Fund paid AIM Distributors $283,106 as compensation under
the Plan.
AIM Distributors received commissions of $34,488 from sales of the Class A
shares of the Fund during the six months ended January 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 six months ended January 31, 2000, the Fund paid legal fees of
$1,918 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
During the six months ended January 31, 2000, the Fund received reductions in
transfer agency fees from AFS (an affiliate of AIM) of $2,126 under an expense
offset arrangement. The effect of the above arrangement resulted in a reduction
of the Fund's total expenses of $2,126 during the six months ended January 31,
2000.
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.
8
<PAGE> 9
NOTE 5-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. During the six
months ended January 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 six months ended January 31, 2000 was
$241,261,337 and $296,334,093, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
for tax purposes, as of January 31, 2000 was as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $ --
- -------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (4,565,056)
- -------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment
securities $(4,565,056
=========================================================================
</TABLE>
Cost of investments for tax purposes is $353,469,351.
NOTE 7-SHARE INFORMATION
Changes in shares outstanding during the six months ended January 31, 2000 and
the year ended July 31, 1999 were as follows:
<TABLE>
<CAPTION>
JANUARY 31, 2000 JULY 31, 1999
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold:
Class A 11,082,345 $ 110,779,368 66,719,952 $ 675,218,081
- ----------------------------------------------------------------------------------------------
Institutional Class 177,195 1,772,353 489,034 4,947,727
- ----------------------------------------------------------------------------------------------
Issued as reinvestment of
dividends:
Class A 746,576 7,459,152 1,524,802 15,430,990
- ----------------------------------------------------------------------------------------------
Institutional Class 749 7,482 1,998 20,239
- ----------------------------------------------------------------------------------------------
Reacquired:
Class A (15,704,601) (156,907,063) (63,662,111) (643,993,387)
- ----------------------------------------------------------------------------------------------
Institutional Class (1,517,739) (15,144,041) (3,809,602) (38,686,410)
- ----------------------------------------------------------------------------------------------
(5,215,475) $ (52,032,749) 1,264,073 $ 12,937,240
==============================================================================================
</TABLE>
9
<PAGE> 10
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, 2000 and during each of the
years in the five-year period ended July 31, 1999.
<TABLE>
<CAPTION>
JULY 31,
JANUARY 31, ---------------------------------------------------
2000(a) 1999 1998 1997 1996 1995
----------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.03 $ 10.07 $ 10.07 $ 9.97 $ 10.03 $ 9.96
- ------------------------------------------- ----------- ------- ------- ------- -------- --------
Income from investment operations:
Net investment income 0.25 0.49 0.56 0.56 0.58 0.57
- ------------------------------------------- ----------- ------- ------- ------- -------- --------
Net gains (losses) on securities (both
realized and unrealized) (0.11) (0.04) -- 0.10 (0.06) 0.07
- ------------------------------------------- ----------- ------- ------- ------- -------- --------
Total from investment operations 0.14 0.45 0.56 0.66 0.52 0.64
- ------------------------------------------- ----------- ------- ------- ------- -------- --------
Less distributions:
Dividends from net investment income (0.25) (0.49) (0.56) (0.56) (0.58) (0.57)
- ------------------------------------------- ----------- ------- ------- ------- -------- --------
Net asset value, end of period $ 9.92 $ 10.03 $ 10.07 $ 10.07 $ 9.97 $ 10.03
=========================================== =========== ======= ======= ======= ======== ========
Total return(b) 1.43% 4.55% 5.66% 6.79% 5.27% 6.61%
=========================================== =========== ======= ======= ======= ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 3,651 $17,131 $50,609 $48,866 $143,468 $129,530
=========================================== =========== ======= ======= ======= ======== ========
Ratio of expenses to average net assets 0.29%(c) 0.31% 0.32% 0.31% 0.27% 0.28%
=========================================== =========== ======= ======= ======= ======== ========
Ratio of net investment income to average
net assets 5.01%(c) 4.84% 5.51% 5.56% 5.72% 5.70%
=========================================== =========== ======= ======= ======= ======== ========
Portfolio turnover rate 62% 184% 133% 130% 117% 120%
=========================================== =========== ======= ======= ======= ======== ========
</TABLE>
(a) Calculated using average shares outstanding.
(b) Total returns are not annualized for periods less than one year.
(c) Ratios are annualized and based on average net assets of $13,154,310.
10
<PAGE> 11
SEMI-ANNUAL REPORT
JANUARY 31, 2000
AIM INVESTMENT
SECURITIES FUNDS
AIM LIMITED MATURITY
TREASURY FUND
INSTITUTIONAL CLASS
TRUSTEES
Charles T. Bauer Carl Frishling
Bruce L. Crockett Robert H. Graham
Owen Daly II Prema Mathai-Davis
Edward K. Dunn Jr Lewis F. Pennock
Jack M. Fields Louis S. Sklar
OFFICERS
Charles T. Bauer Chairman
Robert H. Graham President
Gary T. Crum Senior Vice President
Carol F. Relihan Senior Vice President & Secretary
Melville B. Cox Vice President
Karen Dunn Kelley Vice President
Dana R. Sutton Vice President & Treasurer
Renee A. Friedli Assistant Secretary
P. Michelle Grace Assistant Secretary
Nancy L. Martin Assistant Secretary
Ofelia M. Mayo Assistant Secretary
Lisa A. Moss Assistant Secretary
Kathleen J. Pflueger Assistant Secretary
Samuel D. Sirko Assistant Secretary
Stephen I. Winer Assistant Secretary
Mary J. Benson Assistant Vice President & Assistant Treasurer
Sheri Morris Assistant Vice President & Assistant Treasurer
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, 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.
[FUND MANAGEMENT LOGO APPEARS HERE]
LTD-SAR-2
