<PAGE> 1
SEMIANNUAL REPORT / JANUARY 31 2000
AIM LIMITED MATURITY TREASURY FUND
[COVER IMAGE]
[AIM LOGO APPEARS HERE]
<PAGE> 2
[ COVER IMAGE ]
------------------------------------
ALEXANDER HAMILTON BY JOHN TRUMBULL (AMERICAN, 1756-1843)
AS THE UNITED STATES' FIRST SECRETARY OF THE TREASURY,
ALEXANDER HAMILTON PROVIDED THE BASIC MODEL FOR OUR PRESENT
ECONOMIC SYSTEM. AFTER THE REVOLUTIONARY WAR, WHEN THE
NEWLY FORMED UNITED STATES FOUND ITSELF DEEP IN DEBT, HAMILTON
PROPOSED ISSUING A NEW SERIES OF GOVERNMENT BONDS WHICH WOULD
PRESUMABLY SELL (AND DID) BECAUSE OF HIGH PUBLIC CONFIDENCE IN
THE NEW COUNTRY. U.S. TREASURY SECURITIES CONTINUE TO BE A
POPULAR INVESTMENT CHOICE TODAY FOR THE VERY SAME REASON.
------------------------------------
AIM Limited Maturity Treasury Fund is for shareholders who seek high monthly
income free from state taxes while maintaining relative stability of principal
by investing in U.S. Treasury notes with maturities of three years or less.
ABOUT FUND PERFORMANCE AND PORTFOLIO DATA THROUGHOUT THIS REPORT:
o AIM Limited Maturity Treasury Fund's performance figures are historical, and
they reflect the reinvestment of distributions and changes in net asset
value. When sales charges are included in performance figures, those figures
reflect the maximum 1.00% sales charge. Had the advisor not absorbed fund
expenses in the past, total returns would have been lower.
o The 30-day yield is calculated using a formula prescribed by the Securities
and Exchange Commission (SEC). The formula is based on the fund's potential
earnings from dividends, interest, yield-to-maturity or yield-to-call of its
holdings, net of all expenses and annualized.
o 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.
o The fund's investment return and principal value will fluctuate, so an
investor's shares, when redeemed, may be worth more or less than their
original cost.
o The fund's portfolio composition is subject to change, and there is no
assurance that the fund will continue to hold any particular security.
ABOUT INDEXES AND OTHER PERFORMANCE BENCHMARKS CITED IN THIS REPORT:
o The unmanaged Lehman 1-2 Year U.S. Government Bond Index, which represents
the performance of short-term (maturing in one to two years) U.S. Treasury
and U.S. government agency securities, is compiled by Lehman Brothers, a
well-known global investment bank.
o An investment cannot be made in an index. Unless otherwise indicated, index
results include reinvested dividends and do not reflect sales charges.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY. THERE IS A RISK THAT YOU COULD LOSE SOME OR ALL OF
YOUR MONEY.
This report may be distributed only to current shareholders or to persons
who have received a current prospectus of the fund.
AIM LIMITED MATURITY TREASURY FUND
<PAGE> 3
SEMIANNUAL REPORT / CHAIRMAN'S LETTER
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 us, either
at our Web site, aimfunds.com, or through our Client Services department at
800-959-4246. Information about your account is also available through our
automated AIM Investor Line, 800-246-5463.
Thank you for your continued participation in The AIM Family of
Funds--Registered Trademark--.
Sincerely,
/S/ CHARLES T. BAUER
Charles T. Bauer
Chairman
A I M Advisors, Inc.
------------------------------------
FOR INVESTORS WHO
STAYED THE COURSE WITH
THEIR FIXED-INCOME FUNDS
LAST YEAR, THEIR INVEST-
MENT DOLLARS WERE USED
TO PURCHASE BONDS AT
SIGNIFICANT DISCOUNTS.
------------------------------------
AIM LIMITED MATURITY TREASURY FUND
<PAGE> 4
SEMIANNUAL REPORT / MANAGERS' OVERVIEW
FUND WEATHERS ROCKY TREASURY MARKET
HOW DID AIM LIMITED MATURITY TREASURY FUND 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 5.11%. The
30-day SEC yield at maximum offering price was 5.71%.
Total return for the fund for the six months ended January 31, 2000, was
1.31% at NAV, which does not include sales charges. 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 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.
When the Fed eased interest rates during late 1998, it was to address
financial-market liquidity problems arising from that year's global financial
crisis. Most of the problems related to that crisis have abated, so the Fed is
able to concentrate on the domestic economy. We think a proactive Fed is a
positive for the bond market, and some analysts feel that domestic interest
rates have returned to levels appropriate for strong economic growth.
DID YOU MANAGE THE FUND DIFFERENTLY, GIVEN THE CHALLENGING MARKET ENVIRONMENT?
We did not make any adjustments to our management strategy, and the fund per
------------------------------------
KEY ECONOMIC INDICATORS SHOWED THAT
EVEN IN THE FACE OF BLISTERING ECONOMIC
GROWTH, THE UNITED STATES REMAINED
LARGELY INFLATION-FREE.
------------------------------------
YIELD CURVE--U.S. TREASURY SECURITIES
As of 1/31/00, with time to maturity
AREA OF INVESTMENT FOCUS
================================================================================
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
================================================================================
See important fund and index disclosures inside front cover.
AIM LIMITED MATURITY TREASURY FUND
2
<PAGE> 5
SEMIANNUAL REPORT / MANAGERS' OVERVIEW
------------------------------------
WE LOOK FOR CONTINUED UPWARD PRES-
SURE ON INTEREST RATES . . .
------------------------------------
formed 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. Long-term Treasury securities
usually have higher yields than short-term Treasuries to compensate for the fact
that the value of long-term Treasuries runs a greater risk of being eroded by
inflation. This means that the Treasury yield curve typically rises from left to
right. However, 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 to streamline its
auction schedule by reducing the size and frequency of the auctions. 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 (0.25%) 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.
RESULTS OF A $10,000 INVESTMENT
12/15/87-1/31/00, including sales charges
================================================================================
AIM Limited Maturity
Treasury Fund
- --------------------------------------------------------------------------------
12/15/87 10000
12/31/87 9950
12/31/88 10536
12/31/89 11551
12/31/90 12586
12/31/91 13906
12/31/92 14690
12/31/93 15344
12/31/94 15475
12/31/95 16929
12/31/96 17729
12/31/97 18788
12/31/98 19934
12/31/99 20461
1/31/00 20467
Past performance cannot guarantee comparable future results.
================================================================================
AVERAGE ANNUAL TOTAL RETURNS
================================================================================
For periods ended 1/31/00, including
sales charges
Inception (12/15/87) 6.08%
10 years 5.76
5 years 5.27
1 year 1.38*
*2.38%, excluding sales charges
For periods ended 12/31/99, the most recent
calendar quarter end, including sales charges
Inception (12/15/87) 6.12%
10 years 5.78
5 years 5.53
1 year 1.64
================================================================================
MARKET VOLATILITY CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS
OF AN INVESTMENT MADE TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL
PERFORMANCE SHOWN.
See important fund and index disclosures inside front cover.
AIM LIMITED MATURITY TREASURY FUND
3
<PAGE> 6
SEMIANNUAL REPORT / FOR CONSIDERATION
CHOOSE YOUR INVESTMENT PALETTE
[IMAGE APPEARS HERE]
No two pieces of art are exactly alike. Just as an artist may use different
paints to create a piece, so does an investor use different kinds of investments
to create a portfolio. And as with art, tastes can change over time--most
investors have different goals at different stages in their lives, as well as
varying tolerance for risk. The biggest advantage mutual funds offer is the
potential for diversification. Providing funds with assorted objectives and
goals allows investors to shape their portfolios to their specific needs and
spread their risk over several different funds, rather than painting their
portfolios all one color.
GROWTH VS. INCOME
If you look at the list of AIM's retail mutual funds on the back of your fund
report, you'll notice that they are divided into different types. Two that
frequently appear are growth and income. Common stock is normally the growth
component of a mutual fund with growth as a primary or secondary objective.
Bonds are typically the income components of a mutual fund with income as a
primary or secondary objective.
Let's take a closer look at the categories into which AIM's retail mutual
funds are divided. Keep in mind that funds listed under the same category don't
necessarily have the same kind of investment strategy or portfolio, even if they
have the same objective.
DOMESTIC MUTUAL FUNDS
GROWTH FUNDS
Growth funds typically invest in common stocks of companies whose businesses are
growing. Growth companies tend to reinvest their profits toward expansion of
their potential to produce greater returns instead of paying dividends. So
growth mutual funds focus on generating capital gains--increasing the value of
the stocks they hold--rather than current income, which means they generally
don't pay regular income dividends. Growth funds usually do, however, make one
capital-gains distribution per year, when there are gains.
An increase over time in the value of a growth fund's portfolio means the
fund's value, or share price, increases over time also. Shareholders in a growth
fund, then, make money by selling their shares for more than they paid for them.
Of course, the opposite is also true--shareholders can lose money by selling
their shares for less than they paid for them. Growth funds usually range from
moderate to very aggressive, depending on the size and types of companies in
which they invest.
GROWTH AND INCOME FUNDS
A growth and income fund generally invests in common and preferred stocks and
bonds of older, more established companies that have a longer track record of
growth and paying dividends.
A typical growth and income mutual fund will pay quarterly or annual income
dividends to its shareholders. (Monthly dividends are not common.) In this way,
growth and income funds can potentially provide long-term growth of investments
and also current income. These funds tend to be more conservative than growth
funds.
INCOME FUNDS
Income funds are generally designed to provide high current income rather than
long-term growth. To that end, income funds usually invest chiefly in
interest-paying corporate and government bonds. They may also own stocks of
companies that pay regular dividends. Some income funds are more aggressive than
others. The aggressiveness of a particular fund depends not only on the kinds of
securities in which it invests, but also on the fund's sector allocation and
maturity structure.
AIM LIMITED MATURITY TREASURY FUND
4
<PAGE> 7
SEMIANNUAL REPORT / FOR CONSIDERATION
For example, Treasury securities are considered a relatively safe investment
because they are guaranteed by the U.S. government. However, lower risk also
means lower return potential. On the other hand, lower-rated corporate bonds,
often called junk bonds, involve more risk because they are not guaranteed--they
are only as good as the companies that issue them. But the added risk also means
higher return potential.
Income funds are considered more conservative and are suited for investors
seeking income rather than growth.
TAX-FREE INCOME OR MUNICIPAL FUNDS
These funds provide shareholders with current income that is tax-exempt at some
level, depending on the securities in which they invest. So municipal mutual
funds appeal to investors who are looking to reduce income that would otherwise
be subject to tax. Municipal bonds or notes, which are issued by state or local
governments, are generally exempt from federal taxes. Federal securities, like
Treasury bonds, are usually exempt from state taxes. And then there are some
securities that are exempt from both federal and state taxes.(1)
MONEY MARKET FUNDS
A money market fund is one of the safest types of mutual funds available because
its main goal is preserving your investment while paying current income in the
form of interest. As a result, these funds tend to appeal to investors looking
for safety, liquidity and some income from their investment. Money market funds
invest in high-quality, short-term securities such as commercial paper and U.S.
government agency securities. Although money market funds are not guaranteed or
insured by the U.S. government, the securities they hold are less risky than
other types of fixed-income securities. The trade-off for safety of principal
investment is a lower rate of return.(2)
INTERNATIONAL AND GLOBAL MUTUAL FUNDS
INTERNATIONAL GROWTH FUNDS
An international growth fund has the same objective as a domestic growth fund,
except it invests in stocks of companies located outside the United States. Like
their domestic counterparts, international growth funds tend to pay
distributions in the form of capital gains rather than dividends. An
international growth mutual fund might invest in a particular country, region or
continent depending on the investment strategy shown in its prospectus.
International funds carry different risks than domestic funds because most
foreign markets are not as established as the markets in the United States.
Other risks include changes in the value of the U.S. dollar compared to foreign
currencies, accounting differences, political risks and foreign regulatory
differences.
GLOBAL GROWTH, GLOBAL GROWTH AND INCOME, AND GLOBAL INCOME FUNDS
These funds are similar to their domestic equivalents in terms of their goals
and the income distributions they pay. Global funds are comparable to
international funds in that they can invest in stocks of companies outside the
United States. But global funds can also invest substantially in U.S. stocks;
international funds generally do not. The amount of a global fund's portfolio
that can be invested in the United States varies greatly from fund to fund,
according to a fund's prospectus. Global funds carry the same risks as
international funds.
SPECIALIZED FUNDS
THEME FUNDS
Theme or sector funds invest primarily in a particular industry or sector of the
economy, either domestically or globally. Theme funds are required by prospectus
to invest a certain percentage of their assets in their industry or sector of
choice under normal market conditions. As a result, theme funds present greater
risk and potential reward than more diversified funds. The types of securities
held by a theme fund determine its goal of growth and/or income.
TYPES OF FUND DISTRIBUTIONS
INCOME DIVIDENDS are paid from dividends and/or interest from securities in a
fund's portfolio. For example, if a company in which a mutual fund owns stock
distributes some of its earnings to its shareholders as a dividend, the fund
passes on those earnings to its own shareholders. Income dividends are usually
taxed as ordinary income.
CAPITAL GAINS represent the net profit realized from the growth in value of the
holdings in a fund's portfolio. These distributions are usually made once per
year. There are two types of capital gains:
o Short-term capital gains are paid from net profits gained when a mutual fund
sells stocks or bonds it has held for less than a year. Short-term capital gains
are taxed as ordinary income.
o Long-term capital gains are paid from net profits gained when a mutual fund
sells stocks or bonds it has held for more than a year. Long-term capital gains
are usually taxed at the capital-gains rate, which is typically lower than
ordinary income-tax rates.
(1) Investors in tax-free income funds still have a risk of incurring taxes on
capital-gains distributions, for example, so it's wise to see your tax advisor
before investing in such funds.
(2) There is no guarantee that a money market fund will be able to maintain a
stable net asset value of $1.00 per share.
See the back cover for a complete list of AIM's retail mutual funds. For more
information about your fund's objective, read your fund prospectus. For more
complete information about any AIM fund(s), including sales charges and
expenses, ask your financial advisor or securities dealer for a free
prospectus(es). Please read the prospectus(es) carefully before you invest or
send money.
AIM LIMITED MATURITY TREASURY FUND
5
<PAGE> 8
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.
6
<PAGE> 9
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
=======================================================
</TABLE>
<TABLE>
<S> <C>
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 divided
by 99.00%) $ 10.02
=======================================================
Institutional Class:
Net asset value, redemption price and
offering price per share $ 9.92
=======================================================
</TABLE>
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>
See Notes to Financial Statements.
7
<PAGE> 10
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.
8
<PAGE> 11
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.
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
9
<PAGE> 12
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.
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>
10
<PAGE> 13
NOTE 8-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of Class A outstanding
during the six months ended January 31, 2000 and each of the years in the
five-year period ended July 31, 1999.
<TABLE>
<CAPTION>
JULY 31,
JANUARY 31, -----------------------------------------------------
2000 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 0.24 0.47 0.53 0.54 0.55 0.54
- ----------------------------------------------------------- -------- -------- -------- -------- -------- --------
Net gains (losses) on securities (both realized and
unrealized) (0.11) (0.04) -- 0.10 (0.06) 0.07
- ----------------------------------------------------------- -------- -------- -------- -------- -------- --------
Total from investment operations 0.13 0.43 0.53 0.64 0.49 0.61
- ----------------------------------------------------------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.24) (0.47) (0.53) (0.54) (0.55) (0.54)
- ----------------------------------------------------------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 9.92 $ 10.03 $ 10.07 $ 10.07 $ 9.97 $ 10.03
=========================================================== ======== ======== ======== ======== ======== ========
Total return(a) 1.31% 4.32% 5.42% 6.55% 4.98% 6.36%
=========================================================== ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $347,153 $390,018 $345,355 $389,812 $359,048 $274,480
=========================================================== ======== ======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.52%(b) 0.54% 0.54% 0.54% 0.54% 0.51%
=========================================================== ======== ======== ======== ======== ======== ========
Ratio of net investment income to average net assets 4.78%(b) 4.61% 5.29% 5.35% 5.45% 5.44%
=========================================================== ======== ======== ======== ======== ======== ========
Portfolio turnover rate 62% 184% 133% 130% 117% 120%
=========================================================== ======== ======== ======== ======== ======== ========
</TABLE>
(a) Does not deduct sales charges and is not annualized for periods less than
one year.
(b) Ratios are annualized and based on average net assets of $375,423,064.
11
<PAGE> 14
<TABLE>
<CAPTION>
BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
<S> <C> <C>
Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
Chairman Chairman Suite 100
A I M Management Group Inc. Houston, TX 77046
Robert H. Graham
Bruce L. Crockett President INVESTMENT ADVISOR
Director
ACE Limited; Carol F. Relihan A I M Advisors, Inc.
Formerly Director, President, and Senior Vice President and Secretary 11 Greenway Plaza
Chief Executive Officer Suite 100
COMSAT Corporation Gary T. Crum Houston, TX 77046
Senior Vice President
Owen Daly II TRANSFER AGENT
Director Dana R. Sutton
Cortland Trust Inc. Vice President and Treasurer A I M Fund Services, Inc.
P.O. Box 4739
Edward K. Dunn Jr. Melville B. Cox Houston, TX 77210-4739
Chairman, Mercantile Mortgage Corp.; Vice President
Formerly Vice Chairman, President and CUSTODIAN
Chief Operating Officer, Karen Dunn Kelley
Mercantile-Safe Deposit & Trust Co.; and Vice President Bank of New York
President, Mercantile Bankshares 90 Washington Street, 11th Floor
Mary J. Benson New York, NY 10286
Jack Fields Assistant Vice President and
Chief Executive Officer Assistant Treasurer COUNSEL TO THE FUND
Texana Global, Inc.;
Formerly Member Sheri Morris Ballard Spahr
of the U.S. House of Representatives Assistant Vice President and Andrews & Ingersoll, LLP
Assistant Treasurer 1735 Market Street
Carl Frischling Philadelphia, PA 19103
Partner Renee A. Friedli
Kramer, Levin, Naftalis & Frankel LLP Assistant Secretary COUNSEL TO THE TRUSTEES
Robert H. Graham P. Michelle Grace Kramer, Levin, Naftalis & Frankel LLP
President and Chief Executive Officer Assistant Secretary 919 Third Avenue
A I M Management Group Inc. New York, NY 10022
Nancy L. Martin
Prema Mathai-Davis Assistant Secretary DISTRIBUTOR
Chief Executive Officer, YWCA of the U.S.A.
Ofelia M. Mayo A I M Distributors, Inc.
Lewis F. Pennock Assistant Secretary 11 Greenway Plaza
Attorney Suite 100
Lisa A. Moss Houston, TX 77046
Louis S. Sklar Assistant Secretary
Executive Vice President
Hines Interests Kathleen J. Pflueger
Limited Partnership Assistant Secretary
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
</TABLE>
12
<PAGE> 15
------------------------------------
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AIM INVESTOR LINE,
800-246-5463,
PROVIDES CURRENT ACCOUNT
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ON ALL AIM FUNDS
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checking account at your request.
o AIM INTERNET CONNECT(SM). With this service, you can purchase, redeem or
exchange shares of AIM funds in your current AIM account simply by accessing
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or 403(b), only exchanges are allowed over the Internet because of the
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o AUTOMATIC REINVESTMENT OF DIVIDENDS AND/OR CAPITAL GAINS. You can receive
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o AUTOMATIC INVESTMENT PLAN. You can add to your account by authorizing your
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information. For account information, contact us at
[email protected].
o www.aimfunds.com. Our award-winning Web site provides account information,
shareholder education and fund performance information.
<PAGE> 16
THE AIM FAMILY OF FUNDS--Registered Trademark--
<TABLE>
<S> <C> <C>
GROWTH FUNDS MONEY MARKET FUNDS* A I M Management Group Inc.
AIM Aggressive Growth Fund AIM Money Market Fund has provided leadership in the
AIM Blue Chip Fund AIM Tax-Exempt Cash Fund mutual fund industry since
AIM Capital Development Fund 1976 and managed approximately
AIM Constellation Fund(1) INTERNATIONAL GROWTH FUNDS $160 billion in assets for
AIM Dent Demographic Trends Fund AIM Advisor International Value Fund more than 6.6 million
AIM Large Cap Growth Fund AIM Asian Growth Fund shareholders, including
AIM Mid Cap Equity Fund AIM Developing Markets Fund individual investors,
AIM Mid Cap Growth Fund AIM Euroland Growth Fund(5) corporate clients and
AIM Mid Cap Opportunities Fund(2) AIM European Development Fund financial institutions, as of
AIM Select Growth Fund AIM International Equity Fund December 31, 1999.
AIM Small Cap Growth Fund(3) AIM Japan Growth Fund The AIM Family of
AIM Small Cap Opportunities Fund(4) AIM Latin American Growth Fund Funds--Registered Trademark--
AIM Value Fund AIM New Pacific Growth Fund is distributed nationwide,
AIM Weingarten Fund and AIM today is the
GLOBAL GROWTH FUNDS eighth-largest mutual fund
GROWTH & INCOME FUNDS AIM Global Aggressive Growth Fund compleX in the United States
AIM Advisor Flex Fund AIM Global Growth Fund in assets under management,
AIM Advisor Large Cap Value Fund according to Strategic
AIM Advisor Real Estate Fund GLOBAL GROWTH & INCOME FUNDS Insight, an independent mutual
AIM Balanced Fund AIM Global Growth & Income Fund fund monitor.
AIM Basic Value Fund AIM Global Utilities Fund
AIM Charter Fund
GLOBAL INCOME FUNDS
INCOME FUNDS AIM Emerging Markets Debt Fund
AIM Floating Rate Fund AIM Global Government Income Fund
AIM High Yield Fund AIM Global Income Fund
AIM High Yield Fund II AIM Strategic Income Fund
AIM Income Fund
AIM Intermediate Government Fund THEME FUNDS
AIM Limited Maturity Treasury Fund AIM Global Consumer Products and Services Fund
AIM Global Financial Services Fund
TAX-FREE INCOME FUNDS AIM Global Health Care Fund
AIM High Income Municipal Fund AIM Global Infrastructure Fund
AIM Municipal Bond Fund AIM Global Resources Fund
AIM Tax-Exempt Bond Fund of Connecticut AIM Global Telecommunications and Technology Fund(6)
AIM Tax-Free Intermediate Fund AIM Global Trends Fund(7)
</TABLE>
(1) Effective December 1, 1999, AIM Constellation Fund's investment strategy
broadened to allow investments across all market capitalizations. (2) AIM Mid
Cap Opportunities Fund closed to new investors on March 21, 2000. (3) AIM Small
Cap Growth Fund closed to new investors on November 8, 1999. (4) AIM Small Cap
Opportunities Fund closed to new investors on November 4, 1999. (5) On September
1, 1999, AIM Europe Growth Fund was renamed AIM Euroland Growth Fund. Previously
the fund invested in all size companies in most areas of Europe. The fund now
seeks to invest at least 65% of its assets in large-cap companies within
countries using the euro as their currency (EMU-member countries). (6) On June
1, 1999, AIM Global Telecommunications Fund was renamed AIM Global
Telecommunications and Technology Fund. (7) Effective August 27, 1999, AIM
Global Trends Fund was restructured to operate as a traditional mutual fund.
Before that date, the fund operated as a fund of funds. For more complete
information about any AIM fund(s), including sales charges and expenses, ask
your financial advisor or securities dealer for a free prospectus(es). Please
read the prospectus(es) carefully before you invest or send money. If used as
sales material after April 20, 2000, this report must be accompanied by a
current Quarterly Review of Performance for AIM Funds. *An investment in any AIM
money market fund is not insured by the Federal Deposit Insurance Corporation or
any other government agency.
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LTD-SAR-1
