<PAGE> 1
PROSPECTUS
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PRIVATE INVESTMENT CLASS
OF THE
TREASURY TAXADVANTAGE PORTFOLIO
OF
SHORT-TERM INVESTMENTS TRUST
11 GREENWAY PLAZA, SUITE 1919
HOUSTON, TEXAS 77046-1173
(800) 877-7748
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The Treasury TaxAdvantage Portfolio is a money market fund whose investment
objective is the maximization of current income to the extent consistent with
the preservation of capital and the maintenance of liquidity. The Treasury
TaxAdvantage Portfolio seeks to achieve its objective by investing in direct
obligations of the U.S. Treasury. The Treasury TaxAdvantage Portfolio's
investment strategy is intended to enable the Portfolio to provide its
shareholders with dividends that are exempt from state and local income taxation
in certain jurisdictions. The instruments purchased by the Treasury TaxAdvantage
Portfolio will have maturities of 397 days or less.
The Treasury TaxAdvantage Portfolio is a series portfolio of Short-Term
Investments Trust (the "Fund"), an open-end diversified, series, management
investment company. This Prospectus relates solely to the Private Investment
Class of the Treasury TaxAdvantage Portfolio, a class of shares designed to be a
convenient vehicle in which customers of banks, certain broker-dealers and other
financial institutions can invest short-term cash reserves.
The Fund also offers shares of another class of the Treasury TaxAdvantage
Portfolio pursuant to a separate prospectus: the Institutional Class, as well as
shares of other classes of another portfolio of the Fund, the Treasury
Portfolio: the Cash Management Class, the Institutional Class, the Personal
Investment Class, the Private Investment Class and the Resource Class.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
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THIS PROSPECTUS SETS FORTH BASIC INFORMATION THAT A PROSPECTIVE INVESTOR
SHOULD KNOW BEFORE INVESTING IN SHARES OF THE PRIVATE INVESTMENT CLASS OF THE
TREASURY TAXADVANTAGE PORTFOLIO AND SHOULD BE READ AND RETAINED FOR FUTURE
REFERENCE. A STATEMENT OF ADDITIONAL INFORMATION, DATED DECEMBER 14, 1995, HAS
BEEN FILED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION AND IS
HEREBY INCORPORATED BY REFERENCE. FOR A COPY OF THE STATEMENT OF ADDITIONAL
INFORMATION WITHOUT CHARGE, WRITE TO THE ADDRESS ABOVE OR CALL (800) 877-7748.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. THERE CAN BE NO ASSURANCE THAT
THE TREASURY TAXADVANTAGE PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET
VALUE OF $1.00 PER SHARE. SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING
THE POSSIBLE LOSS OF PRINCIPAL.
PROSPECTUS DATED: DECEMBER 14, 1995
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TABLE OF CONTENTS
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SUMMARY.......................................... 2 DIVIDENDS........................................ 10
TABLE OF FEES AND EXPENSES....................... 4 TAXES............................................ 11
FINANCIAL HIGHLIGHTS............................. 5 NET ASSET VALUE.................................. 12
SUITABILITY FOR INVESTORS........................ 5 YIELD INFORMATION................................ 13
INVESTMENT PROGRAM............................... 6 REPORTS TO SHAREHOLDERS.......................... 13
PURCHASE OF SHARES............................... 8 MANAGEMENT OF THE FUND........................... 13
REDEMPTION OF SHARES............................. 10 GENERAL INFORMATION.............................. 16
</TABLE>
SUMMARY
THE PORTFOLIO AND ITS INVESTMENT OBJECTIVE
The Fund is an open-end diversified series management investment company.
This Prospectus relates to the Private Investment Class (the "Class") of the
Treasury TaxAdvantage Portfolio (the "Portfolio"). The Portfolio is a money
market fund which invests in direct obligations of the U.S. Treasury. The
instruments purchased by the Portfolio will have maturities of 397 days or less.
The investment objective of the Portfolio is the maximization of current income
to the extent consistent with the preservation of capital and the maintenance of
liquidity. The Portfolio's investment strategy is intended to enable the
Portfolio to provide its shareholders with dividends that are exempt from state
and local income taxation in certain jurisdictions.
Pursuant to a separate prospectus, the Fund also offers other shares of
another class of shares of beneficial interest of the Fund representing an
interest in the Portfolio. Such class has different distribution arrangements
and is designed for institutional investors. The Fund also offers shares of
several classes representing an interest in another portfolio, the Treasury
Portfolio, pursuant to separate prospectuses. The portfolios of the Fund are
referred to collectively as "Portfolios."
Because the Fund declares dividends on a daily basis, shares of each class
of the Portfolio have the same net asset value (proportionate interest in the
net assets of the Portfolio) and bear equally those expenses, such as the
advisory fee, that are allocated to the Portfolio as a whole. All classes of the
Portfolio share a common investment objective and portfolio of investments.
However, different classes of the Portfolio have different shareholder
qualifications, and are separately allocated certain class expenses, such as
those associated with the distribution of their shares. Therefore, each class
will have a different dividend payment and a different yield.
INVESTORS IN THE CLASS
The Class is designed to be a convenient vehicle in which customers of
banks, certain broker-dealers and other financial institutions can invest in a
diversified open-end money market fund.
PURCHASE OF SHARES
Shares of the Class that are offered hereby are sold at net asset value.
The minimum initial investment in the Class is $10,000. There is no minimum
amount for subsequent investments. Payment for shares of the Class purchased
must be in funds immediately available to the Fund. See "Purchase of Shares."
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REDEMPTION OF SHARES
Redemptions may be made without charge at net asset value. Payment for
redeemed shares of the Class for which redemption orders are received prior to
1:00 p.m. Eastern Time will normally be made on the same day. See "Redemption of
Shares."
DIVIDENDS
The net income of the Portfolio is declared as a dividend daily to
shareholders of record immediately after 1:00 p.m. Eastern Time. Dividends are
paid monthly by check or wire transfer unless the shareholder has previously
elected to have such dividends automatically reinvested in additional shares of
the Class. Information concerning the amount of the dividends declared on any
particular day will normally be available by 3:30 p.m. Eastern Time on that day.
See "Dividends."
CONSTANT NET ASSET VALUE
The Fund uses the amortized cost method of valuing the securities held by
the Portfolio and rounds the per share net asset value to the nearest whole
cent. Accordingly, the net asset value per share of the Portfolio will normally
remain constant at $1.00. AN INVESTMENT IN THE PORTFOLIO IS NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, AND THERE IS NO ASSURANCE THAT THE PORTFOLIO
WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE. See "Net Asset Value."
INVESTMENT ADVISOR
A I M Advisors, Inc. ("AIM") serves as the Fund's investment advisor and
receives a fee based on the Fund's average daily net assets. During the fiscal
year ended August 31, 1995, the Fund paid AIM advisory fees with respect to the
Portfolio which represented 0.15% of the average daily net assets of the
Portfolio. AIM is primarily engaged in the business of acting as manager or
advisor to investment companies. Under an Administrative Services Agreement, AIM
may be reimbursed by the Fund for its costs of performing certain accounting and
other administrative services for the Fund. See "Management of the
Fund -- Investment Advisor" "-- Administrative Services."
DISTRIBUTOR AND DISTRIBUTION PLAN
Fund Management Company ("FMC") acts as the exclusive distributor of the
shares of the Class. Pursuant to a plan of distribution adopted by the Fund's
Board of Trustees, the Fund may pay up to 0.50% of the average daily net asset
value of the Portfolio attributable to the Class to FMC as well as to certain
broker-dealers or other financial institutions. Of this amount, up to 0.25% may
be for continuing personal services to shareholders provided by broker-dealers
or institutions and the balance would be deemed an asset-based sales charge. See
"Purchase of Shares" and "Distribution Plan."
SPECIAL RISK CONSIDERATIONS
The Portfolio may borrow money and enter into reverse repurchase agreements
for temporary or emergency purposes, and may purchase securities for delayed
delivery. Accordingly, an investment in the Portfolio may entail somewhat
different risks from an investment in an investment company that does not engage
in such practices. There can be no assurance that the Portfolio will be able to
maintain a stable net asset value of $1.00 per share. See "Investment Program."
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
Logo), AIM and Design, AIM, AIM LINK and AIM Institutional Funds are registered
service marks of A I M Management Group Inc.
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TABLE OF FEES AND EXPENSES
<TABLE>
<S> <C> <C>
Shareholder Transaction Expenses
Maximum sales load imposed on purchases
(as a percentage of offering price).................................. None
Maximum sales load on reinvested dividends
(as a percentage of offering price).................................. None
Deferred sales load (as a percentage of original purchase price or
redemption proceeds, as applicable).................................. None
Redemption fees (as a percentage of amount redeemed,
if applicable)....................................................... None
Exchange fee............................................................ None
Annual Portfolio Operating Expenses -- Private Investment Class*
(as a percentage of average net assets)
Management fees (after fee waivers)**................................... 0.15%
12b-1 fees (after fee waivers)**........................................ 0.25%***
Other expenses:
Custodian fees....................................................... 0.01%
Other**.............................................................. 0.04%
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Total other expenses............................................ 0.05%
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Total portfolio operating expenses --
Private Investment Class............................................. 0.45%
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</TABLE>
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* The fees and expenses set forth in the table are based on estimated average
net assets of the Class.
** Had there been no fee waivers, management fees, 12b-1 fees and other
expenses would have been 0.18%, 0.50% and 0.34%, respectively.
*** It is possible that as a result of Rule 12b-1 fees, long-term shareholders
may pay more than the economic equivalent of the maximum front-end sales
charges permitted under rules of the National Association of Securities
Dealers, Inc. Given the Rule 12b-1 fee of the Class, however, it is
estimated that it would take a substantial number of years for a shareholder
to exceed such maximum front-end sales charges.
EXAMPLE
An investor in the Class would pay the following expenses on a $1,000
investment, assuming (1) a 5% annual return and (2) redemption at the end of
each time period.
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1 year............................................................... $ 5
3 years.............................................................. $14
5 years.............................................................. $25
10 years.............................................................. $57
</TABLE>
The Table of Fees and Expenses is designed to assist an investor in
understanding the various costs and expenses that an investor in the Class will
bear directly or indirectly. (For more complete descriptions of the various
costs and expenses, see "Management of the Fund" below.) The expense figures are
based upon actual costs and fees charged to the Class. The Table of Fees and
Expenses reflects voluntary waivers for the Class.
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However, there can be no assurance that any future waivers (if any) will not
vary from the figures reflected in the Table of Fees and Expenses. To the extent
any service providers assume additional expenses of the Class, such assumption
of additional expenses will have the effect of lowering the Class's overall
expense ratio and increasing its yield to investors. Beneficial owners of shares
of the Class should also consider the effect of any charges imposed by the
institution maintaining their accounts.
The example in the Table of Fees and Expenses assumes that all dividends
and distributions are reinvested and that the amounts listed under "Annual
Portfolio Operating Expenses -- Private Investment Class" remain the same in the
years shown. THE EXAMPLE SHOULD NOT BE CONSIDERED TO BE AN ACCURATE
REPRESENTATION OF PAST OR FUTURE PERFORMANCE AND ACTUAL EXPENSES MAY BE GREATER
OR LESSER THAN THOSE SHOWN.
FINANCIAL HIGHLIGHTS
Shown below are the per share data, ratios and supplemental data
(collectively, "data") for the period December 21, 1994 (date operations
commenced) through August 31, 1995. The data has been audited by KPMG Peat
Marwick LLP, independent auditors, whose unqualified report thereon appears in
the Statement of Additional Information.
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1995
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Net asset value, beginning of period............................................ $ 1.00
Income from investment operations:
Net investment income......................................................... 0.04
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Total from investment operations...................................... 0.04
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Less distributions:
Dividends from net investment income.......................................... (0.04)
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Net asset value, end of period.................................................. $ 1.00
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Total return(a)................................................................. 5.32%
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Ratios/supplemental data:
Net assets, end of period (000s omitted)...................................... $5,423
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Ratio of expenses to average net assets....................................... 0.45%(b)
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Ratio of net investment income to average net assets.......................... 5.21%(b)
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</TABLE>
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(a) Annualized.
(b) After waiver of advisory fee and expense reimbursement. Ratios are
annualized and based on average net assets of $5,862,581. Ratios of expenses
and net investment income to average net assets prior to waiver of advisory
fees and expense reimbursements were 0.77% and 4.89%, respectively.
SUITABILITY FOR INVESTORS
The Class is intended for use primarily by customers of banks, certain
broker-dealers and other financial institutions who seek a convenient vehicle in
which to invest in an open-end diversified money market fund. The Portfolio's
investment strategy is intended to provide its shareholders with dividends that
are exempt from state and local income taxation in certain jurisdictions. The
minimum initial investment is $10,000.
5
<PAGE> 6
Investors in the Class have the opportunity to receive a somewhat higher
yield than might be obtainable through direct investment in money market
instruments, and enjoy the benefits of diversification, economies of scale and
same-day liquidity. Generally, higher interest rates can be obtained on the
purchase of very large blocks of money market instruments. Of course, any such
relative increase in interest rates may be offset to some extent by the
operating expenses of the Class.
Because the Portfolio invests in direct obligations of the U.S. Treasury it
may be considered to have somewhat less risk than many other money market funds
and yields on the Portfolio may be expected to be somewhat lower than many other
money market funds. However, the possible exemption from state and local income
taxation with respect to dividends paid by the Portfolio may enable shareholders
to achieve an after-tax return comparable to or higher than that obtained from
other money market funds, which may provide an advantage to some shareholders.
INVESTMENT PROGRAM
INVESTMENT OBJECTIVE
The investment objective of the Portfolio is the maximization of current
income to the extent consistent with the preservation of capital and the
maintenance of liquidity. The Portfolio intends to provide its shareholders with
dividends that are exempt from state and local income taxation in certain
jurisdictions. The Portfolio seeks to achieve its objective by investing in
direct obligations of the U.S. Treasury. The money market instruments in which
the Portfolio invests are considered to carry very little risk and accordingly
may not have as high a yield as that available on money market instruments of
lesser quality.
INVESTMENT POLICIES
The Portfolio invests exclusively in direct obligations of the U.S.
Treasury, which include Treasury bills, notes and bonds. The market values of
the money market instruments held by the Portfolio will be affected by changes
in the yields available on similar securities. If yields have increased since a
security was purchased, the market value of such security will generally have
decreased. Conversely, if yields have decreased, the market value of such
security will generally have increased.
BORROWING MONEY/REVERSE REPURCHASE AGREEMENTS. The Portfolio may borrow
money and enter into reverse repurchase agreements with respect to its portfolio
securities in amounts up to 10% of the value of its total assets at the time of
borrowing or entering into a reverse repurchase agreement. The Portfolio will
only borrow money or enter into reverse repurchase agreements for temporary or
emergency purposes, such as to facilitate the orderly sale of portfolio
securities to accommodate abnormally heavy redemption requests should they
occur. Borrowing will not be made for leverage purposes. Reverse repurchase
transactions are limited to a term not to exceed 92 days. The Portfolio will use
reverse repurchase agreements when the interest income to be earned from the
securities that would otherwise have to be liquidated to meet redemption
requests is greater than the interest expense of the reverse repurchase
transaction. Reverse repurchase agreements involve the risk that the market
value of securities retained by the Portfolio in lieu of liquidation may decline
below the repurchase price of the securities sold by the Portfolio which it is
obligated to repurchase. The risk, if encountered, could cause a reduction in
the net asset value of the Portfolio's shares. Reverse repurchase agreements are
considered to be borrowings under the Investment Company Act of 1940, as amended
(the "1940 Act").
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<PAGE> 7
PURCHASING DELAYED DELIVERY SECURITIES. In managing the Portfolio's
investments, AIM may indicate to dealers or issuers its interest in acquiring
certain securities for the Portfolio for settlement beyond a customary
settlement date. In some cases, the Portfolio may agree to purchase such
securities at stated prices and yields. In such cases, such securities are
considered "delayed delivery" securities when traded in the secondary market.
Since this is done to facilitate the acquisition of portfolio securities and is
not for the purpose of investment leverage, the amount of delayed delivery
securities involved may not exceed the estimated amount of funds available for
investment on the settlement date. Until the settlement date, assets of the
Portfolio with a dollar value sufficient at all times to make payment for the
delayed delivery securities will be segregated. The total amount of segregated
assets may not exceed 25% of the Portfolio's total assets. The delayed delivery
securities, which will not begin to accrue interest until the settlement date,
will be recorded as an asset of the Portfolio and will be subject to the risks
of market value fluctuations. The purchase price of the delayed delivery
securities will be recorded as a liability of the Portfolio until settlement.
Absent extraordinary circumstances, the Portfolio's right to acquire delayed
delivery securities will not be divested prior to the settlement date.
ILLIQUID SECURITIES. The Portfolio will invest no more than 10% of its net
assets in illiquid securities.
PORTFOLIO TRANSACTIONS. The Portfolio does not seek profits through
short-term trading and will generally hold portfolio securities to maturity, but
AIM may seek to enhance the yield of the Portfolio by taking advantage of yield
disparities or other factors that occur in the money market. For example, market
conditions frequently result in similar securities trading at different prices.
AIM may dispose of any portfolio security prior to its maturity if such
disposition and reinvestment of proceeds are expected to enhance yield
consistent with AIM's judgment as to desirable portfolio maturity structure or
if such disposition is believed to be advisable due to other circumstances or
conditions. Securities held by the Portfolio will be disposed of prior to
maturity if an earlier disposition is deemed desirable by AIM to meet redemption
requests. The Portfolio's policy of investing in securities with maturities of
397 days or less will result in high portfolio turnover. Since brokerage
commissions are not normally paid on investments of the type made by the
Portfolio, however, the high turnover rate should not adversely affect the
Portfolio's net income.
The investment policies described above may be changed by the Board of
Trustees without the affirmative vote of a majority of the outstanding shares of
the Portfolio.
INVESTMENT RESTRICTIONS
The Portfolio's investment program is subject to a number of investment
restrictions which reflect self-imposed standards as well as federal and state
regulatory limitations. These restrictions are designed to minimize certain
risks associated with investing in specified types of securities or engaging in
certain transactions and to limit the amount of the Portfolio's assets which may
be concentrated in any specific industry or issuer. The most significant of
these restrictions provides that the Portfolio will not:
borrow money or issue senior securities except (a) for
temporary or emergency purposes (e.g., in order to facilitate
the orderly sale of portfolio securities to accommodate
abnormally heavy redemption requests), the Portfolio may
borrow money from banks or obtain funds by entering into
reverse repurchase agreements, and (b) to the extent that
entering into commitments to purchase securities in accordance
with the
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<PAGE> 8
Portfolio's investment program may be considered the issuance
of senior securities. The Portfolio will not purchase
securities while borrowings in excess of 5% of its total
assets are outstanding.
The foregoing investment restriction of the Portfolio (as well as certain
others set forth in the Statement of Additional Information) is a matter of
fundamental policy which may not be changed without the affirmative vote of a
majority of the outstanding shares of the Portfolio.
In addition to the restrictions described above, the Portfolio must also
comply with the requirements of Rule 2a-7 under the 1940 Act, as such Rule may
be amended from time to time, which governs the operations of money market
funds, and may be more restrictive than the policies described herein. The
United States Securities and Exchange Commission (the "SEC") has proposed
certain changes to Rule 2a-7. While such proposed changes may have a prospective
impact on the investments of the Portfolio, the Portfolio anticipates no
difficulty in complying with any proposed change if adopted by the SEC. A
description of further investment restrictions applicable to the Portfolio is
contained in the Statement of Additional Information.
PURCHASE OF SHARES
Shares of the Class are sold on a continuing basis at their net asset value
next determined after an order has been received by the Portfolio. As discussed
below, the Fund reserves the right to reject any purchase order. Although there
is no sales charge imposed on the purchase of shares of the Class, banks or
other institutions may charge a recordkeeping, account maintenance or other fee
to their customers, and beneficial holders of the shares of the Class should
consult with the institutions maintaining their accounts to obtain a schedule of
applicable fees. To facilitate the investment of proceeds of purchase orders,
investors are urged to place their orders as early in the day as possible.
Purchase orders will be accepted for execution on the day the order is placed,
provided that the order is properly submitted and received by the Portfolio
prior to 1:00 p.m. Eastern Time on a business day of the Portfolio. Purchase
orders received after such time will be processed at the next day's net asset
value. Shares of the Class will earn the dividend declared on the effective date
of purchase.
A "business day of the Portfolio" is any day on which both the Federal
Reserve Bank of New York and The Bank of New York, the Fund's custodian, are
open for business. It is expected that The Bank of New York and the Federal
Reserve Bank of New York will be closed during the next twelve months on
Saturdays and Sundays, and on the observed holidays of New Year's Day, Martin
Luther King Jr.'s Birthday, Presidents' Day, Memorial Day, Independence Day,
Labor Day, Columbus Day, Veterans' Day, Thanksgiving Day and Christmas Day.
Shares of the Class are sold to customers of banks, certain broker-dealers
and other financial institutions (each, an Institution, and collectively,
"Institutions"). Individuals, corporations, partnerships and other businesses
that maintain qualified accounts at an Institution may invest in the shares of
the Class. Each Institution will render administrative support services to its
customers who are the beneficial owners of the shares of the Class. Such
services may include, among other things, establishment and maintenance of
shareholder accounts and records; assistance in processing purchase and
redemption transactions in shares of the Class; providing periodic statements
showing a customer's account balance in shares of the Class; distribution of
Fund proxy statements, annual reports and other communications to shareholders
whose accounts are serviced by the Institution; and such other services as the
Fund may reasonably request. Institutions will be required to certify to the
Fund that they comply with applicable state law regarding registration as
broker-dealers, or that they are exempt from such registration.
8
<PAGE> 9
Prior to the initial purchase of shares of the Class, an Account
Application, which can be obtained from A I M Institutional Fund Services, Inc.
("AIFS"), must be completed and sent to AIFS at 11 Greenway Plaza, Suite 1919,
Houston, Texas 77046-1173. Any changes made to the information provided in the
Account Application must be made in writing or by completing a new form and
providing it to AIFS. An investor must open an account in the shares of the
Class through an Institution in accordance with procedures established by such
Institution. Each Institution separately determines the rules applicable to
accounts in the shares of the Class opened with it, including minimum initial
and subsequent investment requirements and the procedures to be followed by
investors to effect purchases of shares of the Class. The minimum initial
investment is $10,000, and there is no minimum amount of subsequent purchases of
shares of the Class by an Institution on behalf of its customers. An investor
who proposes to open a Portfolio account with an Institution should consult with
a representative of such Institution to obtain a description of the rules
governing such an account. The Institution holds shares of the Class registered
in its name, as agent for the customer, on the books of the Institution. A
statement with regard to the customer's shares of the Class is supplied to the
customer periodically, and confirmations of all transactions for the account of
the customer are provided by the Institution to the customer promptly upon
request. In addition, the Institution sends to each customer proxies, periodic
reports and other information with regard to the customer's shares of the Class.
The customer's shares of the Class are fully assignable and subject to
encumbrance by the customer.
All agreements which relate to a customer's account with an Institution are
with the Institution. An investor may terminate his relationship with an
Institution at any time, in which case an account in the investor's name will be
established directly with the Portfolio and the investor will become a
shareholder of record. In such case, however, the investor will not be able to
purchase additional shares of the Class directly, except through reinvestment of
dividends and distributions.
Orders for the purchase of shares of the Class are placed by the investor
with the Institution. The Institution is responsible for the prompt transmission
of the order to the Fund. The Portfolio will normally be required to make
immediate settlement in federal funds (member bank deposits with a Federal
Reserve Bank) for portfolio securities purchased. Accordingly, payment for
shares of the Class purchased by Institutions on behalf of their customers must
be in federal funds. If an investor's order to purchase shares of the Class is
paid for other than in federal funds, the Institution, acting on behalf of the
investor, completes the conversion into federal funds (which may take two
business days), or itself advances federal funds prior to conversion, and
promptly transmits the order and payment in the form of federal funds to AIFS.
Subject to the conditions stated above and to the Portfolio's right to
reject any purchase order, orders will be accepted (i) when payment for the
shares of the Class purchased is received by the Portfolio in the form described
above and notice of such order is provided to AIFS or (ii) at the time the order
is placed, if the Portfolio is assured of payment. Shares of the Class purchased
by orders which are accepted prior to 12:00 p.m. Eastern Time will earn the
dividend declared on the date of purchase.
Federal Reserve wires should be sent as early as possible in order to
facilitate crediting to the shareholder's account. Any funds received with
respect to an order which is not accepted by the Portfolio and any funds
received for which an order has not been received will be returned to the
sending Institution. An order must specify that it is for the purchase of Shares
of the "Private Investment Class of the Treasury TaxAdvantage Portfolio,"
otherwise any funds received will be returned to the sending Institution.
In the interest of economy and convenience, certificates representing
shares of the Class will not be issued except upon written request to the Fund.
Certificates (in full shares only) will be issued without charge and may be
redeposited at any time.
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<PAGE> 10
The Fund reserves the right in its sole discretion to withdraw all or any
part of the offering made by this Prospectus or to reject any purchase order.
REDEMPTION OF SHARES
A shareholder may redeem any or all of its shares of the Class at the net
asset value next determined after receipt of the redemption request in proper
form by the Portfolio. Redemption requests with respect to the Class may also be
made via AIM LINK(R), a personal computer application software product.
Normally, the net asset value per share of the Portfolio will remain constant at
$1.00. See "Net Asset Value." Redemption requests with respect to shares of the
Class for which certificates have not been issued are normally made through a
customer's Institution.
Payment for redeemed shares of the Class is normally made by Federal
Reserve wire to the commercial bank account designated in the Institution's
Account Application, but may be remitted by check upon request by a shareholder.
If a redemption request is received by the Portfolio prior to 1:00 p.m. Eastern
Time on a business day of the Portfolio, the redemption will be effected at the
net asset value next determined on such day and the shares of the Class to be
redeemed will not receive the dividend declared on the effective date of the
redemption. If a redemption request is received by the Portfolio after 1:00 p.m.
Eastern Time or on other than a business day of the Portfolio, the redemption
will be effected at the net asset value of the Portfolio determined as of 1:00
p.m. Eastern Time on the next business day of the Portfolio, and the proceeds of
such redemption will normally be wired on the effective day of the redemption.
A shareholder may change the bank account designated to receive redemption
proceeds by written notice to the Fund. The authorized signature on the notice
must be guaranteed by a commercial bank or a trust company. Additional
documentation may be required when deemed appropriate by the Fund or AIFS, the
Fund's transfer agent.
Shareholders may request a redemption by telephone. AIFS and FMC will not
be liable for any loss, expense or cost arising out of any telephone redemption
request effected in accordance with the authorization set forth in the account
application if they reasonably believe such request to be genuine but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for certification of telephone transactions may include
recordings of telephone transactions (maintained for six months), and mailings
of confirmations promptly after the transaction.
Payment for shares of the Class redeemed by mail and payment for telephone
redemptions in amounts of less than $1,000 will be made by check mailed within
seven days after receipt of the redemption request in proper form. The Fund may
make payment for telephone redemptions in excess of $1,000 by check when it is
considered to be in the Portfolio's best interest to do so.
In certain cases, the Fund may call for the redemption of, or refuse to
transfer or issue, shares of the Class in order to comply with law or to further
the purposes for which the Fund is formed. If a transfer or redemption of shares
of the Class causes the value of shares of the Class in an account to be less
than $500, the Fund may cause the remaining shares to be redeemed.
DIVIDENDS
Dividends from the net income of the Portfolio are declared daily to
shareholders of record of each class of the Portfolio as of immediately after
1:00 p.m. Eastern Time on the day of declaration. Net income for
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<PAGE> 11
dividend purposes is determined daily as of 1:00 p.m. Eastern Time. The dividend
accrued and paid for each class will consist of (a) income of the Portfolio, the
allocation of which is based upon such class's pro rata share of the total
outstanding shares representing an interest in the Portfolio, less (b) Fund
expenses, such as custodian fees, trustees' fees, accounting and legal expenses,
based upon such class' pro rata share of the net assets of the Portfolio, less
(c) expenses directly attributable to such class, such as distribution expenses,
if any, transfer agent fees or registration fees that may be unique to such
class. Although realized gains and losses on the assets of the Portfolio are
reflected in its net asset value, they are not expected to be of an amount which
would affect its $1.00 per share net asset value for purposes of purchases and
redemptions. See "Net Asset Value." Distributions from net realized short-term
gains may be declared and paid yearly or more frequently. See "Taxes." The
Portfolio does not expect to realize any long-term capital gains or losses.
All dividends declared during a month will normally be paid by wire
transfer. Payment will normally be made on the first business day of the
following month. A shareholder may elect to have all dividends automatically
reinvested in additional full and fractional shares of the Class at the net
asset value as of 1:00 p.m. Eastern Time on the last business day of the month.
Such election, or any revocation thereof, must be made either in writing by the
Institution to AIFS at 11 Greenway Plaza, Suite 1919, Houston, TX 77046-1173,
and will become effective with dividends paid after its receipt by AIFS. If a
shareholder redeems all the shares of the Class in its account at any time
during the month, all dividends declared through the date of redemption are paid
to the shareholder along with the proceeds of the redemption.
The Portfolio uses its best efforts to maintain the net asset value per
share at $1.00 for purposes of sales and redemptions. See "Net Asset Value."
Should the Fund incur or anticipate any unusual expense, loss or depreciation
which could adversely affect the income or net asset value of the Portfolio, the
Fund's Board of Trustees would at that time consider whether to adhere to the
present dividend policy described above or to revise it in light of the then
prevailing circumstances. For example, under such unusual circumstances, the
Board of Trustees might reduce or suspend the daily dividend in order to prevent
to the extent possible the net asset value per share of the Portfolio from being
reduced below $1.00. Thus, such expenses, losses or depreciation may result in a
shareholder receiving no dividends for the period during which it held its
shares of the Class and cause such a shareholder to receive upon redemption a
price per share lower than the shareholder's original cost.
TAXES
FEDERAL TAXATION
The Fund's policy with respect to the Portfolio is to distribute to its
shareholders at least 90% of its investment company taxable income for each year
and consistent therewith to meet the distribution requirements of Part I of
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). The
Fund intends for the Portfolio to distribute at least 98% of its net investment
income for the calendar year and at least 98% of its net realized capital gains,
if any, for the one-year period ending on October 31 and therefore to meet the
distribution requirements imposed by the Code in order to avoid the imposition
of a 4% excise tax. The Fund also intends for the Portfolio to meet the other
requirements of Subchapter M, including the requirements with respect to
diversification of assets and sources of income, so that the Portfolio will pay
no federal income taxes on net investment income and net realized capital gains
paid to shareholders.
The Portfolio will be treated as a separate corporation for purposes of
determining taxable income, distribution requirements and other requirements of
Subchapter M. Therefore, the Portfolio may not offset its
11
<PAGE> 12
gains against losses of the other portfolio of the Fund and each portfolio of
the Fund must specifically comply with all the provisions of the Code.
Dividends paid by the Portfolio are subject to taxation as of the date of
payment, whether received by shareholders in cash or shares of the Portfolio.
The Code provides an exception to this general rule: if the Portfolio declares a
dividend in October, November or December to shareholders of record in such
months and pays the dividend during January of the next year, a shareholder will
be treated for tax purposes as having received the dividend on December 31 of
the year in which it is declared rather than in January of the following year
when it is paid. It is anticipated that no portion of distributions will be
eligible for the dividends received deduction for corporations. Dividends paid
by the Portfolio from its net investment income and short-term capital gains are
taxable to shareholders at ordinary income tax rates.
The foregoing discussion of federal income tax consequences is based on tax
laws and regulations in effect on November 1, 1995, which are subject to change
by legislation or administrative action.
STATE AND LOCAL TAXATION
Distributions and other Fund transactions referred to in the preceding
paragraphs may be subject to state, local or foreign taxes, and the treatment
thereof may differ from the federal income tax consequences discussed herein.
The Portfolio's investment strategy is intended to provide shareholders with
dividends that are exempt from state and local personal and, in some cases,
corporate income taxation in as many jurisdictions as possible. The possible
exemption from such taxation may enable shareholders to achieve an after-tax
return comparable to or higher than that obtained from other money market funds.
Shareholders should consult their own tax advisors concerning the tax impact of
their investment in the Portfolio and the application of state, local and
foreign taxes.
NET ASSET VALUE
The net asset value per share of the Portfolio is determined daily as of
1:00 p.m. Eastern Time on each business day of the Fund. Net asset value per
share is determined by dividing the value of the Portfolio's securities, cash
and other assets (including interest accrued but not collected) less all of its
liabilities (including accrued expenses and dividends payable), by the number of
shares outstanding of the Portfolio and rounding the resulting per share net
asset value to the nearest one cent.
The securities of the Portfolio are valued on the basis of amortized cost
pursuant to rules promulgated by the SEC applicable to money market funds. This
method values a security at its cost on the date of purchase and thereafter
assumes a constant amortization to maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the market value of
the security. While this method provides certainty in valuation, it may result
in periods during which value, as determined by amortized cost, is higher or
lower than the price the Portfolio would receive if the security were sold.
During such periods, the daily yield on shares of the Portfolio, computed as
described in "Purchases and Redemptions -- Performance Information" in the
Statement of Additional Information, may differ somewhat from an identical
computation made by an investment company with identical investments utilizing
available indications as to market value to value its portfolio securities.
12
<PAGE> 13
YIELD INFORMATION
Yield information for the Class can be obtained by calling the Fund at
(800) 877-7748. Yields will fluctuate from time to time and are not necessarily
indicative of future results. Accordingly, the yield information may not provide
a basis for comparison with investments which pay a fixed rate of interest for a
stated period of time. Yield is a function of the type and quality of a
Portfolio's investments, the Portfolio's maturity and the operating expense
ratio of the Class. A SHAREHOLDER'S INVESTMENT IN THE PORTFOLIO IS NOT INSURED
OR GUARANTEED BY THE U.S. GOVERNMENT OR BY ANY INSTITUTION. These factors should
be carefully considered by the investor before making an investment in the
Portfolio.
For the seven-day period ended August 31, 1995, the current yield and the
effective yield of the Class (which assumes the reinvestment of dividends for a
365-day year and a return for the entire year equal to the average annualized
current yield for the period) were 5.17% and 5.30%, respectively, excluding
capital gains distributions. For the seven-day period ended August 31, 1995, the
current distribution rate and the effective distribution rate of the Class,
including capital gains distributions, (which assumes the reinvestment of
dividends for a 365-day year and a return for the entire year equal to the
average annualized current distribution rate for the period) were 5.22% and
5.36%, respectively. These performance numbers are quoted for illustration
purposes only. The performance numbers for any other seven-day period may be
substantially different from those quoted above.
To assist banks and other institutions performing their own sub-accounting,
same day information as to the daily dividend per share for the Portfolio to
eight decimal places and current yield normally will be available by 4:00 p.m.
Eastern Time.
From time to time and in its discretion, AIM may waive all or a portion of
its advisory fees and/or assume certain expenses of the Portfolio. Such a
practice will have the effect of increasing the Portfolio's yield and total
return.
REPORTS TO SHAREHOLDERS
The Fund furnishes shareholders with semi-annual reports containing
information about the Portfolio and its operations, including a list of the
investments held in the Portfolio and financial statements. The annual financial
statements are audited by the Fund's independent auditors.
Unless otherwise requested by the shareholder, each shareholder will be
provided with a written confirmation for each transaction by its Institution.
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES
The overall management of the business and affairs of the Fund is vested
with its Board of Trustees. The Board of Trustees approves all significant
agreements between the Fund and persons or companies furnishing services to the
Fund, including agreements with the Fund's investment advisor, distributor,
custodian and transfer agent. The day-to-day operations of the Fund are
delegated to the Fund's officers and to AIM, subject always to the objectives
and policies of the Fund and to the general supervision of the Fund's Board of
Trustees.
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<PAGE> 14
INVESTMENT ADVISOR
A I M Advisors, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173, acts as the investment advisor for the Portfolio pursuant to a
Master Investment Advisory Agreement dated as of October 18, 1993 (the "Advisory
Agreement"). AIM was organized in 1976 and, together with its affiliates,
manages or advises 37 investment company portfolios. As of October 31, 1995, the
total assets of the investment company portfolios managed or advised by AIM and
its affiliates were approximately $39.3 billion. All of the directors and
certain of the officers of AIM are also trustees or executive officers of the
Fund. AIM is a wholly owned subsidiary of A I M Management Group Inc. ("AIM
Management"). AIM Management is a holding company in the financial services
business.
Pursuant to the terms of the Advisory Agreement, AIM manages the investment
of the Portfolio's assets and obtains and evaluates economic, statistical and
financial information to formulate and implement investment policies for the
Portfolio. The Advisory Agreement requires AIM to reduce its fee to the extent
required to satisfy any expense limitations imposed by the securities laws or
regulations thereunder of any state in which the Portfolio's shares are
qualified for sale.
For the fiscal year ended August 31, 1995, AIM received fees from the Fund
under an advisory agreement previously in effect, which provided for the same
level of compensation to AIM as the Advisory Agreement, as well as received fees
from the Fund under the Advisory Agreement, with respect to the Portfolio which
represented 0.15% of the Portfolio's average daily net assets. During such
fiscal year, the expenses of the Class, including AIM's fees, amounted to 0.45%
of the Class' daily net assets.
ADMINISTRATIVE SERVICES
The Fund has entered into a Master Administrative Services Agreement dated
as of October 18, 1993 with AIM (the "Administrative Services Agreement"),
pursuant to which AIM has agreed to provide or arrange for the provision of
certain accounting and other administrative services to the Portfolio, including
the services of a principal financial officer of the Fund and related staff. As
compensation to AIM for its services under the Administrative Services
Agreement, the Portfolio may reimburse AIM for expenses incurred by AIM in
connection with such services.
In addition, AIM and A I M Institutional Fund Services, Inc. ("AIFS") have
entered into an Administrative Services Agreement pursuant to which AIFS was
reimbursed by AIM for its costs in providing shareholder services for the Fund.
AIFS or its affiliates received reimbursement of shareholder services costs of
$6,263 with respect to the Portfolio for the year ended August 31, 1995, which
represented $0.002% of the Portfolio's average daily net assets. The
Administrative Services Agreement between AIM and AIFS was terminated July 1,
1995. Beginning July 1, 1995, AIFS received fees with respect to the Portfolio
for its provision of shareholder services pursuant to a Transfer Agency and
Service Agreement with the Fund. For the period July 1, 1995 through August 31,
1995, AIFS received transfer agency fees from AIM with respect to the Portfolio
in the amount of $4,650.
FEE WAIVERS
AIM may in its discretion from time to time agree to waive voluntarily all
or any portion of its advisory fee and/or assume certain expenses of the
Portfolio but will retain its ability to be reimbursed prior to the end of the
fiscal year. FMC may in its discretion from time to time voluntarily agree to
waive its 12b-1 fee, but will retain its ability to be reimbursed prior to the
end of the fiscal year.
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<PAGE> 15
DISTRIBUTOR
The Fund has entered into a Master Distribution Agreement dated as of
October 18, 1993 (the "Distribution Agreement") with FMC, a registered
broker-dealer and a wholly-owned subsidiary of AIM, to act as the exclusive
distributor of the shares of the Class. The address of FMC is 11 Greenway Plaza,
Suite 1919, Houston, Texas 77046-1173. Certain trustees and officers of the Fund
are affiliated with FMC and AIM. The Distribution Agreement provides that FMC
has the exclusive right to distribute shares of the Class either directly or
through other broker-dealers. FMC is the distributor of several of the mutual
funds managed or advised by AIM.
FMC may, from time to time, at its expense, pay a bonus or other
consideration or incentive to dealers or banks who sell a minimum dollar amount
of the shares of the Class during a specific period of time. In some instances,
these incentives may be offered only to certain dealers or institutions who have
sold or may sell significant amounts of shares. The total amount of such
additional bonus payments or other consideration shall not exceed 0.05% of the
net asset value of the shares of the Class sold. Any such bonus or incentive
programs will not change the price paid by investors for the purchase of shares
of the Class or the amount received as proceeds from such sales. Dealers or
institutions may not use sales of the shares of the Class to qualify for any
incentives to the extent that such incentives may be prohibited by the laws of
any jurisdiction.
DISTRIBUTION PLAN
The Fund has adopted a Master Distribution Plan (the "Plan") pursuant to
Rule 12b-1 under the 1940 Act. The Plan provides that the Fund may compensate
FMC in connection with the distribution of shares of the Class in an amount
equal to 0.50% on an annualized basis of the average daily net assets of the
Portfolio attributable to the Class. Such amounts may be expended when and if
authorized by the Board of Trustees and may be used to finance such
distribution-related services as expenses of organizing and conducting sales
seminars, printing of prospectuses and statements of additional information (and
supplements thereto) and reports for other than existing shareholders,
preparation and distribution of advertising material and sales literature and
costs of administering the Plan.
Of the compensation paid to FMC under the Plan, a service fee may be paid
to dealers and other financial institutions that provide continuing personal
shareholder services to their customers who purchase and own shares of the
Class, in amounts of up to 0.25% of the average net assets of the Portfolio
attributable to the Class which are attributable to the customers of such
dealers or financial institutions. Payments to dealers and other financial
institutions in excess of such amount and payments retained by FMC would be
characterized as an asset-based sales charge pursuant to the Plan. The Plan also
imposes a cap on the total amount of sales charges, including asset-based sales
charges, that may be paid by the Portfolio with respect to the Class. The Plan
does not obligate the Fund to reimburse FMC for the actual expenses FMC may
incur in fulfilling its obligations under the Plan on behalf of the Class. Thus,
under the Plan, even if FMC's actual expenses exceed the fee payable to FMC
thereunder at any given time, the Fund will not be obligated to pay more than
that fee. If FMC's expenses are less than the fee it receives, FMC will retain
the full amount of the fee.
The Plan requires the officers of the Fund to provide the Board of Trustees
at least quarterly with a written report of the amounts expended pursuant to
each Plan and the purposes for which such expenditures were made. The Board of
Trustees shall review these reports in connection with their decisions with
respect to the Plan.
As required by Rule 12b-1 under the 1940 Act, the Plan was approved by the
Board of Trustees, including a majority of the trustees who are not "interested
persons" (as defined in the 1940 Act) of the Fund
15
<PAGE> 16
and who have no direct or indirect financial interest in the operation of the
Plan or in any agreements related to the Plan ("Qualified Trustees") on December
6, 1994. In approving the Plan in accordance with the requirements of Rule
12b-1, the trustees considered various factors and determined that there is a
reasonable likelihood that the Plan will benefit the Fund and the shareholders
of the Class.
The Plan may be terminated by a vote of a majority of the Qualified
Trustees, or by a vote of a majority of the holders of the outstanding voting
securities of the shares of the Class. Any change in the Plan that would
increase materially the distribution expenses paid by the Class requires
shareholder approval; otherwise the Plan may be amended by the trustees,
including a majority of the Qualified Trustees, by vote cast in person at a
meeting called for the purpose of voting upon such amendment. As long as the
Plan is in effect, the selection or nomination of the Qualified Trustees is
committed to the discretion of the Qualified Trustees.
PORTFOLIO TRANSACTIONS AND BROKERAGE
AIM is responsible for decisions to buy and sell securities for the
Portfolio, broker-dealer selection and negotiation of commission rates. Since
purchases and sales of portfolio securities by the Portfolio are usually
principal transactions, the Portfolio incurs little or no brokerage commissions.
Portfolio securities are normally purchased directly from the issuer or from a
market maker for the securities. The purchase price paid to dealers serving as
market makers may include a spread between the bid and asked prices.
AIM's primary consideration in effecting a security transaction is to
obtain the best net price and the most favorable execution of the order. To the
extent that the executions and prices offered by more than one dealer are
comparable, AIM may, in its discretion, effect transactions with dealers that
furnish statistical, research or other information or services which are deemed
by AIM to be beneficial to the Portfolio's investment programs. Certain research
services furnished by dealers may be useful to clients of AIM other than the
Portfolio. Similarly, any research services received by AIM through placement of
portfolio transactions of other clients may be of value to AIM in fulfilling its
obligations to the Portfolio.
GENERAL INFORMATION
ORGANIZATION AND DESCRIPTION OF SHARES
The Fund is a Delaware business trust. The Fund was originally incorporated
in Maryland on January 24, 1977, but had no operations prior to November 10,
1980. Effective December 31, 1986, the Fund was reorganized as a Massachusetts
business trust; and effective October 15, 1993, the Fund was reorganized as a
Delaware business trust. On October 15, 1993, the Portfolio succeeded to the
assets and assumed the liabilities of the Treasury TaxAdvantage Portfolio (the
"Predecessor Portfolio") of Short-Term Investments Co., a Massachusetts business
trust ("STIC"), pursuant to an Agreement and Plan of Reorganization between the
Fund and STIC. All historical financial and other information contained in this
Prospectus for periods prior to October 15, 1993 relating to the Portfolio (or a
class thereof) is that of the Predecessor Portfolio (or the corresponding class
thereof). Shares of beneficial interest of the Fund are divided into seven
classes. Two classes, including the Class, represent interests in the Portfolio,
and five classes represent interests in the Treasury Portfolio. Each class of
shares has a par value of $.01 per share. The other classes of the Fund may have
different sales charges and other expenses which may affect performance. An
investor may obtain information concerning the Fund's other classes by
contacting FMC.
All shares of the Fund have equal rights with respect to voting, except
that the holders of shares of a particular portfolio or class will have the
exclusive right to vote on matters pertaining solely to that portfolio or
16
<PAGE> 17
class. For example, holders of shares of a particular portfolio will have the
exclusive right to vote on any investment advisory agreement or investment
restriction that relates only to such portfolio. In addition, if a portfolio is
divided into various classes, holders of shares of a particular class will have
the exclusive right to vote on any matter, such as distribution arrangements,
which relates solely to such class. The shareholders of the Class have
distinctive rights with respect to dividends and redemption which are more fully
described in this Prospectus. In the event of liquidation or termination of the
Fund, holders of shares of each portfolio will receive pro rata, subject to the
rights of creditors, (a) the proceeds of the sale of the assets held in the
respective portfolio to which such shares relate, less (b) the liabilities of
the Fund attributable to the respective portfolio or allocated to the respective
portfolio based on the liquidation value of such portfolio. Fractional shares of
each portfolio have the same rights as full shares to the extent of their
proportionate interest.
There will not normally be annual shareholders' meetings. Shareholders may
remove trustees from office by votes cast at a meeting of shareholders called
solely for such purpose or by written consent. A meeting of shareholders for the
sole purpose of considering removal of a trustee shall be called at the request
of the holders of 10% or more of the Fund's outstanding shares.
There are no preemptive or conversion rights applicable to any of the
Fund's shares. The Fund's shares, when issued, will be fully paid and
non-assessable. The Board of Trustees may create additional portfolios and
classes of the Fund without shareholder approval.
TRANSFER AGENT AND CUSTODIAN
The Bank of New York, 110 Washington Street, 8th Floor, New York, New York
10286, acts as custodian for the portfolio securities and cash of the Portfolio.
A I M Institutional Fund Services, Inc., 11 Greenway Plaza, Suite 1919, Houston,
Texas 77046-1173, acts as transfer agent for the shares of the Portfolio.
LEGAL COUNSEL
The law firm of Ballard Spahr Andrews & Ingersoll, Philadelphia,
Pennsylvania, serves as counsel to the Fund and has passed upon the legality of
the shares of the Portfolio.
SHAREHOLDER INQUIRIES
Shareholder inquiries concerning the status of an account should be
directed to an investor's Institution, or to the Fund at 11 Greenway Plaza,
Suite 1919, Houston, Texas 77046-1173, or may be made by calling (800) 877-7748.
OTHER INFORMATION
This Prospectus sets forth basic information that investors should know
about the Fund and the Portfolio prior to investing. A Statement of Additional
Information has been filed with the SEC. Copies of the Statement of Additional
Information are available upon request and without charge by writing or calling
the Fund or FMC. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted herein, may be obtained from the SEC by paying the
charges prescribed under its rules and regulations.
17
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(This page intentionally left blank)
<PAGE> 19
SHORT-TERM INVESTMENTS TRUST SHORT-TERM
11 Greenway Plaza, Suite 1919 INVESTMENTS TRUST
Houston, Texas 77046-1173
(800) 877-7748
INVESTMENT ADVISOR
A I M ADVISORS, INC. PRIVATE
11 Greenway Plaza, Suite 1919 INVESTMENT CLASS
Houston, Texas 77046-1173 OF THE
(713) 626-1919 -----------------------------
TREASURY
DISTRIBUTOR TAXADVANTAGE
FUND MANAGEMENT COMPANY PORTFOLIO PROSPECTUS
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
(800) 877-7748
AUDITORS
KPMG PEAT MARWICK LLP
NationsBank Building
700 Louisiana
Houston, Texas 77002
CUSTODIAN
THE BANK OF NEW YORK DECEMBER 14, 1995
110 Washington Street, 8th Floor
New York, New York 10286
TRANSFER AGENT
A I M INSTITUTIONAL FUND
SERVICES, INC.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS
NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION
WITH THE OFFERING MADE BY THIS PROSPECTUS, AND
IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE FUND OR THE
DISTRIBUTOR. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY JURISDICTION TO
ANY PERSON TO WHOM SUCH OFFERING MAY NOT [LOGO APPEARS HERE]
LAWFULLY BE MADE. Fund Management Company
<PAGE> 20
STATEMENT OF
ADDITIONAL INFORMATION
PRIVATE INVESTMENT CLASS
OF THE
TREASURY TAXADVANTAGE PORTFOLIO
OF
SHORT-TERM INVESTMENTS TRUST
11 GREENWAY PLAZA
SUITE 1919
HOUSTON, TEXAS 77046-1173
(800) 877-7748
______________________
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS.
IT SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS, COPIES OF WHICH
MAY BE OBTAINED BY WRITING
FUND MANAGEMENT COMPANY, 11 GREENWAY PLAZA,
SUITE 1919, HOUSTON, TEXAS 77046-1173
OR CALLING (800) 877-7748
______________________
STATEMENT OF ADDITIONAL INFORMATION DATED DECEMBER 14, 1995
RELATING TO THE PROSPECTUS DATED DECEMBER 14, 1995
<PAGE> 21
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
GENERAL INFORMATION ABOUT THE FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Fund and Its Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Trustees and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Investment Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Administrative Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Banking Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Transfer Agent and Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Principal Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
PURCHASES AND REDEMPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Net Asset Value Determination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Distribution Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Distribution Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Performance Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Suspension of Redemption Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
INVESTMENT PROGRAM AND RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Investment Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Other Investment Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Qualification as a Regulated Investment Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Excise Tax on Regulated Investment Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Portfolio Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Sale or Redemption of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Foreign Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Effect of Future Legislation; Local Tax Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FS
</TABLE>
i
<PAGE> 22
INTRODUCTION
The Treasury TaxAdvantage Portfolio (the "Portfolio") is an investment
portfolio of Short-Term Investments Trust (the "Fund"), a mutual fund. The
rules and regulations of the United States Securities and Exchange Commission
(the "SEC") require all mutual funds to furnish prospective investors certain
information concerning the activities of the fund being considered for
investment. This information is included in a Prospectus dated December 14,
1995 (the "Prospectus"). Copies of the Prospectus and additional copies of
this Statement of Additional Information may be obtained without charge by
writing the principal distributor of the Fund's shares, Fund Management Company
("FMC"), 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173 or by calling
(800) 877-7748. Investors must receive a Prospectus before they invest.
This Statement of Additional Information is intended to furnish
prospective investors with additional information concerning the Private
Investment Class of the Portfolio. Some of the information required to be in
this Statement of Additional Information is also included in the Prospectus;
and, in order to avoid repetition, reference will be made to sections of the
Prospectus. Additionally, the Prospectus and this Statement of Additional
Information omit certain information contained in the registration statement
filed with the SEC. Copies of the registration statement, including items
omitted from the Prospectus and this Statement of Additional Information, may
be obtained from the SEC by paying the charges prescribed under its rules and
regulations.
GENERAL INFORMATION ABOUT THE FUND
THE FUND AND ITS SHARES
The Fund is an open-end diversified series management investment
company which was originally organized as a corporation under the laws of the
State of Maryland on January 24, 1977, but which had no operations prior to
November 10, 1980. The Fund was reorganized as a business trust under the laws
of the Commonwealth of Massachusetts on December 31, 1986. The Fund was again
reorganized as a business trust under the laws of the State of Delaware on
October 15, 1993. On October 15, 1993, the Portfolio succeeded to the assets
and assumed the liabilities of the Treasury TaxAdvantage Portfolio (the
"Predecessor Portfolio") of Short-Term Investments Co., a Massachusetts
business trust ("STIC"), pursuant to an Agreement and Plan of Reorganization
between the Fund and STIC. All historical financial and other information
contained in this Statement of Additional Information for periods prior to
October 15, 1993 relating to the Portfolio (or a class thereof) is that of the
Predecessor Portfolio (or the corresponding class thereof). A copy of the
Agreement and Declaration of Trust (the "Declaration of Trust") establishing
the Fund is on file with the SEC. Shares of beneficial interest of the Fund
are redeemable at the net asset value thereof at the option of the shareholder
or at the option of the Fund in certain circumstances. For information
concerning the methods of redemption and the rights of share ownership,
investors should consult the Prospectus under the captions "General
Information" and "Redemption of Shares."
The Fund offers on a continuous basis shares representing an interest
in one of two portfolios: the Portfolio and the Treasury Portfolio (together,
the "Portfolios"). The Portfolio consists of the following two classes of
shares: Private Investment Class and Institutional Class. The Treasury
Portfolio consists of the following five classes of shares: Private Investment
Class, Personal Investment Class, Institutional Class, Cash Management Class
and Resource Class. Each such class has different shareholder qualifications
and bears expenses differently. This Statement of Additional Information and
the Prospectus relate solely to shares of the Private Investment Class (the
"Class") of the Portfolio. Shares of the Institutional Class of the Portfolio
and the classes of the Treasury Portfolio are offered pursuant to separate
prospectuses and statements of additional information.
1
<PAGE> 23
As used in the Prospectus, the term "majority of the outstanding
shares" of the Fund, a particular portfolio or a particular class means,
respectively, the vote of the lesser of (i) 67% or more of the shares of the
Fund, such portfolio or such class present at a meeting of the Fund's
shareholders, if the holders of more than 50% of the outstanding shares of the
Fund, such portfolio or such class are present or represented by proxy, or (ii)
more than 50% of the outstanding shares of the Fund, such portfolio or such
class.
Shareholders of the Fund do not have cumulative voting rights.
Therefore, the holders of more than 50% of the outstanding shares of all series
or classes voting together for election of trustees may elect all of the
members of the Board of Trustees and, in such event, the remaining holders
cannot elect any members of the Board of Trustees.
The Declaration of Trust provides for the perpetual existence of the
Fund. The Fund, either of the Portfolios and any class thereof, however, may
be terminated at any time, upon the recommendation of the Fund's Board of
Trustees, by vote of a majority of the outstanding shares of the Fund, such
Portfolio and such class, respectively; provided, however that the Board of
Trustees may terminate, without such shareholder approval, the Fund, either
Portfolio and any class thereof with respect to which there are fewer than 100
shares outstanding.
The Declaration of Trust permits the trustees to issue an unlimited
number of full and fractional shares, $.01 par value, of each class of shares
of beneficial interest of the Fund. The Board of Trustees may establish
additional series or classes of shares from time to time without shareholder
approval. Additional information concerning the rights of share ownership is
set forth in the prospectus applicable to each such class or series of shares
of the Fund.
The assets received by the Fund for the issue or sale of shares of
each class relating to a portfolio and all income, earnings, profits, losses
and proceeds therefrom, subject only to the rights of creditors, will be
allocated to that portfolio, and constitute the underlying assets of that
portfolio. The underlying assets of each portfolio will be segregated and will
be charged with the expenses with respect to that portfolio and with a share of
the general expenses of the Fund. While certain expenses of the Fund will be
allocated to the separate books of account of each portfolio, certain other
expenses may be legally chargeable against the assets of the entire Fund.
Under Delaware law, shareholders of a Delaware business trust shall be
entitled to the same limitations of liability extended to shareholders of
private for-profit corporations. There is a remote possibility that
shareholders could, under certain circumstances, be held liable for the
obligations of the Fund to the extent the courts of another state which does
not recognize such limited liability were to apply the laws of such state to a
controversy involving such obligations. However, the Declaration of Trust
disclaims shareholder liability for acts or obligations of the Fund and
requires that notice of such disclaimer be given in each agreement, obligation
or instrument entered into or executed by the Fund or the trustees to all
parties, and each party thereto must expressly waive all rights of action
directly against shareholders of the Fund. The Declaration of Trust provides
for indemnification out of the Fund's property for all losses and expenses of
any shareholder of the Fund held liable on account of being or having been a
shareholder. Thus, the risk of a shareholder incurring financial loss due to
shareholder liability is limited to circumstances in which the Fund would be
unable to meet its obligations and wherein the complaining party was held not
to be bound by the disclaimer.
The Declaration of Trust further provides that the trustees will not
be liable for errors of judgment or mistakes of fact or law. However, nothing
in the Declaration of Trust protects a trustee against any liability to which a
trustee would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office. The Declaration of Trust provides for indemnification by the Fund
of the trustees and the officers of the Fund except with respect to any matter
as to which any such person did not act in good faith in the reasonable belief
that his action was in or not opposed to the best interests of the Fund. Such
person may not be indemnified against any liability to the
2
<PAGE> 24
Fund or to the Fund's shareholders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office. The Declaration
of Trust also authorizes the purchase of liability insurance on behalf of
trustees and officers.
As described in the Prospectus, the Fund will not normally hold annual
shareholders' meetings. At such time as less than a majority of the trustees
have been elected by the shareholders, the trustees then in office will call a
shareholders' meeting for the election of trustees. In addition, trustees may
be removed from office by a written consent signed by the holders of two-thirds
of the outstanding shares of the Fund and filed with the Fund's custodian or by
a vote of the holders of two-thirds of the outstanding shares at a meeting duly
called for the purpose, which meeting shall be held upon written request of the
holders of not less than 10% of the outstanding shares of the Fund.
TRUSTEES AND OFFICERS
The trustees and officers of the Fund and their principal occupations
during the last five years are set forth below. Unless otherwise indicated,
the address of each trustee and officer is 11 Greenway Plaza, Suite 1919,
Houston, Texas 77046-1173.
*CHARLES T. BAUER, Trustee and Chairman (76)
Director, Chairman and Chief Executive Officer, A I M Management Group
Inc.; Chairman of the Board of Directors, A I M Advisors, Inc., A I M Capital
Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc., A I M
Global Associates, Inc., A I M Global Holdings, Inc., A I M Institutional Fund
Services, Inc. and Fund Management Company; and Director, AIM Global Advisors
Limited, A I M Global Management Company Limited and AIM Global Ventures Co.
BRUCE L. CROCKETT, Trustee (51)
COMSAT Corporation
6560 Rock Spring Drive
Bethesda, MD 20817
Director, President and Chief Executive Officer, COMSAT Corporation
(Includes COMSAT World Systems, COMSAT Mobile Communications, COMSAT Video
Enterprises, COMSAT RSI and COMSAT International Ventures). Previously,
President and Chief Operating Officer, COMSAT Corporation; President, World
Systems Division, COMSAT Corporation; and Chairman, Board of Governors of
INTELSAT; (each of the COMSAT companies listed above is an international
communication, information and entertainment-distribution services company).
OWEN DALY II, Trustee (71)
6 Blythewood Road
Baltimore, MD 21210
Director, Cortland Trust Inc. (investment company). Formerly,
Director, CF & I Steel Corp., Monumental Life Insurance Company and Monumental
General Insurance Company; and Chairman of the Board of Equitable
Bancorporation.
__________________________________
* A trustee who is an "interested person" of the Fund and A I M
Advisors, Inc., as defined in the Investment Company Act of 1940, as
amended (the "1940 Act").
3
<PAGE> 25
*CARL FRISCHLING, Trustee (58)
919 Third Avenue
New York, NY 10022
Partner, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel (law firm).
Formerly, Partner, Reid & Priest (law firm); and, prior thereto, Partner,
Spengler Carlson Gubar Brodsky & Frischling (law firm).
**ROBERT H. GRAHAM, Trustee and President (49)
Director, President and Chief Operating Officer, A I M Management
Group Inc.; Director and President, A I M Advisors, Inc.; Director and
Executive Vice President, A I M Distributors, Inc.; Director and Senior Vice
President, A I M Capital Management, Inc., A I M Fund Services, Inc., A I M
Global Associates, Inc., A I M Global Holdings, Inc., AIM Global Ventures Co.,
A I M Institutional Fund Services, Inc. and Fund Management Company; Senior
Vice President, AIM Global Advisors Limited.
JOHN F. KROEGER, Trustee (71)
24875 Swan Road - Martingham
Box 464
St. Michaels, MD 21663
Director, Flag Investors International Fund, Inc., Flag Investors
Emerging Growth Fund, Inc., Flag Investors Telephone Income Fund, Inc., Flag
Investors Equity Partners Fund, Inc., Total Return U.S. Treasury Fund, Inc.,
Flag Investors Intermediate Term Income Fund, Inc., Managed Municipal Fund,
Inc., Flag Investors Value Builder Fund, Inc., Flag Investors Maryland
Intermediate Tax-Free Income Fund, Inc., Flag Investors Real Estate Securities
Fund, Inc., Alex. Brown Cash Reserve Fund, Inc. and North American Government
Bond Fund, Inc. (investment companies). Formerly, Consultant, Wendell & Stockel
Associates, Inc. (consulting firm).
LEWIS F. PENNOCK, Trustee (53)
6363 Woodway, Suite 825
Houston, TX 77057
Attorney in private practice in Houston, Texas.
IAN W. ROBINSON, Trustee (72)
183 River Drive
Tequesta, FL 33469
Formerly, Executive Vice President and Chief Financial Officer, Bell
Atlantic Management Services, Inc. (provider of centralized management
services to telephone companies); Executive Vice President, Bell Atlantic
Corporation (parent of seven telephone companies); and Vice President and Chief
Financial Officer, Bell Telephone Company of Pennsylvania and Diamond State
Telephone Company.
__________________________________
* A trustee who is an "interested person" of the Fund, as defined in the
1940 Act.
** A trustee who is an "interested person" of the Fund and A I M Advisors,
Inc., as defined in the 1940 Act.
4
<PAGE> 26
LOUIS S. SKLAR, Trustee (56)
Transco Tower, 50th Floor
2800 Post Oak Blvd.
Houston, TX 77056
Executive Vice President, Development and Operations, Hines Interests
Limited Partnership (real estate development).
***JOHN J. ARTHUR, Senior Vice President and Treasurer (51)
Senior Vice President and Treasurer, A I M Advisors, Inc.; and Vice
President and Treasurer, A I M Management Group Inc., A I M Capital Management,
Inc., A I M Distributors, Inc., A I M Fund Services, Inc., A I M Institutional
Fund Services, Inc. and Fund Management Company; and Vice President, AIM Global
Advisors Limited, A I M Global Associates, Inc., A I M Global Holdings, Inc.,
and AIM Global Ventures Co.
GARY T. CRUM, Senior Vice President (48)
Director and President, A I M Capital Management, Inc.; Director and
Senior Vice President, A I M Management Group Inc., A I M Advisors, Inc., A I M
Global Associates, Inc., A I M Global Holdings, Inc. and AIM Global Ventures
Co., Director, A I M Distributors, Inc.; and Senior Vice President, AIM Global
Advisors Limited.
***CAROL F. RELIHAN, Vice President and Secretary (41)
Vice President, General Counsel and Secretary, A I M Management Group
Inc., A I M Advisors, Inc., A I M Fund Services, Inc., A I M Institutional Fund
Services, Inc., and Fund Management Company; Vice President and Secretary,
A I M Distributors, Inc., A I M Global Associates, Inc. and AIM Global
Holdings, Inc.; Vice President and Assistant Secretary, AIM Global Advisors
Limited and AIM Global Ventures Co.; and Secretary, A I M Capital Management,
Inc.
DANA R. SUTTON, Vice President and Assistant Treasurer (36)
Vice President and Fund Controller, A I M Advisors, Inc.; and
Assistant Vice President and Assistant Treasurer, Fund Management Company.
MELVILLE B. COX, Vice President (52)
Vice President, A I M Advisors, Inc., A I M Capital Management, Inc.,
A I M Fund Services, Inc. and A I M Institutional Fund Services, Inc., and
Assistant Vice President, A I M Distributors, Inc. and Fund Management Company.
Formerly, Vice President, Charles Schwab & Co., Inc.; Assistant Secretary,
Charles Schwab Family of Funds and Schwab Investments; Chief Compliance
Officer, Charles Schwab Investment Management, Inc.; and Vice President,
Integrated Resources Life Insurance Co. and Capitol Life Insurance Co.
KAREN DUNN KELLEY, Vice President (35)
Director, A I M Global Management Company Limited; Senior Vice
President, A I M Capital Management, Inc. and AIM Global Advisors Limited; and
Vice President, A I M Advisors, Inc. and AIM Global Ventures Co.
__________________________________
*** Mr. Arthur and Ms. Relihan are married to each other.
5
<PAGE> 27
J. ABBOTT SPRAGUE, Vice President (40)
Director and President, A I M Institutional Fund Services, Inc. and
Fund Management Company; Director and Senior Vice President, A I M Advisors,
Inc.; and Senior Vice President, A I M Fund Services, Inc. and A I M Management
Group Inc.
The Board of Trustees has an Audit Committee, an Investments
Committee, and a Nominating and Compensation Committee.
The members of the Audit Committee are Messrs. Daly, Kroeger
(Chairman), Pennock and Robinson. The Audit Committee is responsible for
meeting with the Fund's auditors to review audit procedures and results and to
consider any matters arising from an audit to be brought to the attention of
the trustees as a whole with respect to the Fund's fund accounting or its
internal accounting controls, or for considering such matters as may from time
to time be set forth in a charter adopted by the Board of Trustees and such
committee.
The members of the Investments Committee are Messrs. Bauer, Crockett,
Daly (Chairman), Kroeger and Pennock. The Investments Committee is responsible
for reviewing portfolio compliance, brokerage allocation, portfolio investment
pricing issues, interim dividend and distribution issues, or considering such
matters as may from time to time be set forth in a charter adopted by the board
and such committee.
The members of the Nominating and Compensation Committee are Messrs.
Crockett, Daly, Kroeger, Pennock (Chairman) and Sklar. The Nominating and
Compensation Committee is responsible for considering and nominating
individuals to stand for election as trustees who are not interested persons as
long as the Fund maintains a distribution plan pursuant to Rule 12b-1 under the
1940 Act, reviewing from time to time the compensation payable to the
disinterested trustees or considering such matters as may from time to time be
set forth in a charter adopted by the board and such committee.
All of the Fund's trustees also serve as directors or trustees of some
or all of the other investment companies managed or advised by A I M Advisors,
Inc. ("AIM") or distributed and administered by FMC. All of the Fund's
executive officers hold similar offices with some or all of such investment
companies.
Remuneration of Trustees
Set forth below is information regarding compensation paid or accrued
during the fiscal year ended August 31, 1995 for each trustee of the Fund:
<TABLE>
<CAPTION>
============================================================================================
DIRECTOR AGGREGATE RETIREMENT TOTAL
COMPENSATION BENEFITS COMPENSATION
FROM FUND(1) ACCRUED FROM ALL AIM
BY ALL AIM FUNDS(3)
FUNDS(2)
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Charles T. Bauer $ -0- $ -0- $ -0-
--------------------------------------------------------------------------------------------
Bruce L. Crockett 1,034 2,814 45,094
--------------------------------------------------------------------------------------------
Owen Daly II 1,027 14,375 45,844
--------------------------------------------------------------------------------------------
Carl Frischling 1,034 7,542 45,094
--------------------------------------------------------------------------------------------
Robert H. Graham -0- -0- -0-
--------------------------------------------------------------------------------------------
John F. Kroeger 1,027 20,517 45,844
--------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 28
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Lewis F. Pennock 1,027 5,094 45,844
--------------------------------------------------------------------------------------------
Ian W. Robinson 1,024 10,396 45,094
--------------------------------------------------------------------------------------------
Louis S. Sklar 1,024 4,682 45,094
============================================================================================
</TABLE>
______________________
(1) The total amount of compensation deferred by all Trustees of the Fund
during the fiscal year ended August 31, 1995, including interest
earned thereon, was $4,246.
(2) During the fiscal year ended August 31, 1995, the total amount of
expenses allocated to the Fund in respect of such retirement benefits
was $1,112. Data reflects compensation earned for the calendar year
ended December 31, 1994.
(3) Messrs. Bauer, Daly, Graham, Kroeger and Pennock each serves as a
Director or Trustee of a total of 11 AIM Funds. Messrs. Crockett,
Frischling, Robinson and Sklar each serves as a Director or Trustee of
a total of 10 AIM Funds. Data reflects compensation earned for the
calendar year ended December 31, 1994.
AIM Funds Retirement Plan for Eligible Directors/Trustees
Under the terms of the AIM Funds Retirement Plan for Eligible
Directors/Trustees (the "Plan"), each director (who is not a employee of any of
the AIM Funds, A I M Management Group Inc. or any of their affiliates) may be
entitled to certain benefits upon retirement from the Board of Directors.
Pursuant to the Plan, the normal retirement date is the date on which the
eligible director has attained age 65 and has completed at least five years of
continuous service with one or more of the regulated investment companies
managed, administered or distributed by AIM or its affiliates (the "AIM
Funds"). Each eligible director is entitled to receive an annual benefit from
the AIM Funds commencing on the first day of the calendar quarter coincident
with or following his date of retirement equal to 5% of such Trustees'
compensation paid by the AIM Funds multiplied by the number of such Trustee's
years of service (not in excess of 10 years of service) completed with respect
to any of the AIM Funds. Such benefit is payable to each eligible trustee in
quarterly installments for a period of no more than five years. If an eligible
trustee dies after attaining the normal retirement date but before receipt of
any benefits under the Plan commences, the trustee's surviving spouse (if any)
shall receive a quarterly survivor's benefit equal to 50% of the amount payable
to the deceased trustee, for no more than five years beginning the first day of
the calendar quarter following the date of the director's death. Payments
under the Plan are not secured or funded by any AIM Fund.
Set forth below is a table that shows the estimated annual benefits
payable to an eligible director upon retirement assuming various compensation
and years of service classifications. The estimated credited years of service
as of December 31, 1994 for Messrs. Crockett, Daly, Frischling, Kroeger,
Pennock, Robinson and Sklar are 7, 8, 17, 17, 13, 7, and 5 years, respectively.
7
<PAGE> 29
<TABLE>
<CAPTION>
Annual Compensation Paid
By All AIM Funds
<S> <C> <C> <C>
$60,000 $65,000
=========================================
Number of Years of 10 $30,000 $32,500
Service With the -----------------------------------------
AIM Funds 9 $27,000 $29,250
-----------------------------------------
8 $24,000 $26,000
-----------------------------------------
7 $21,000 $22,750
-----------------------------------------
6 $18,000 $19,500
-----------------------------------------
5 $15,000 $16,250
=========================================
</TABLE>
DEFERRED COMPENSATION AGREEMENTS
Messrs. Daly, Frischling, Kroeger, Robinson and Sklar (for purposes of
this paragraph only, the "deferring directors") have each executed a Deferred
Compensation Agreement (collectively, the "Agreements"). Pursuant to the
Agreements, the deferring directors may elect to defer receipt of up to 100% of
their compensation payable by the Fund, and such amounts are placed into a
deferral account. Currently, the deferring directors may select various AIM
Funds in which all or part of his deferral account shall be deemed to be
invested. Distributions from the deferring directors' deferral accounts will
be paid in cash, in generally equal quarterly installments over a period of
five years beginning on the date the deferring director's retirement benefits
commence under the Plan. The Fund's Board of Trustees, in its sole discretion,
may accelerate or extend the distribution of such deferral accounts after the
deferring director's termination of service as a director of the Fund. If a
deferring director dies prior to the distribution of amounts in his deferral
account, the balance of the deferral account will be distributed to his
designated beneficiary in a single lump sum payment as soon as practicable
after such deferring director's death. The Agreements are not funded and, with
respect to the payments of amounts held in the deferral accounts, the deferring
directors have the status of unsecured creditors of the Fund and of each other
AIM Fund from which they are deferring compensation.
The Portfolio paid legal fees of $471 for services rendered by Reid &
Priest as counsel to the Board of Trustees. In September 1994, Kramer, Levin,
Naftalis, Nessen, Kamin & Frankel was appointed as counsel to the Board of
Trustees and the Portfolio paid legal fees of $2,654 for services rendered by
that firm as counsel to the Board of Trustees. A trustee of the Fund was a
partner of the firm of Reid & Priest until September 1994, when he became a
partner of Kramer, Levin, Naftalis, Nessen, Kamin & Frankel.
INVESTMENT ADVISOR
A I M Advisors, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173, acts as the investment advisor of the Portfolio pursuant to a
Master Investment Advisory Agreement dated as of October 18, 1993 (the
"Advisory Agreement"). AIM was organized in 1976, and together with its
affiliates advises or manages 37 investment company portfolios. As of October
31, 1995, the total assets of the investment company portfolios managed or
advised by AIM and its affiliates were approximately $39.3 billion.
AIM and the Fund have adopted a code of Ethics which requires
investment personnel (a) to pre-clear all personal securities transactions, (b)
to file reports regarding such transactions, and (c) to refrain from personally
engaging in (i) short-term trading of a security, (ii) transactions involving a
security within seven days of an AIM Fund transaction involving the same
security, and (iii) transactions involving securities being considered for
investment by an AIM Fund. The Code also prohibits investment personnel from
purchasing securities in an initial public offering. Personal trading reports
are reviewed periodically by AIM, and the Board of Trustees reviews annually
such reports (including information on any substantial violations
8
<PAGE> 30
of the Code). Violations of the Code may result in censure, monetary
penalties, suspension or termination of employment.
Pursuant to the terms of the Advisory Agreement, AIM manages the
investment of the assets of the Portfolio. AIM obtains and evaluates economic,
statistical and financial information to formulate and implement investment
policies for the Portfolio. Any investment program undertaken by AIM will at
all times be subject to the policies and control of the Fund's Board of
Trustees. AIM shall not be liable to the Fund or to its shareholders for any
act or omission by AIM or for any loss sustained by the Fund or its
shareholders except in the case of willful misfeasance, bad faith, gross
negligence or reckless disregard of duty.
As compensation for its services with respect to the Portfolio, AIM
receives a monthly fee which is calculated by applying the following annual
rates to the average daily net assets of the Portfolio:
<TABLE>
<CAPTION>
Net Assets Rate
---------- ----
<S> <C>
First $250 million 0.20%
Over $250 million to $500 million 0.15%
Over $500 million 0.10%
</TABLE>
The Advisory Agreement requires AIM to reduce its fee to the extent
required to satisfy any expense limitations imposed by the securities laws or
regulations thereunder of any state in which the Fund's shares are qualified
for sale.
Pursuant to an investment advisory agreement between the Fund and AIM
previously in effect with respect to the Portfolio (the "Prior Advisory
Agreement"), which provided for the same level of compensation to AIM as the
Advisory Agreement and the Advisory Agreement currently in effect, AIM received
fees (net of fee waivers, if any) from the Fund for the fiscal years ended
August 31, 1995, 1994 and 1993, in the amounts of $596,449, $640,698 and
$904,014, respectively. For the fiscal years ended August 31, 1995, 1994, and
1993, AIM waived fees with respect to the Portfolio in the amounts of $117,100,
$131,042 and $0, respectively.
The Advisory Agreement provides that, upon the request of the Fund's
Board of Trustees, AIM may perform or arrange for the performance of certain
additional services on behalf of the Portfolio which are not required by the
Agreement. AIM may receive reimbursement or reasonable compensation for such
additional services, as may be agreed upon by AIM and the Board of Trustees,
based upon a finding by the Board of Trustees that the provision of such
services would be in the best interest of the Portfolio and its shareholders.
The Board of Trustees has made such a finding and, accordingly, has entered
into the Master Administrative Services Agreement under which AIM will provide
the additional services described below under the caption "Administrative
Services."
The Advisory Agreement was approved for its initial term by the Board
of Trustees on July 19, 1993. The Advisory Agreement will continue in effect
until June 30, 1996 and from year to year thereafter only if such continuance
is specifically approved at least annually by the Fund's Board of Trustees and
the affirmative vote of a majority of the trustees who are not parties to the
Agreement or "interested persons" of any such party by votes cast in person at
a meeting called for such purpose. The Fund or AIM may terminate the Agreement
on 60 days' notice without penalty. The Agreement terminates automatically in
the event of its assignment, as defined in the 1940 Act.
AIM is a wholly-owned subsidiary of A I M Management Group Inc. ("AIM
Management"), 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173. All of
the directors and certain of the officers of AIM are also executive officers of
the Fund and their affiliations are shown under "Trustees and Officers." The
address of each director and officer of AIM is 11 Greenway Plaza, Suite 1919,
Houston, Texas 77046-1173.
9
<PAGE> 31
FMC is a registered broker-dealer and wholly-owned subsidiary of AIM.
FMC acts as distributor of the shares of the Portfolio.
ADMINISTRATIVE SERVICES
AIM acts as the Portfolio's administrator pursuant to a Master
Administrative Services Agreement dated as of October 18, 1993 between AIM and
the Fund (the "Administrative Services Agreement").
The Administrative Services Agreement provides that AIM may perform or
arrange for the performance of certain accounting, shareholder servicing and
other administrative services for the Portfolio which are not required to be
performed by AIM under the Advisory Agreement. As full compensation for the
performance of such services, AIM is reimbursed for any personnel and other
costs (including the cost of applicable office space, facilities and equipment)
of furnishing the services of a principal financial officer of the Fund and of
persons working under his supervision for maintaining the financial accounts
and books and records of the Fund, including calculation of the Portfolio's
daily net asset value, and preparing tax returns and financial statements for
the Portfolio. The method of calculating such reimbursements must be annually
approved, and the amounts paid will be periodically reviewed, by the Fund's
Board of Trustees.
The Administrative Services Agreement was initially approved by the
Board of Trustees on July 19, 1993. Pursuant to an administrative services
agreement between the Fund and AIM, previously in effect, which provided for
the same level of reimbursement to AIM as the Administrative Services
Agreement, as well as the Administrative Services Agreement, AIM was reimbursed
for the fiscal years ended August 31, 1995, 1994 and 1993, in the amounts of
$42,823, $29,642 and $29,382, respectively, for fund accounting services for
the Portfolio.
Under the terms of a Transfer Agency and Service Agreement, dated July
1, 1995, between the Fund and AIFS, a registered transfer agent and
wholly-owned subsidiary of AIM, as well as under previous agreements, AIFS
received $10,913 and $1,892, for the fiscal years ended August 31, 1995 and
1994, respectively, for the provision of certain shareholder serivces for the
Fund.
EXPENSES
In addition to fees paid to AIM pursuant to the Advisory Agreement and
the expenses reimbursed to AIM under the Administrative Services Agreement, the
Fund also pays or causes to be paid all other expenses of the Fund, including,
without limitation: the charges and expenses of any registrar, any custodian or
depository appointed by the Fund for the safekeeping of its cash, portfolio
securities and other property, and any transfer, dividend or accounting agent
or agents appointed by the Fund; brokers' commissions chargeable to the Fund in
connection with portfolio securities transactions to which the Fund is a party;
all taxes, including securities issuance and transfer taxes, and fees payable
by the Fund to federal, state or other governmental agencies; the costs and
expenses of engraving or printing of certificates representing shares of the
Fund; all costs and expenses in connection with the registration and
maintenance of registration of the Fund and its shares with the SEC and various
states and other jurisdictions (including filing and legal fees and
disbursements of counsel); the costs and expenses of printing, including
typesetting, and distributing prospectuses and statements of additional
information of the Fund and supplements thereto to the Fund's shareholders; all
expenses of shareholders' and trustees' meetings and of preparing, printing and
mailing of prospectuses, proxy statements and reports to shareholders; fees and
travel expenses of trustees and trustee members of any advisory board or
committee; all expenses incident to the payment of any dividend, distribution,
withdrawal or redemption, whether in shares or in cash; charges and expenses of
any outside service used for pricing of the Fund's shares; charges and expenses
of legal counsel, including counsel to the trustees of the Fund who are not
"interested persons" (as defined in the 1940 Act) of the Fund or AIM, and of
independent accountants in connection with any matter relating to the Fund;
membership dues of industry associations; interest payable on Fund borrowing;
postage; insurance premiums on property or personnel (including officers and
trustees) of the Fund which inure to its benefit; and extraordinary
10
<PAGE> 32
expenses (including, but not limited to, legal claims and liabilities and
litigation costs and any indemnification related thereto). Except as disclosed
under the caption "Distribution Plan," FMC bears the expenses of printing and
distributing prospectuses and statements of additional information (other than
those prospectuses and statements of additional information distributed to
existing shareholders of the Fund) and any other promotional or sales
literature used by FMC or furnished by FMC to purchasers or dealers in
connection with the public offering of the Fund's shares.
Expenses of the Fund which are not directly attributable to the
operations of any class of shares or portfolio of the Fund are prorated among
all classes of the Fund. Expenses of the Fund which are not directly
attributable to a specific class of shares but are directly attributable to a
specific portfolio are prorated among all classes of such Portfolio. Expenses
of the Fund which are directly attributable to a specific class of shares are
charged against the income available for distribution as dividends to the
holders of such shares.
BANKING REGULATIONS
The Glass-Steagall Act and other applicable laws and regulations,
among other things, generally prohibit federally chartered or supervised banks
from engaging in the business of underwriting, selling or distributing
securities, but permit banks to make shares of mutual funds available to their
customers and to perform administrative and shareholder servicing functions.
However, judicial or administrative decisions or interpretations of such laws,
as well as changes in either federal or state statutes or regulations relating
to the permissible activities of banks or their subsidiaries or affiliates,
could prevent a bank from continuing to perform all or a part of its servicing
activities. If a bank were prohibited from so acting, shareholder clients of
such bank would be permitted to remain shareholders of the Fund and alternate
means for continuing the servicing of such shareholders would be sought. In
such event, changes in the operation of the Fund might occur and shareholders
serviced by such bank might no longer be able to avail themselves of any
automatic investment or other services then being provided by such bank. It is
not expected that shareholders would suffer any adverse financial consequences
as a result of any of these occurrences. In addition, state securities laws on
this issue may differ from the interpretations of federal law expressed herein
and certain banks and financial institutions may be required to register as
dealers pursuant to state law.
TRANSFER AGENT AND CUSTODIAN
The Bank of New York acts as custodian for the portfolio securities
and cash of the Portfolio. The Bank of New York receives such compensation from
the Fund for its services in such capacity as is agreed to from time to time by
The Bank of New York and the Fund. The address of The Bank of New York is 110
Washington Street, 8th Floor, New York, New York 10286.
A I M Institutional Fund Services, Inc. serves as transfer agent for
the shares of the Class and receives an annual fee from the Fund for its
services in such capacity in the amount of .007% of average daily net assets of
the Fund, payable monthly. Such compensation may be changed from time to time
as is agreed to by A I M Institutional Fund Services, Inc. and the Fund.
REPORTS
The Fund furnishes shareholders with semi-annual reports containing
information about the Fund and its operations, including a schedule of
investments held in the Fund's Portfolios and its financial statements. The
annual financial statements are audited by the Fund's independent auditors. The
Fund's Board of Trustees has selected KPMG Peat Marwick LLP, NationsBank
Building, 700 Louisiana, Houston, Texas 77002, as the independent auditors to
audit the financial statements and review the tax returns of the Portfolio.
11
<PAGE> 33
PRINCIPAL HOLDERS OF SECURITIES
TREASURY PORTFOLIO
To the best of the knowledge of the Fund, the names and addresses of
the holders of 5% or more of the outstanding shares of any class of the
Treasury Portfolio as of October 25, 1995, and the percentage of such shares
owned by such shareholders as of such date are as follows:
INSTITUTIONAL CLASS
- -------------------
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY(a)
--------------- --------------
<S> <C>
NationsBank Texas 14.27%
P.O. Box 831000
Dallas, TX 75283-1000
Wachovia Bank and Trust 12.50%
P.O. Box 3075
Winston-Salem, NC 27150
Trust Company Bank 11.96%
P.O. Box 105504
Atlanta, GA 30348
Victoria Bank & Trust 7.84%
One O'Connor Plaza 6th Fl.
Victoria, TX 77902
Texas Commerce Bank 6.47%
601 Travis
Houston, TX 77002
U.S. Bank of Washington 5.62%
P.O. Box 3168
Portland, OR 97208
FRNCO 5.04%
P.O.Box 939
Rogers, AR 72757-0939
</TABLE>
__________________________________
(a) The Fund has no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
12
<PAGE> 34
PERSONAL INVESTMENT CLASS
- -------------------------
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY(a)
--------------- -------------
<S> <C>
Frost National Bank 49.42%(b)
P.O. Box 2358
San Antonio, TX 78299
Republic National Bank 27.58%(b)
1 Hanson Pl., Lower Level
Brooklyn, NY 11243
The Bank of New York 21.30%
440 Mamaroneck Ave.
Harrison, NY 10528
PRIVATE INVESTMENT CLASS
- ------------------------
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY(a)
--------------- -------------
Liberty Bank and Trust Co. 41.02%(b)
of Oklahoma, N.A.
P.O. Box 25848
Oklahoma City, OK 73125
First Trust/VAR & Co. 29.92%b
180 E. 5th Street
St. Paul, MN 55101
Huntington Capital Corp 14.82%
41 S. High St.
Columbus, OH 43287
Charter National Bank 6.39%
P.O. Box 1494
Houston, TX 77251-1494
United Counties Trust Co. 5.20%
30 Maple St.
Summit, NJ 07901
</TABLE>
__________________________________
(a) The Fund has no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
(b) A shareholder who holds more than 25% of the outstanding shares of a
class may be presumed to be in "control" of such class of shares, as
defined in the 1940 Act.
13
<PAGE> 35
CASH MANAGEMENT CLASS
- ---------------------
<TABLE>
<CAPTION>
PERCENT PERCENT
NAME AND ADDRESS OWNED OWNED OF
OF RECORD OWNER BENEFICIALLY ONLY RECORD ONLY
--------------- ----------------- -----------
<S> <C> <C>
City of Riverside 21.65% -0-
P.O. Box 12005
Riverside, CA 92502-2205
LA Export Terminal -0- 11.72%(a)
P.O. Box 1769
San Pedro, CA 90733
State Street Bank & Trust -0- 10.87%(a)
61 Broadway 15th Fl.
New York, NY 10006
Montgomery County 6.76% -0-
101 Monroe St. 15th Fl.
Rockville, MD 20850
City of West Sacramento 6.60% -0-
2101 Stone Blvd.
W. Sacramento, CA 95691
City of Ontario 5.26% -0-
303 East "B" St.
Ontario, CA 91764
</TABLE>
RESOURCE CLASS
- --------------
AIM provided the initial capitalization of the Resource Class of the
Treasury Portfolio and, accordingly, as of the date of this Statement of
Additional Information, owned all the outstanding shares of beneficial interest
of the Resource Class of the Treasury Portfolio. Although the Resource Class
of the Treasury Portfolio expects that the sale of its shares to the public
pursuant to the Prospectus will promptly reduce the percentage of such shares
owned by AIM to less than 1% of the total shares outstanding, as long as AIM
owns over 25% of the shares of the Resource Class of the Treasury Portfolio
that are outstanding, in may be presumed to be in "control" of the Resource
Class of the Treasury Portfolio, as defined in the 1940 Act.
__________________________________
(a) The Fund has no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
(b) A shareholder who holds more than 25% of the outstanding shares of a
class may be presumed to be in "control" of such class of shares, as
defined in the 1940 Act.
14
<PAGE> 36
TREASURY TAXADVANTAGE PORTFOLIO
To the best of the knowledge of the Fund, the names and addresses of
the holders of 5% or more of the outstanding shares of any class of the
Treasury TaxAdvantage Portfolio as of October 25, 1995, and the percentage of
such shares owned by such shareholders as of such date are as follows:
INSTITUTIONAL CLASS
- -------------------
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY(a)
--------------- --------------
<S> <C>
FirsTier Bank Omaha 28.6%(b)
1700 Farnam Street
Omaha, NE 68102
Muchmore & Co. 13.7%
750 Walnut Street
Cranford, NJ 07016-1205
Key Trust Company 10.1%
4900 Tiedeman
Cleveland, OH 44101-5971
Boatmen's Trust Company 8.7%
P.O. Box 14737
St. Louis, MO 63178
Wachovia Bank and Trust Co NA 7.6%
P.O. Box 3075
Winston-Salem, NC 27150
Liberty Bank & Trust Company 7.5%
of Tulsa, N.A.
P.O. Box 25848
Oklahoma City, OK 73125
</TABLE>
PRIVATE INVESTMENT CLASS
- ------------------------
<TABLE>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY(a)
--------------- ---------------
<S> <C>
Huntington Capital Corp 100%(b)
41 S. High St.
Columbus, OH 43287
</TABLE>
__________________________________
(a) The Fund has no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
(b) A shareholder who holds more than 25% of the outstanding shares of a
class may be presumed to be in "control" of such class of shares, as
defined in the 1940 Act.
15
<PAGE> 37
To the best of the knowledge of the Fund, as of October 25, 1995, the
trustees and officers of the Fund beneficially owned less than 1% of each class
of the Fund's outstanding shares.
Shares shown as beneficially owned by the above institutions are those
shares for which the institutions possessed or shared voting or investment
power with respect to such shares on behalf of their underlying accounts.
PURCHASES AND REDEMPTIONS
NET ASSET VALUE DETERMINATION
Shares of the Portfolio are sold at the net asset value of such
shares. Shareholders may at any time redeem all or a portion of their shares at
net asset value. The investor's price for purchases and redemptions will be the
net asset value next determined following the receipt of an order to purchase
or a request to redeem shares.
The valuation of the portfolio instruments based upon their amortized
cost and the concomitant maintenance of the net asset value per share of $1.00
for the Portfolio is permitted in accordance with applicable rules and
regulations of the SEC, including Rule 2a-7 under the 1940 Act. These rules
require that the Fund maintain a dollar-weighted average portfolio maturity of
90 days or less for the Portfolio, purchase only instruments having remaining
maturities of 397 days or less and invest only in securities determined by the
Board of Trustees to be of high quality with minimal credit risk.
The Board of Trustees is required to establish procedures designed to
stabilize, to the extent reasonably practicable, the Fund's price per share at
$1.00 for the Portfolio as computed for the purpose of sales and redemptions.
Such procedures include review of the Portfolio's portfolio holdings by the
Board of Trustees, at such intervals as they may deem appropriate, to determine
whether the net asset value calculated by using available market quotations or
other reputable sources for the Portfolio deviates from $1.00 per share and, if
so, whether such deviation may result in material dilution or is otherwise
unfair to existing holders of the Portfolio's shares. In the event the Board
of Trustees determines that such a deviation exists for the Portfolio, it will
take such corrective action as the Board of Trustees deems necessary and
appropriate with respect to the Portfolio, including the sale of portfolio
instruments prior to maturity to realize capital gains or losses or to shorten
the average portfolio maturity; the withholding of dividends; redemption of
shares in kind; or the establishment of a net asset value per share by using
available market quotations.
DISTRIBUTION AGREEMENT
The Fund has entered into a Master Distribution Agreement dated as of
October 18, 1993 (the "Distribution Agreement") with FMC, a registered
broker-dealer and a wholly-owned subsidiary of AIM, to act as the exclusive
distributor of the shares of the Class. The address of FMC is 11 Greenway
Plaza, Suite 1919, Houston, Texas 77046-1173. See "General Information About
the Fund - Trustees and Officers" and "- Investment Advisor" for information as
to the affiliation of certain trustees and officers of the Fund with FMC, AIM
and AIM Management.
The Distribution Agreement provides that FMC has the exclusive right
to distribute shares of the class either directly or through other
broker-dealers. The Distribution Agreement also provides that FMC will pay
promotional expenses, including the incremental costs of printing prospectuses
and statements of additional information, annual reports and other periodic
reports for distribution to persons who are not shareholders of the Fund and
the costs of preparing and distributing any other supplemental sales
literature, except as may otherwise be provided in a distribution plan adopted
by the Fund's Board of Trustees pursuant to Rule 12b-1. FMC has not undertaken
to sell any specified number of Shares.
16
<PAGE> 38
On July 19, 1993, the Board of Trustees (including all the trustees
who are not parties to the Distribution Agreement or "interested persons" of
any such party) initially approved the Distribution Agreement for its initial
term. The Distribution Agreement will remain in effect until June 30, 1996 and
it will continue in effect from year to year thereafter only if such
continuation is specifically approved at least annually by the Fund's Board of
Trustees and the affirmative vote of the trustees who are not parties to the
Distribution Agreement or "interested persons" of any such party by votes cast
in person at a meeting called for such purpose. A prior distribution agreement
between the Fund and FMC, with terms substantially the same as those of the
Distribution Agreement, was in effect through October 15, 1993. The Fund or
FMC may terminate the Distribution Agreement on 60 days' written notice without
penalty. The Distribution Agreement will terminate automatically in the event
of its "assignment," as defined in the 1940 Act.
DISTRIBUTION PLAN
The Fund has adopted a Master Distribution Plan (the "Plan") pursuant
to Rule 12b-1 under the 1940 Act. Pursuant to the Plan, the Fund may enter
into Shareholder Service Agreements ("Service Agreements") with selected
broker-dealers, banks, other financial institutions or their affiliates. Such
firms may receive from the Portfolio compensation for servicing investors as
beneficial owners of the shares of the Class of the Portfolio. These services
may include among other things: (i) answering customer inquiries regarding the
shares of the Class and the Portfolio; (ii) assisting customers in changing
dividend options, account designations and addresses; (iii) performing sub-
accounting; (iv) establishing and maintaining shareholder accounts and records;
(v) processing purchase and redemption transactions; (vi) automatic investment
in the shares of the class of customer cash account balances; (vii) providing
periodic statements showing a customer's account balance and integrating such
statements with those of other transactions and balances in the customer's
other accounts serviced by such firm; (viii) arranging for bank wires; and (ix)
such other services as the Fund may request on behalf of the shares of the
Class, to the extent such firms are permitted to engage in such services by
applicable statute, rule or regulation. The Plan may only be used for the
purposes specified above and as stated in the Plan. Expenses may not be carried
over from year to year.
FMC is a wholly-owned subsidiary of AIM, a wholly-owned subsidiary of
AIM Management. Charles T. Bauer, a Trustee and Chairman of the Fund, owns
shares of AIM Management and Robert H. Graham, a Trustee and President of the
Fund, also owns shares of AIM Management.
PERFORMANCE INFORMATION
As stated under the caption "Yield Information" in the Prospectus,
yield information for the shares of the Portfolio may be obtained by calling
the Fund at (800) 877-7748. The current yield quoted will be the net average
annualized yield for an identified period, usually seven consecutive calendar
days. Current yield will be computed by assuming that an account was
established with a single share (the "Single Share Account") on the first day
of the period. To arrive at the quoted yield, the net change in the value of
that Single Share Account for the period (which would include dividends accrued
with respect to the share, and dividends declared on shares purchased with
dividends accrued and paid, if any, but would not include realized gains and
losses or unrealized appreciation or depreciation) will be multiplied by 365
and then divided by the number of days in the period, with the resulting figure
carried to the nearest hundredth of one percent. The Fund may also furnish a
quotation of effective yield that assumes the reinvestment of dividends for a
365-day year and a return for the entire year equal to the average annualized
yield for the period, which will be computed by compounding the unannualized
current yield for the period by adding 1 to the unannualized current yield,
raising the sum to a power equal to 365 divided by the number of days in the
period, and then subtracting 1 from the result.
For the seven-day period ended August 31, 1995, the current yield and
the effective yield of the Class (which assumes the reinvestment of dividends
for a 365-day year and a return for the entire year equal to the annualized
current yield for the period) were 5.17% and 5.30%, respectively, excluding
capital gains distributions. For the seven-day period ended August 31, 1995,
the current distribution rate and the effective
17
<PAGE> 39
distribution rate of the Class, including capital gains distributions, (which
assumes the reinvestment of dividends for a 365-day year and a return for the
entire year equal to the annualized current distribution rate for the period)
were 5.22% and 5.36%, respectively. These performance numbers are quoted for
illustration purposes only. The performance numbers for any other seven-day
period may be substantially different from those quoted above.
The Fund may compare the performance of the Class or the performance
of securities in which it may invest to:
o IBC/Donoghue's Money Fund Averages, which are average
yields of various types of money market funds that include the effect
of compounding distributions;
o other mutual funds, especially those with similar
investment objectives. These comparisons may be based on data
published by IBC/Donoghue's Money Fund Report(R) of Holliston,
Massachusetts or by Lipper Analytical Services, Inc., a widely
recognized independent service located in Summit, New Jersey, which
monitors the performance of mutual funds;
o yields on other money market securities or averages of
other money market securities as reported by the Federal Reserve
Bulletin, by TeleRate, a financial information network, or by
Bloomberg, a financial information firm; and
o other fixed-income investments such as Certificates of
Deposit ("CDs").
The principal value and interest rate of CDs and money market
securities are fixed at the time of purchase, whereas the Class' yield will
fluctuate. Unlike some CDs and certain other money market securities, money
market mutual funds are not insured by the FDIC. Investors should give
consideration to the quality and maturity of the portfolio securities of the
respective investment companies when comparing investment alternatives.
The Fund may reference the growth and variety of money market mutual
funds and AIM's innovation and participation in the industry.
SUSPENSION OF REDEMPTION RIGHTS
The right of redemption may be suspended or the date of payment upon
redemption may be postponed when (a) trading on the New York Stock Exchange is
restricted, as determined by applicable rules and regulations of the SEC, (b)
the New York Stock Exchange is closed for other than customary weekend or
holiday closings, (c) the SEC has by order permitted such suspension, or (d) an
emergency as determined by the SEC exists making disposition of portfolio
securities or the valuation of the net assets of the Portfolio not reasonably
practicable.
INVESTMENT PROGRAM AND RESTRICTIONS
INVESTMENT PROGRAM
The Portfolio seeks to achieve its objective by investing in high
grade money market instruments. The money market instruments in which the
Portfolio invests are considered to carry very little risk and accordingly may
not have as high a yield as that available on money market instruments of
lesser quality. The Portfolio invests exclusively in direct obligations of the
U.S. Treasury, which include Treasury bills, notes and bonds.
18
<PAGE> 40
The Portfolio limits its investments to direct U.S. Treasury
obligations. These securities are "Eligible Securities" as defined in Rule
2a-7 under the 1940 Act. Rule 2a-7, which governs the operations of money
market funds and which limits securities that may be purchased by money market
funds to "Eligible Securities," defines an "Eligible Security" as follows:
(i) a security with a remaining maturity of 397 days or
less that is rated (or that has been issued by an issuer that is rated
with respect to a class of short-term debt obligations, or any
security within that class, that is comparable in priority and
security with the security) by the Requisite NRSROs(1) in one of the
two highest rating categories for short-term debt obligations (within
which there may be sub-categories or gradations indicating relative
standing); or
(ii) a security:
(A) that at the time of issuance was a long-term
security but that has a remaining maturity of 397 calendar
days or less, and
(B) whose issuer has received from the Requisite
NRSROs, a rating, with respect to a class of short-term debt
obligations (or any security within that class) that is now
comparable in priority and security with the security, in one
of the two highest rating categories for short-term debt
obligations (within which there may be sub-categories or
gradations indicating relative standing); or
(iii) an unrated security(2) that is of comparable quality
to a security meeting the requirements of paragraphs (a)(5)(i) or (ii)
this section, as determined by the money market fund's board of
directors; provided, however, that:
(A) the board of directors may base its
determination that a Standby Commitment is an Eligible
Security upon a finding that the issuer of the commitment
presents a minimal risk of default; and
(B) a security that at the time of issuance was a
long-term security but that has a remaining maturity of 397
calendar days or less and that is an unrated security is not
an Eligible Security if the security has a long-term rating
from any
__________________________________
(1) "Requisite NRSRO" shall mean (a) any two nationally recognized
statistical rating organizations that have issued a rating with
respect to a security or class of debt obligations of an issuer, or
(b) if only one NRSRO has issued a rating with respect to such
security or issuer of such security, that NRSRO. At present the NRSROs
are: Standard & Poor's Corp. ("S & P"), Moody's Investors Service,
Inc. ("Moody's"), Duff and Phelps, Inc., Fitch Investors Services,
Inc. and, with respect to certain types of securities, IBCA Limited
and its affiliate, IBCA Inc. Subcategories or gradations in ratings
(such as a "+" or "-") do not count as rating categories.
(2) An "unrated security" is a security (i) issued by an issuer that does
not have a current short-term rating from any NRSRO, either as to the
particular security or as to any other short-term obligations of
comparable priority and security; (ii) that was a long-term security
at the time of issuance and whose issuer has not received from any
NRSRO a rating with respect to a class of short-term debt obligations
now comparable in priority and security; or (iii) a security that is
rated but which is the subject of an external credit support agreement
not in effect when the security was assigned its rating, provided that
a security is not an unrated security if any short-term debt
obligation issued by the issuer and comparable in priority and
security is rated by any NRSRO.
19
<PAGE> 41
NRSRO that is not within the NRSRO's two highest categories
(within which there may be sub-categories or gradations
indicating relative standing).
The securities purchased by the Portfolio, which are limited to those
issued by the U.S. Treasury, are considered to be in the highest ratings
category for short-term debt obligations.
INVESTMENT RESTRICTIONS
As a matter of fundamental policy which may not be changed without a
majority vote of shareholders of the Portfolio (as that term is defined under
"General Information about the Fund - The Fund and its Shares"), the Portfolio
may not:
(1) concentrate more than 25% of the value of its total assets in
the securities of one or more issuers conducting their principal business
activities in the same industry, provided that there is no limitation with
respect to investments in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and bank instruments, such as
CDs, bankers' acceptances, time deposits and bank repurchase agreements;
(2) borrow money or issue senior securities except (a) for
temporary or emergency purposes (e.g., in order to facilitate the orderly sale
of portfolio securities or to accommodate abnormally heavy redemption
requests), the Portfolio may borrow money from banks or obtain funds by
entering into reverse repurchase agreements, and (b) to the extent that
entering into commitments to purchase securities in accordance with the
Portfolio's investment program may be considered the issuance of senior
securities, provided that the Portfolio will not purchase portfolio securities
while borrowing in excess of 5% of its total assets are outstanding;
(3) mortgage, pledge or hypothecate any assets except to secure
permitted borrowing and except for reverse repurchase agreements and then only
in an amount up to 33 1/3% of the value of its total assets at the time of
borrowing or entering into a reverse repurchase agreement;
(4) make loans of money or securities other than (a) through the
purchase of debt securities in accordance with the Portfolio's investment
program, (b) by entering into repurchase agreements, and (c) by lending
portfolio securities to the extent permitted by law or regulation;
(5) underwrite securities issued by any other person, except to
the extent that the purchase of securities and the later disposition of such
securities in accordance with the Portfolio's investment program may be deemed
an underwriting;
(6) invest in real estate, except that the Portfolio may purchase
and sell securities secured by real estate or interests therein or issued by
issuers which invest in real estate or interests therein;
(7) purchase or sell commodities or commodity futures contracts,
purchase securities on margin, make short sales or invest in puts or calls;
(8) invest in any obligation not payable as to principal and
interest in United States currency; or
(9) acquire for value the securities of any other investment
company, except in connection with a merger, consolidation, reorganization or
acquisition of assets.
20
<PAGE> 42
OTHER INVESTMENT POLICIES
The Portfolio does not intend to invest in companies for the purpose
of exercising control or management. The Portfolio may also lend its portfolio
securities in amounts up to 33 1/3% of its total assets to financial
institutions in accordance with the investment restrictions of the Portfolio.
Such loans would involve risks of delay in receiving additional collateral in
the event the value of the collateral decreased below the value of the
securities loaned, or of delay in recovering the securities loaned, or even
loss of rights in the collateral should the borrower of the securities fail
financially. However, loans will be made only to borrowers deemed by AIM to be
of good standing and only when, in AIM's judgment, the income to be earned from
the loans justifies the attendant risks. None of the foregoing policies is
fundamental.
The Fund may, from time to time in order to qualify shares of the
Portfolio for sale in a particular state, agree to certain investment
restrictions in addition to or more stringent than those set forth above. Such
restrictions are not fundamental and may be changed without the approval of
shareholders. For example, the Portfolio will not invest in oil, gas or other
mineral leases, rights, royalty contracts or exploration or development
programs (Texas). This restriction, however, does not prevent the Portfolio
from purchasing and selling securities of companies engaged in the exploration,
development, production, refining, transporting and marketing of oil, gas or
minerals.
PORTFOLIO TRANSACTIONS
AIM is responsible for decisions to buy and sell securities for the
Portfolio, broker-dealer selection and negotiation of commission rates. Since
purchases and sales of portfolio securities by the Portfolio are usually
principal transactions, the Portfolio incurs little or no brokerage
commissions. Portfolio securities are normally purchased directly from the
issuer or from a market maker for the securities. The purchase price paid to
dealers serving as market makers may include a spread between the bid and asked
prices.
The Portfolio does not seek to profit from short-term trading, and
will generally (but not always) hold portfolio securities to maturity, but AIM
may seek to enhance the yield of the Portfolio by taking advantage of yield
disparities or other factors that occur in the money markets. For example,
market conditions frequently result in similar securities trading at different
prices. AIM may dispose of any portfolio security prior to its maturity if such
disposition and reinvestment of proceeds are expected to enhance yield
consistent with AIM's judgment as to desirable portfolio maturity structure or
if such disposition is believed to be advisable due to other circumstances or
conditions. The amortized cost method of valuing portfolio securities requires
that the Portfolio maintain an average weighted portfolio maturity of ninety
days or less. Thus, there is likely to be relatively high portfolio turnover,
but since brokerage commissions are not normally paid on money market
instruments, the high rate of portfolio turnover is not expected to have a
material effect on the net income or expenses of the Portfolio.
AIM's primary consideration in effecting a security transaction is to
obtain the best net price and the most favorable execution of the order. To the
extent that the execution and prices offered by more than one dealer are
comparable, AIM may, in its discretion, effect transactions with dealers that
furnish statistical, research or other information or services which are deemed
by AIM to be beneficial to the Portfolio's investment program. Certain research
services furnished by dealers may be useful to AIM with respect to clients
other than the Portfolio. Similarly, any research services received by AIM
through placement of portfolio transactions of other clients may be of value to
AIM in fulfilling its obligations to the Portfolio. AIM is of the opinion that
the material received is beneficial in supplementing AIM's research and
analysis; and, therefore, it may benefit the Portfolio by improving the quality
of AIM's investment advice. The advisory fees paid by the Portfolio are not
reduced because AIM receives such services.
From time to time, the Fund may sell a security, or purchase a
security from an AIM Fund or another investment account advised by AIM or A I M
Capital Management, Inc. ("AIM Capital"), when such
21
<PAGE> 43
transactions comply with applicable rules and regulations and are deemed
consistent with the investment objective(s) and policies of the investment
accounts advised by AIM or AIM Capital. Procedures pursuant to Rule 17a-7 under
the 1940 Act regarding transactions between investment accounts advised by AIM
or AIM Capital have been adopted by the Boards of Directors/Trustees of the
various AIM Funds, including the Fund. Although such transactions may result in
custodian, tax or other related expenses, no brokerage commissions or other
direct transaction costs are generated by transactions among the investment
accounts advised by AIM or AIM Capital.
Provisions of the 1940 Act and rules and regulations thereunder have
also been construed to prohibit the Fund from purchasing securities or
instruments from, or selling securities or instruments to, any holder of 5% or
more of the voting securities of any investment company managed or advised by
AIM. The Fund has obtained an order of exemption from the SEC which permits
the Fund to engage in certain transactions with such 5% holder, if the Fund
complies with conditions and procedures designed to ensure that such
transactions are executed at fair market value and present no conflicts of
interest.
AIM and its affiliates manage several other investment accounts, some
of which may have objectives similar to the Portfolio's. It is possible that
at times identical securities will be acceptable for one or more of such
investment accounts. However, the position of each account in the securities of
the same issue may vary and the length of time that each account may choose to
hold its investment in the securities of the same issue may likewise vary. The
timing and amount of purchase by each account will also be determined by its
cash position. If the purchase or sale of securities is consistent with the
investment policies of the Portfolio and one or more of these accounts and is
considered at or about the same time, transactions in such securities will be
allocated in good faith among such accounts, in accordance with applicable laws
and regulations, in order to obtain the best net price and most favorable
execution. The allocation and combination of simultaneous securities purchases
on behalf of the Portfolio will be made in the same way that such purchases are
allocated among or combined with those of other AIM accounts. Simultaneous
transactions could adversely affect the ability of the Portfolio to obtain or
dispose of the full amount of a security which it seeks to purchase or sell.
Under the 1940 Act, persons affiliated with the Fund are prohibited
from dealing with the Portfolios as principal in any purchase or sale of
securities unless an exemptive order allowing such transactions is obtained
from the SEC. Furthermore, the 1940 Act prohibits the Fund from purchasing a
security being publicly underwritten by a syndicate of which persons affiliated
with the Fund are a member except in accordance with certain conditions. These
conditions may restrict the ability of the Portfolio to purchase Money Market
obligations being publicly underwritten by such a syndicate, and the Portfolio
may be required to wait until the syndicate has been terminated before buying
such securities. At such time, the market price of the securities may be
higher or lower than the original offering price. A person affiliated with the
Fund may, from time to time, serve as placement agent or financial advisor to
an issuer of Money Market obligations and be paid a fee by such issuer. The
Portfolio may purchase such Money Market obligations directly from the issuer,
provided that the purchase made in accordance with procedures adopted by the
Fund's Board of Trustees and any such purchases are reviewed at least quarterly
by the Fund's Board of Trustees and a determination is made that all such
purchases were effected in compliance with such procedures, including a
determination that the placement fee or other remuneration paid by the issuer
to the person affiliated with the Fund was fair and reasonable in relation to
the fees charged by others performing similar services. During the fiscal year
ended August 31, 1995, no securities or instruments were purchased by the
Portfolio from issuers who paid placement fees or other compensation to a
broker affiliated with the Portfolio.
TAX MATTERS
The following is only a summary of certain additional tax
considerations generally affecting the Portfolio and its shareholders that are
not described in the Prospectus. No attempt is made to present a
22
<PAGE> 44
detailed explanation of the tax treatment of the Portfolio or its shareholders,
and the discussion here and in the Prospectus is not intended as a substitute
for careful planning.
QUALIFICATION AS A REGULATED INVESTMENT COMPANY
The Portfolio has elected to be taxed as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"). As a regulated investment company, the Portfolio is not subject
to federal income tax on the portion of its net investment income (i.e., taxable
interest, dividends and other taxable ordinary income, net of expenses) and
capital gain net income (i.e., the excess of capital gains over capital losses)
that it distributes to shareholders, provided that it distributes at least 90%
of its investment company taxable income (i.e., net investment income and the
excess of net short-term capital gain over net long-term capital loss) for the
taxable year (the "Distribution Requirement"), and satisfies certain other
requirements of the Code that are described below. Distributions by the
Portfolio made during the taxable year or, under specified circumstances, within
twelve months after the close of the taxable year, will be considered
distributions of income and gains for the taxable year and can therefore satisfy
the Distribution Requirement.
In addition to satisfying the Distribution Requirement, a regulated
investment company must (1) derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, gains
from the sale or other disposition of stock or securities or foreign currencies
(to the extent such currency gains are directly related to the regulated
investment company's principal business of investing in stock or securities)
and other income (including but not limited to gains from options, futures or
forward contracts) derived with respect to its business of investing in such
stock, securities or currencies (the "Income Requirement"); and (2) derive less
than 30% of its gross income (exclusive of certain gains on designated hedging
transactions that are offset by realized or unrealized losses on offsetting
positions) from the sale or other disposition of stock, securities or foreign
currencies (or of options, futures or forward contracts thereon) held for less
than three months (the "Short-Short Gain Test"). However, foreign currency
gains, including those derived from options, futures and forward contracts,
will not be characterized as Short-Short Gain if they are directly related to
the regulated investment company's principal business of investing in stock or
securities (or in options or futures thereon). Because of the Short-Short Gain
Test, the Portfolio may have to limit the sale of appreciated securities that
it has held for less than three months. However, the Short-Short Gain Test
will not prevent the Portfolio from disposing of investments at a loss, since
the recognition of a loss before the expiration of the three-month holding
period is disregarded. Interest (including original issue discount) received
by the Portfolio at maturity or upon the disposition of a security held for
less than three months will not be treated as gross income derived from the
sale or other disposition of a security within the meaning of the Short-Short
Gain Test. However, income that is attributable to realized market
appreciation will be treated as gross income from the sale or other disposition
of securities for this purpose.
In addition to satisfying the requirements described above, the
Portfolio must satisfy an asset diversification test in order to qualify for
tax purposes as a regulated investment company. Under this test, at the close
of each quarter of a fund's taxable year, at least 50% of the value of a fund's
assets must consist of cash and cash items, U.S. Government securities,
securities of other regulated investment companies, and securities of other
issuers (as to which a fund has not invested more than 5% of the value of a
fund's total assets in securities of such issuer and as to which a fund does
not hold more than 10% of the outstanding voting securities of such issuer),
and no more than 25% of the value of its total assets may be invested in the
securities of any other issuer (other than U.S. Government securities and
securities of other regulated investment companies), or in two or more issuers
which a fund controls and which are engaged in the same or similar trades or
businesses.
If for any taxable year the Portfolio does not qualify as a regulated
investment company, all of its taxable income (including its net capital gain)
will be subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable as
ordinary dividends to
23
<PAGE> 45
the extent of the Portfolio's current and accumulated earnings and profits.
Such distributions generally will be eligible for the dividends received
deduction in the case of corporate shareholders.
EXCISE TAX ON REGULATED INVESTMENT COMPANIES
A 4% non-deductible excise tax is imposed on a regulated investment
company that fails to distribute in each calendar year an amount equal to 98%
of ordinary taxable income for the calendar year and 98% of capital gain net
income for the one-year period ended on October 31 of such calendar year (or, at
the election of a regulated investment company having a taxable year ending
November 30 or December 31, for its taxable year (a "taxable year election")).
The balance of such income must be distributed during the next calendar year.
For the foregoing purposes, a regulated investment company is treated as having
distributed any amount on which it is subject to income tax for any taxable year
ending in such calendar year.
For purposes of the excise tax, a regulated investment company (1) may
reduce its capital gain net income (but not below its net capital gain) by the
amount of any net ordinary loss for the calendar year and (2) must, unless it
has made a taxable year election, exclude foreign currency gains and losses
incurred after October 31 of any year in determining the amount of ordinary
taxable income for the current calendar year (and, instead, include such gains
and losses in determining ordinary taxable income for the succeeding calendar
year).
The Portfolio intends to make sufficient distributions or deemed
distributions of its ordinary taxable income and capital gain net income prior
to the end of each calendar year to avoid liability for the excise tax.
However, investors should note that the Portfolio may in certain circumstances
be required to liquidate portfolio investments to make sufficient distributions
to avoid excise tax liability.
PORTFOLIO DISTRIBUTIONS
The Portfolio anticipates distributing substantially all of its
investment company taxable income for each taxable year. Such distributions
will be taxable to shareholders as ordinary income and treated as dividends for
federal income tax purposes, but they will not qualify for the 70% dividends
received deduction for corporations.
The Portfolio may either retain or distribute to shareholders its net
capital gain for each taxable year. The Portfolio currently intends to
distribute any such amounts. If net capital gain is distributed and designated
as a capital gain dividend, it will be taxable to shareholders as long-term
capital gain, regardless of the length of time the shareholder has held his
shares or whether such gain was recognized by the Portfolio prior to the date
on which the shareholder acquired his shares. Conversely, if the Portfolio
elects to retain its net capital gain, the Portfolio will be taxed thereon
(except to the extent of any available capital loss carryovers) at the current
corporate tax rate. If the Portfolio elects to retain net capital gain, it is
expected that the Portfolio also will elect to have shareholders treated as
having received a distribution of such gain, with the result that they will be
required to report their respective shares of such gain on their tax returns as
long-term capital gain, will receive a refundable tax credit for their
allocable share of tax paid by the Portfolio on the gain, and will increase the
tax basis for their shares by an amount equal to the deemed distribution less
the tax credit.
Distributions by the Portfolio that do not constitute ordinary income
dividends or capital gain dividends will be treated as a return of capital to
the extent of (and in reduction of) the shareholder's tax basis in his shares;
any excess will be treated as gain from the sale of his shares, as discussed
below.
Distributions by the Portfolio will be treated in the manner described
above regardless of whether such distributions are paid in cash or reinvested
in additional shares of the Class. Shareholders receiving a distribution in
the form of additional shares will be treated as receiving a distribution in an
amount equal to the fair market value of the shares received, determined as of
the reinvestment date. In addition, if the
24
<PAGE> 46
net asset value at the time a shareholder purchases shares of the Class reflects
undistributed net investment income or recognized capital gain net income, or
unrealized appreciation in the value of the assets of the Portfolio,
distributions of such amounts will be taxable to the shareholder in the manner
described above, although such distributions economically constitute a return of
capital to the shareholder.
Ordinarily, shareholders are required to take distributions by the
Portfolio into account in the year in which the distributions are made.
However, distributions declared in October, November or December of any year
and payable to shareholders of record on a specified date in such a month will
be deemed to have been received by the shareholders (and made by the Portfolio)
on December 31 of such calendar year if such dividends are actually paid in
January of the following year. Shareholders will be advised annually as to the
U.S. federal income tax consequences of distributions made (or deemed made)
during the year.
The Portfolio will be required in certain cases to withhold and remit
to the U.S. Treasury 31% of the ordinary income dividends and capital gain
dividends of the proceeds of redemption of shares, paid to any shareholder (1)
who has provided either an incorrect tax identification number or no number at
all, (2) who is subject to backup withholding by the Internal Revenue Service
for failure to report the receipt of interest or dividend income properly, or
(3) who has failed to certify to the Portfolio that it is not subject to backup
withholding or that it is a corporation or other "exempt recipient."
SALE OR REDEMPTION OF SHARES
A shareholder will recognize gain or loss on the sale or redemption of
shares of the Class in an amount equal to the difference between the proceeds
of the sale or redemption and the shareholder's adjusted tax basis in the
shares. All or a portion of any loss so recognized may be disallowed if the
shareholder purchases other shares of the Class within 30 days before or after
the sale or redemption. In general, any gain or loss arising from (or treated
as arising from) the sale or redemption of shares of the Class will be
considered capital gain or loss and will be long-term capital gain or loss if
the shares were held for longer than one year. However, any capital loss
arising from the sale or redemption of shares held for six months or less will
be treated as a long-term capital loss to the extent of the amount of capital
gain dividends received on such shares. For this purpose, the special holding
period rules of Code Section 246(c)(3) and (4) generally will apply in
determining the holding period of shares.
FOREIGN SHAREHOLDERS
Taxation of a shareholder who, as to the United States, is a
nonresident alien individual, foreign trust or estate, foreign corporation, or
foreign partnership ("foreign shareholder"), depends on whether the income from
the Portfolio is "effectively connected" with a U.S. trade or business carried
on by such shareholder.
If the income from the Portfolio is not effectively connected with a
U.S. trade or business carried on by a foreign shareholder, dividends and
distributions (other than capital gains dividends) will be subject to U.S.
withholding tax at the rate of 30% (or lower treaty rate) upon the gross amount
of the dividend or distribution. Such a foreign shareholder would generally be
exempt from U.S. federal income tax on gains realized on the sale of shares of
the Portfolio, capital gain dividends and amounts retained by the Portfolio
that are designated as undistributed capital gains.
If the income from the Portfolio is effectively connected with a U.S.
trade or business carried on by a foreign shareholder, then ordinary income
dividends, capital gain dividends and any gains realized upon the sale of
shares of the Portfolio will be subject to U.S. federal income tax at the rates
applicable to U.S. citizens or domestic corporations.
In the case of foreign non corporate shareholders, the Portfolio may
be required to withhold U.S. federal income tax at a rate of 31% on
distributions that are otherwise exempt from withholding tax unless such
shareholders furnish the Portfolio with proper notification of their foreign
status.
25
<PAGE> 47
The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Foreign shareholders are urged to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in the
Portfolio, including the applicability of foreign taxes.
EFFECT OF FUTURE LEGISLATION; LOCAL TAX CONSIDERATIONS
The foregoing general discussion of U.S. federal income tax
consequences is based on the Code and the regulations issued thereunder as in
effect on November 1, 1995. Future legislative or administrative changes or
court decisions may significantly change the conclusions expressed herein, and
any such changes or decisions may have a retroactive effect with respect to the
transactions contemplated herein.
Rules of state and local taxation of ordinary income dividends and
capital gain dividends from regulated investment companies often differ from
the rules for U.S. federal income taxation described above. It is anticipated
that the ordinary income dividends paid by the Portfolio from net investment
income will be exempt from state and local personal and, in some cases,
corporate income taxes in many states. Shareholders are urged to consult their
tax advisers as to the consequences of these and other state and local tax
rules affecting investment in the Fund.
26
<PAGE> 48
FINANCIAL STATEMENTS
FS
<PAGE> 49
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders
Short-Term Investments Trust:
We have audited the accompanying statement of assets and liabilities of the
Treasury TaxAdvantage Portfolio (a series portfolio of Short-Term Investments
Trust), including the schedule of investments, as of August 31, 1995, and the
related statement of operations for the year then ended, the statement 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 and the period August 17, 1990 (date operations commenced) through August
31, 1990. 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 generally accepted auditing
standards. 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
August 31, 1995, 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 the
Treasury TaxAdvantage Portfolio as of August 31, 1995, 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, and the period August 17,
1990 (date operations commenced) through August 31, 1990 in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
October 6, 1995
FS-1
<PAGE> 50
SCHEDULE OF INVESTMENTS
August 31, 1995
<TABLE>
<CAPTION>
MATURITY PAR VALUE
<S> <C> <C> <C>
U.S. TREASURY SECURITIES - 100.39%
U.S. TREASURY BILLS(a) - 94.61%
5.425% 09/07/95 $ 1,370,000 $ 1,368,761
- ----------------------------------------------------------------------
5.58% 09/07/95 5,470,000 5,464,913
- ----------------------------------------------------------------------
5.595% 09/07/95 7,000,000 6,993,473
- ----------------------------------------------------------------------
5.745% 09/07/95 17,870,000 17,852,889
- ----------------------------------------------------------------------
5.325% 09/14/95 1,295,000 1,292,510
- ----------------------------------------------------------------------
5.40% 09/14/95 7,100,000 7,086,155
- ----------------------------------------------------------------------
5.41% 09/14/95 2,615,000 2,609,891
- ----------------------------------------------------------------------
5.455% 09/14/95 3,300,000 3,293,499
- ----------------------------------------------------------------------
5.49% 09/14/95 3,250,000 3,243,557
- ----------------------------------------------------------------------
5.375% 09/21/95 12,640,000 12,602,256
- ----------------------------------------------------------------------
5.42% 09/21/95 450,000 448,645
- ----------------------------------------------------------------------
5.63% 09/21/95 710,000 707,780
- ----------------------------------------------------------------------
5.635% 09/21/95 15,000,000 14,953,042
- ----------------------------------------------------------------------
5.64% 09/21/95 3,655,000 3,643,548
- ----------------------------------------------------------------------
5.66% 09/21/95 8,000,000 7,974,845
- ----------------------------------------------------------------------
5.69% 09/21/95 200,000 199,368
- ----------------------------------------------------------------------
5.48% 09/28/95 10,415,000 10,372,194
- ----------------------------------------------------------------------
5.41% 10/05/95 2,555,000 2,541,945
- ----------------------------------------------------------------------
5.465% 10/05/95 10,000,000 9,948,386
- ----------------------------------------------------------------------
5.50% 10/05/95 25,000,000 24,870,140
- ----------------------------------------------------------------------
5.62% 10/05/95 1,630,000 1,621,348
- ----------------------------------------------------------------------
5.37% 10/12/95 4,400,000 4,373,090
- ----------------------------------------------------------------------
5.375% 10/12/95 16,375,000 16,274,760
- ----------------------------------------------------------------------
5.38% 10/12/95 4,100,000 4,074,878
- ----------------------------------------------------------------------
5.44% 10/12/95 4,555,000 4,526,779
- ----------------------------------------------------------------------
5.475% 10/12/95 11,965,000 11,890,393
- ----------------------------------------------------------------------
5.41% 10/19/95 15,890,000 15,775,380
- ----------------------------------------------------------------------
5.425% 10/19/95 15,245,000 15,134,727
- ----------------------------------------------------------------------
5.45% 10/19/95 1,860,000 1,846,484
- ----------------------------------------------------------------------
5.49% 10/19/95 15,000,000 14,890,200
- ----------------------------------------------------------------------
</TABLE>
FS-2
<PAGE> 51
<TABLE>
<CAPTION>
MATURITY PAR VALUE
<S> <C> <C> <C>
U.S. TREASURY SECURITIES--(continued)
U.S. TREASURY BILLS(a)-(CONTINUED)
5.43% 10/26/95 $12,315,000 $ 12,212,837
- ---------------------------------------------------------------------------
5.41% 11/02/95 710,000 703,385
- ---------------------------------------------------------------------------
5.415% 11/02/95 7,010,000 6,944,626
- ---------------------------------------------------------------------------
5.43% 11/02/95 12,000,000 11,887,780
- ---------------------------------------------------------------------------
5.415% 11/09/95 4,050,000 4,007,966
- ---------------------------------------------------------------------------
5.445% 11/09/95 1,520,000 1,504,137
- ---------------------------------------------------------------------------
5.47% 11/09/95 20,000,000 19,790,317
- ---------------------------------------------------------------------------
5.315% 11/16/95 2,115,000 2,091,269
- ---------------------------------------------------------------------------
5.37% 11/16/95 8,515,000 8,418,468
- ---------------------------------------------------------------------------
5.43% 11/16/95 295,000 291,618
- ---------------------------------------------------------------------------
5.45% 11/16/95 20,000,000 19,769,889
- ---------------------------------------------------------------------------
5.345% 11/24/95 2,480,000 2,449,070
- ---------------------------------------------------------------------------
5.35% 11/24/95 4,840,000 4,779,581
- ---------------------------------------------------------------------------
5.375% 11/24/95 12,000,000 11,849,500
- ---------------------------------------------------------------------------
5.41% 11/24/95 4,305,000 4,250,657
- ---------------------------------------------------------------------------
5.42% 11/24/95 7,200,000 7,108,944
- ---------------------------------------------------------------------------
5.33% 11/30/95 3,220,000 3,177,094
- ---------------------------------------------------------------------------
5.30% 12/14/95 265,000 260,943
- ---------------------------------------------------------------------------
5.31% 12/14/95 29,315,000 28,865,308
- ---------------------------------------------------------------------------
378,239,225
- ---------------------------------------------------------------------------
U.S. TREASURY NOTES - 5.78%
5.125% 11/15/95 14,150,000 14,134,017
- ---------------------------------------------------------------------------
4.25% 11/30/95 9,000,000 8,969,328
- ---------------------------------------------------------------------------
23,103,345
- ---------------------------------------------------------------------------
Total U.S. Treasury Securities 401,342,570
- ---------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100.39%(b) 401,342,570(c)
- ---------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES --
(0.39%) (1,543,472)
- ---------------------------------------------------------------------------
NET ASSETS -- 100.00% $399,799,098
===========================================================================
(a) U.S. Treasury bills are traded on a discount basis. In such cases the
interest rate shown represents the rate of discount paid or received at the
time of purchase by the Portfolio.
(b) Percentage of Net Assets.
(c) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
</TABLE>
FS-3
<PAGE> 52
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments, at value (amortized cost) $401,342,570
- ----------------------------------------------------------------------
Cash 2,686
- ----------------------------------------------------------------------
Interest receivable 311,990
- ----------------------------------------------------------------------
Investment for deferred compensation plan 6,131
- ----------------------------------------------------------------------
Other assets 9,807
- ----------------------------------------------------------------------
Total assets 401,673,184
- ----------------------------------------------------------------------
LIABILITIES:
Dividends payable 1,769,980
- ----------------------------------------------------------------------
Deferred compensation payable 6,131
- ----------------------------------------------------------------------
Accrued advisory fees 60,277
- ----------------------------------------------------------------------
Accrued transfer agent fees 2,385
- ----------------------------------------------------------------------
Accrued trustees' fees 1,075
- ----------------------------------------------------------------------
Accrued administrative services fees 5,525
- ----------------------------------------------------------------------
Accrued distribution fees 1,179
- ----------------------------------------------------------------------
Accrued operating expenses 27,534
- ----------------------------------------------------------------------
Total liabilities 1,874,086
- ----------------------------------------------------------------------
NET ASSETS $399,799,098
======================================================================
NET ASSETS:
Institutional Class $394,375,864
======================================================================
Private Investment Class $ 5,423,234
======================================================================
NET ASSET VALUE PER SHARE:
Shares outstanding, $.01 par value per share:
Institutional Class 394,308,752
======================================================================
Private Investment Class 5,422,315
======================================================================
Net asset value, offering and redemption price per share $ 1.00
======================================================================
See Notes to Financial Statements.
</TABLE>
FS-4
<PAGE> 53
STATEMENT OF OPERATIONS
For the year ended August 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $21,243,050
- ------------------------------------------------------------------
EXPENSES:
Advisory fees 713,549
- ------------------------------------------------------------------
Custodian fees 36,901
- ------------------------------------------------------------------
Administrative services fees 42,823
- ------------------------------------------------------------------
Trustees' fees and expenses 7,599
- ------------------------------------------------------------------
Transfer agent fees 17,122
- ------------------------------------------------------------------
Printing expenses 29,481
- ------------------------------------------------------------------
Distribution fees 10,159
- ------------------------------------------------------------------
Other 66,628
- ------------------------------------------------------------------
Total expenses 924,262
- ------------------------------------------------------------------
Less expenses assumed by advisor (129,100)
==================================================================
Net expenses 795,162
==================================================================
Net investment income 20,447,888
- ------------------------------------------------------------------
Net realized gain on sales of investments 24,806
- ------------------------------------------------------------------
Net increase in net assets resulting from operations $20,472,694
==================================================================
See Notes to Financial Statements.
</TABLE>
FS-5
<PAGE> 54
STATEMENT OF CHANGES IN NET ASSETS
For the years ended August 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 20,447,888 $ 13,926,577
- ----------------------------------------------------------------------------
Net realized gain on sales of investments 24,806 12,246
- ----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 20,472,694 13,938,823
- ----------------------------------------------------------------------------
Distributions to shareholders from net
investment income (20,447,888) (13,926,577)
- ----------------------------------------------------------------------------
Distributions to shareholders from net realized
gains on investments (12,244) --
- ----------------------------------------------------------------------------
Share transactions-net (4,095,169) (30,823,909)
- ----------------------------------------------------------------------------
Net increase (decrease) in net assets (4,082,607) (30,811,663)
- ----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 403,881,705 434,693,368
- ----------------------------------------------------------------------------
End of period $399,799,098 $403,881,705
============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $399,731,067 $403,826,236
- ----------------------------------------------------------------------------
Undistributed net realized gain on sales of
investments 68,031 55,469
- ----------------------------------------------------------------------------
$399,799,098 $403,881,705
============================================================================
</TABLE>
See Notes to Financial Statements.
FS-6
<PAGE> 55
NOTES TO FINANCIAL STATEMENTS
August 31, 1995
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
Short-Term Investments Trust (the "Fund") is registered under the Investment
Company Act of 1940, as amended, as an open-end series, diversified management
investment company. The Fund is organized as a Delaware business trust
consisting of two different portfolios, each of which offers separate series of
shares: the Treasury Portfolio and the Treasury TaxAdvantage Portfolio, with
the assets, liabilities and operations of each portfolio accounted for
separately. Information presented in these financial statements pertains only
to the Treasury TaxAdvantage Portfolio (the "Portfolio"). The Portfolio
consists of two different classes of shares: the Institutional Class and the
Private Investment Class.
The following is a summary of the significant accounting policies
followed by the Portfolio in the preparation of its financial statements.
A. Security Valuations - The Portfolio invests only in securities which have
maturities of 397 days or less. The securities are valued on the basis of
amortized cost which approximates market value. This method values a security
at its cost on the date of purchase and thereafter assumes a constant
amortization to maturity of any discount or premium.
B. Securities Transactions, Investment Income and Distributions - Securities
transactions are accounted for on a trade date basis. Realized gains or
losses are computed on the basis of specific identification of the securities
sold. Interest income, adjusted for amortization of premiums and discounts on
investments, is accrued daily. Dividends to shareholders are declared daily
and are paid on the first business day of the following month.
C. Federal Income Taxes - The Portfolio 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.
D. Expenses - Operating expenses directly attributable to a class of shares are
charged to that class' operations. Expenses which are applicable to more than
one class, e.g., advisory fees, are allocated among them.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master advisory agreement, AIM
receives a monthly fee with respect to the Portfolio calculated by applying a
monthly rate, based upon the following annual rates, to the average daily net
assets of the Portfolio:
<TABLE>
<CAPTION>
Net Assets RATE
- ----------------------------------------------------------------------
<S> <C>
First $250 million 0.20%
- ----------------------------------------------------------------------
Over $250 million to $500 million 0.15%
- ----------------------------------------------------------------------
Over $500 million 0.10%
- ----------------------------------------------------------------------
</TABLE>
The Fund has entered into a master distribution agreement with Fund Management
Company ("FMC") for the distribution of shares of the Institutional Class and
the Private Investment Class. The Company has also adopted a distribution plan
(the "Plan") pursuant to Rule 12b-1 under the 1940 Act with respect to the
Private Investment Class. The Plan provides that the Private Investment Class
may pay up to a 0.50% maximum annual rate of the Private Investment Class'
average daily net assets. Of this amount, the Fund may pay an asset-based sales
charge to FMC and the Portfolio may pay a service fee of 0.25% of the average
daily net assets of the Private Investment Class to selected broker-dealers and
other financial institutions who offer continuing personal shareholder services
to their customers who purchase and own shares of the Private Investment Class.
Any amounts not paid as a service fee under such Plan would constitute an
asset-based sales charge. The Plan also imposes a cap on the total amount of
sales charges, including asset-based sales charges, that may be paid by the
Portfolio with respect to the Private Investment Class. During the year ended
August 31, 1995, the Private Investment Class paid $10,159 as compensation
under the Plan.
AIM will, if necessary, reduce its fee for any fiscal year to the extent
required so that the amount of ordinary expenses of the Portfolio (excluding
interest, taxes, brokerage commissions and extraordinary expenses) paid or
incurred by the Portfolio
FS-7
<PAGE> 56
for such fiscal year does not exceed the applicable expense limitations imposed
by the state securities regulations in any state in which the Portfolio's
shares are qualified for sale. During the year ended August 31, 1995, AIM
voluntarily waived advisory fees of $117,100 and assumed expenses of $12,000.
The Portfolio, pursuant to a master administrative services agreement with
AIM, has agreed to reimburse AIM for certain costs incurred in providing
accounting services to the Portfolio. During the year ended August 31, 1995,
the Portfolio reimbursed AIM $42,823 for such services. During the year ended
August 31, 1995, the Portfolio paid A I M Institutional Fund Services, Inc.
("AIFS") $10,913 for shareholder and transfer agency services. Effective July
1, 1995, AIFS became the exclusive transfer agent of the Portfolio.
Certain officers and trustees of the Fund are officers and directors of AIM,
FMC, and AIFS.
The Portfolio paid legal fees of $471 for services rendered by Reid & Priest
as counsel to the Board of Trustees. In September 1994, Kramer, Levin,
Naftalis, Kamin & Frankel was appointed as counsel to the Board of Trustees and
the Portfolio paid legal fees of $2,654 for services rendered by that firm as
counsel to the Board of Trustees. A trustee of the Trust was a member of the
firm of Reid & Priest until September 1994, when he became a member of Kramer,
Levin, Naftalis, Kamin & Frankel.
NOTE 3-TRUSTEES' FEES
Trustees' fees represent remuneration paid or accrued to each trustee who is
not an "interested person" of AIM. The Fund may invest trustees' fees, if so
elected by a trustee, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 4-SHARE INFORMATION
Changes in shares outstanding for the years ended August 31, 1995 and 1994 were
as follows:
<TABLE>
<CAPTION>
1995 1994
------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- --------------- -------------- ----------------
<S> <C> <C> <C> <C>
Sold:
Institutional Class 1,566,228,552 $ 1,566,228,552 1,529,572,244 $ 1,529,572,244
- ------------------------------------------------------------------------------------------
Private Investment
Class* 29,762,798 29,762,798 -- --
- ------------------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Institutional Class 255,484 255,484 72,270 72,270
- ------------------------------------------------------------------------------------------
Private Investment
Class* 211,779 211,779 -- --
- ------------------------------------------------------------------------------------------
Reacquired:
Institutional Class (1,576,001,520) (1,576,001,520) (1,560,468,423) (1,560,468,423)
- ------------------------------------------------------------------------------------------
Private Investment
Class* (24,552,262) (24,552,262) -- --
==========================================================================================
Net increase (decrease) (4,095,169) $ (4,095,169) (30,823,909) $ (30,823,909)
==========================================================================================
</TABLE>
* The Private Investment Class commenced operations on December 21, 1994.
FS-8
<PAGE> 57
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share outstanding of
the Treasury TaxAdvantage Portfolio Private Investment Class for the period
December 21, 1994 (date operations commenced) through August 31, 1995.
<TABLE>
AUGUST 31,
1995
----------
<S> <C>
Net asset value, beginning of period $ 1.00
- ---------------------------------------------------- ------
Income from investment operations:
Net investment income 0.04
- ---------------------------------------------------- ------
Less distributions:
Dividends from net investment income (0.04)
- ---------------------------------------------------- ------
Net asset value, end of period $ 1.00
==================================================== ======
Total return(a) 5.32%
==================================================== ======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $5,423
==================================================== ======
Ratio of expenses to average net assets 0.45%(b)
==================================================== ======
Ratio of net investment income to average net assets 5.21%(b)
==================================================== ======
</TABLE>
(a) Annualized.
(b) After waiver of advisory fee and expense reimbursements. Ratios are
annualized and based on average net assets of $5,862,581. Ratios of
expenses and net investment income to average net assets prior to waiver of
advisory fees and expense reimbursements were 0.77% and 4.89%,
respectively.
FS-9
