<PAGE>
PRIVATE INVESTMENT CLASS
OF THE
TREASURY TAXADVANTAGE PORTFOLIO
OF
SHORT-TERM INVESTMENTS TRUST
Supplement dated June 28, 1995
to the Prospectus
dated December 21, 1994
Effective July 1, 1995, A I M Institutional Fund Services, Inc. ("AIFS"), a
wholly-owned subsidiary of A I M Advisors, Inc. and a registered transfer agent,
will become the exclusive transfer agent and dividend disbursing agent for the
Private Investment Class (the "Class") of the Treasury TaxAdvantage Portfolio
(the "Portfolio") of Short-Term Investments Trust (the "Fund"). Since September
16, 1994, AIFS has been acting as a transfer agent for the Class providing
certain limited transfer agency services for shares of the Class. The phone
number of AIFS is (800) 877-7748.
AIFS will provide such transfer agency services pursuant to a Transfer
Agency and Service Agreement, dated September 16, 1994, as amended July 1, 1995,
and the Administrative Services Agreement, dated September 16, 1994, between
A I M Advisors, Inc. and AIFS will terminate.
Effective July 17, 1995, purchase orders and redemption requests received
by the Fund after 1:00 p.m. Eastern Time on a business day of the Portfolio will
be effected at the net asset value determined on the next business day.
Also effective July 17, 1995: (1) the net asset value per share of the
Portfolio will be determined daily as of 1:00 p.m. Eastern Time, (2) dividends
from the net income of the Portfolio will be declared daily to shareholders of
record of the Class of the Portfolio immediately after 1:00 p.m. Eastern Time,
and (3) 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.
<PAGE>
PROSPECTUS
----------
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
---------------
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 and the Private Investment Class.
----------
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.
----------
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 21, 1994, HAS
BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND IS HEREBY
INCORPORATED BY REFERENCE. FOR A COPY OF THE STATEMENT OF ADDITIONAL
INFORMATION, 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 21, 1994
<PAGE>
TABLE OF CONTENTS
<TABLE>
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Page Page
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<S> <C> <C> <C>
SUMMARY....................... 2 TAXES......................... 11
TABLE OF FEES AND EXPENSES.... 4 NET ASSET VALUE............... 12
SUITABILITY FOR INVESTORS..... 5 YIELD INFORMATION............. 12
INVESTMENT PROGRAM............ 5 REPORTS TO SHAREHOLDERS....... 12
PURCHASE OF SHARES............ 7 MANAGEMENT OF THE FUND........ 13
REDEMPTION OF SHARES.......... 9 GENERAL INFORMATION........... 15
DIVIDENDS..................... 10
</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 arrange[HL]
ments 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."
2
<PAGE>
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
12:00 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 12:00 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 4:00 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, 1994, 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. See "Investment Program."
3
<PAGE>
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%
----
Total other expenses........................................... 0.05%
----
Total portfolio operating expenses --
Private Investment Class......................................... 0.45%
====
</TABLE>
- --------
* The fees and expenses set forth in the table are based on estimated average
net assets of the Class' first period of operations.
** Had there been no fee waivers, management fees and 12b-1 fees would have
been 0.18% and 0.50%, 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.
<TABLE>
<S> <C>
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
4
<PAGE>
costs and fees charged to the Class. The Table of Fees and Expenses reflects a
voluntary waiver of 12b-1 fees for the Class. However, there can be no assurance
that any future waivers of 12b-1 fees (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.
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.
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.
5
<PAGE>
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. 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").
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
6
<PAGE>
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 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
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 accepted by the Portfolio. 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 12:00 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.
7
<PAGE>
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.
Prior to the initial purchase of shares of the Class, an Account Information
and Authorization Form, which can be obtained from Fund Management Company
("FMC"), must be completed and sent to FMC at 11 Greenway Plaza, Suite 1919,
Houston, Texas 77046-1173. Any changes made to the information provided in the
Account Information and Authorization Form must be made in writing or by
completing a new form and providing it to FMC. 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 Institution may have a "sweep" program under which a portion
of a customer's account with such Institution may be automatically invested in
shares of the Class. 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 directly additional shares of the Class, 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
8
<PAGE>
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 the Fund.
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 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.
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(TM), 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
Information and Authorization Form, but may be remitted by check upon request by
a shareholder. If a redemption request is received by the Portfolio prior to
12:00 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 12:00 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 12:00 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, State Street
Bank and Trust Company, one of the Fund's transfer agents, or A I M
Institutional Fund Services, Inc., the other transfer agent of the Fund.
9
<PAGE>
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
12:00 p.m. Eastern Time on the day of declaration. Net income for dividend
purposes is determined daily as of 12:00 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 accrued for the applicable dividend period attributable to the
Portfolio, such as custodian fees, trustees' fees, accounting and legal
expenses, based upon such class's pro rata share of the net assets of the
Portfolio, less (c) expenses directly attributable to such class that are
accrued for the applicable dividend period, 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 be paid by check or wire transfer.
Wire transfers may only be made in amounts of $1,000 or more. 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 12:00 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 FMC at 11 Greenway
Plaza, Suite 1919, Houston, TX 77046-1173 or transmitted via the version of AIM
LINK(TM) containing the subaccounting feature, and will become effective with
dividends paid after its receipt by FMC or, if such election is transmitted via
AIM LINK(TM), FMC's affiliates. 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
10
<PAGE>
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.
For purposes of determining taxable income, distribution requirements and
other requirements of Subchapter M, the Portfolio will be treated as a separate
corporation from the other portfolio comprising the Fund. Therefore, the
Portfolio may not offset its gains against losses of such other portfolio and
the Portfolio must itself 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 the date of this Prospectus, 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.
11
<PAGE>
NET ASSET VALUE
The net asset value per share of the Portfolio is determined daily as of 12:00
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 Securities and Exchange Commission
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.
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.
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.
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.
12
<PAGE>
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.
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 November 3, 1994, the
total assets of the investment company portfolios managed or advised by AIM and
its affiliates were approximately $28.3 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").
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, 1994, 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 such Portfolio's average 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 is
reimbursed by AIM for its costs in providing shareholder services for the Fund.
AIFS or its affiliates received reimbursement of shareholder services costs of
$1,892 with respect to the Portfolio for the period June 1, 1994 through August
31, 1994 which represented 0.0004% of the Portfolio's average daily net assets.
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
13
<PAGE>
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.
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
14
<PAGE>
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 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). The Fund has filed an amendment to the Registration Statement on Form
N-1A, as amended, of Short-Term Investments Co. (File No. 2-58287), pursuant to
which the Fund has expressly adopted such Registration Statement as its own
Registration Statement for all purposes of the
15
<PAGE>
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, and the 1940 Act. Shares of beneficial interest of the Fund are divided
into six classes. Two classes, including the Class, represent interests in the
Portfolio, and four classes represent interests in the Treasury Portfolio. Each
class of shares has a par value of $.01 per share. 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 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 AGENTS 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.
State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts
02110, acts as a transfer agent for the shares of the Portfolio. A I M
Institutional Fund Services, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173, also acts as a 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.
16
<PAGE>
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 Securities and Exchange Commission. 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
Securities and Exchange Commission. Copies of the registration statement,
including items omitted herein, may be obtained from the Securities and Exchange
Commission by paying the charges prescribed under its rules and regulations.
17
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
INVESTMENT ADVISOR
A I M ADVISORS, INC. SHORT-TERM
11 Greenway Plaza, Suite 1919 INVESTMENTS TRUST
Houston, Texas 77046-1173
(713) 626-1919
DISTRIBUTOR
FUND MANAGEMENT COMPANY PRIVATE
11 Greenway Plaza, Suite 1919 INVESTMENT CLASS
Houston, Texas 77046-1173 OF THE
(800) 877-7748 -----------------------------------
TREASURY
TAXADVANTAGE
AUDITORS PORTFOLIO PROSPECTUS
KPMG PEAT MARWICK LLP
NationsBank Building
700 Louisiana
Houston, Texas 77002
CUSTODIAN
THE BANK OF NEW YORK
110 Washington Street, 8th Floor
New York, New York 10286
December 21, 1994
TRANSFER AGENTS
STATE STREET BANK AND TRUST
COMPANY
225 Franklin Street
Boston, Massachusetts 02110
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 [AIM LOGO APPEARS HERE]
ANY JURISDICTION TO ANY PERSON TO WHOM SUCH
OFFERING MAY NOT LAWFULLY BE MADE. FUND MANAGEMENT COMPANY
<PAGE>
PRIVATE INVESTMENT CLASS
OF THE
TREASURY TAXADVANTAGE PORTFOLIO
OF
SHORT-TERM INVESTMENTS TRUST
Supplement dated June 28, 1995
to the Statement of Additional Information
dated December 21, 1994
Effective July 1, 1995, A I M Institutional Fund Services, Inc. ("AIFS"), a
wholly-owned subsidiary of A I M Advisors, Inc. and a registered transfer agent,
will become the exclusive transfer agent and dividend disbursing agent for the
Private Investment Class (the "Class") of the Treasury TaxAdvantage Portfolio of
Short-Term Investments Trust (the "Fund"). Since September 16, 1994, AIFS has
been acting as a transfer agent for the Class providing certain limited transfer
agency services for shares of the Class. The phone number of AIFS is
(800) 877-7748.
AIFS will provide such transfer agency services pursuant to a Transfer
Agency and Service Agreement, dated September 16, 1994, as amended July 1, 1995,
and the Administrative Services Agreement, dated September 16, 1994, between
A I M Advisors, Inc. and AIFS will terminate.
<PAGE>
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 21, 1994
RELATING TO THE PROSPECTUS DATED DECEMBER 21, 1994
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
INTRODUCTION............................................................... 1
GENERAL INFORMATION ABOUT THE FUND......................................... 1
The Fund and Its Shares............................................... 1
Trustees and Officers................................................. 3
Investment Advisor.................................................... 7
Administrative Services............................................... 8
Expenses.............................................................. 8
Banking Regulations................................................... 9
Transfer Agents and Custodian......................................... 10
Reports............................................................... 10
Principal Holders of Securities....................................... 10
PURCHASES AND REDEMPTIONS.................................................. 15
Net Asset Value Determination......................................... 15
Distribution Agreement................................................ 15
Distribution Plan..................................................... 16
Performance Information............................................... 16
Suspension of Redemption Rights....................................... 17
INVESTMENT PROGRAM AND RESTRICTIONS........................................ 17
Investment Program.................................................... 17
Investment Restrictions............................................... 18
Other Investment Policies............................................. 19
PORTFOLIO TRANSACTIONS..................................................... 20
TAX MATTERS................................................................ 21
Qualification as a Regulated Investment Company....................... 21
Excise Tax on Regulated Investment Companies.......................... 22
Portfolio Distributions............................................... 22
Sale or Redemption of Shares.......................................... 23
Foreign Shareholders.................................................. 23
Effect of Future Legislation; Local Tax Considerations................ 24
FINANCIAL STATEMENTS....................................................... None
</TABLE>
i
<PAGE>
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 21, 1994
(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. The Fund has filed an amendment to the Registration Statement
on Form N-1A, as amended, of Short-Term Investments Co. (File No. 2-58287),
pursuant to which the Fund has expressly adopted such Registration Statement as
its own Registration Statement for all purposes of the Securities Act of 1933,
as amended, the Securities Exchange Act of 1934, as amended, and the Investment
Company Act of 1940, as amended (the "1940 Act"). 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). Similarly,
the information set forth under "Principal Holders of Securities" relates to 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
1
<PAGE>
following four classes of shares: Private Investment Class, Personal Investment
Class, Institutional Class and Cash Management 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.
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.
2
<PAGE>
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 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
Director and Chairman and Chief Executive Officer, A I M Management Group
Inc.; and 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 Institutional Fund Services, Inc. and Fund Management Company.
BRUCE L. CROCKETT, Trustee
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
Six Blythewood Road
Baltimore, MD 21210
- ----------------------
* A trustee who is an "interested person" of the Fund and AIM, as defined in
the 1940 Act.
3
<PAGE>
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.
*CARL FRISCHLING, Trustee
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
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
Institutional Fund Services, Inc. and Fund Management Company; and Director and
Vice President, A I M Capital Management, Inc. and A I M Fund Services, Inc.
JOHN F. KROEGER, Trustee
Box 464
24875 Swan Road - Martingham
St. Michaels, MD 21663
Trustee, Flag Investors International Trust; and Director, Flag Investors
Emerging Growth Fund, Inc., Flag Investors Telephone Income Fund, Inc., Flag
Investors Quality Growth Fund, Inc., Flag Investors 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., 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
8955 Katy Freeway, Suite 204
Houston, TX 77024
Attorney in private practice in Houston, Texas.
IAN W. ROBINSON, Trustee
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 AIM, as defined in
the 1940 Act.
4
<PAGE>
LOUIS S. SKLAR, Trustee
Transco Tower, 50th Floor
2800 Post Oak Blvd.
Houston, TX 77056
Executive Vice President, Development and Operations, Hines Interests
Limited Partnership (real estate development).
WILLIAM H. KLEH, Senior Vice President
Director and Senior Vice President, A I M Advisors, Inc.; Director and Vice
President, Fund Management Company; Senior Vice President, A I M Management
Group Inc.; and Vice President, A I M Capital Management, Inc., A I M
Distributors, Inc. and A I M Fund Services, Inc.
JOHN J. ARTHUR, Senior Vice President and Treasurer
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.
GARY T. CRUM, Senior Vice President
Director and President, A I M Capital Management, Inc.; Director and Senior
Vice President, A I M Management Group Inc. and A I M Advisors, Inc.; and
Director, A I M Distributors, Inc.
CAROL F. RELIHAN, Vice President and Secretary
Vice President, General Counsel and Secretary, A I M Advisors, Inc., A I M
Distributors, Inc., A I M Institutional Fund Services, Inc., A I M Fund
Services, Inc., A I M Management Group Inc. and Fund Management Company; and
General Counsel and Secretary, A I M Capital Management, Inc.
DANA R. SUTTON, Vice President and Assistant Treasurer
Vice President and Fund Controller, A I M Advisors, Inc.; and Assistant
Vice President and Assistant Treasurer, Fund Management Company.
POLLY A. AHRENDTS, Vice President
Vice President, A I M Capital Management, Inc.
GARY V. BEAUCHAMP, Vice President
Vice President, A I M Capital Management, Inc.
MELVILLE B. COX, Vice President
Vice President, A I M Advisors, Inc., A I M Capital Management, Inc., A I M
Institutional Fund Services, Inc., and A I M 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.
5
<PAGE>
KAREN DUNN KELLEY, Vice President
Senior Vice President, A I M Capital Management, Inc.; and Vice President,
A I M Advisors, Inc.
J. ABBOTT SPRAGUE, Vice President
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 be 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 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.
Each trustee is reimbursed for expenses incurred in connection with each
meeting of the Board of Trustees or any committee attended. The trustees of the
Trust who do not serve as officers of the Trust are compensated for their
services according to a fee schedule which recognizes the fact that they also
serve as directors or trustees of certain other investment companies advised or
managed by AIM. Each such trustee receives a fee, allocated among the investment
companies for which he serves as a director or trustee, which consists of two
components: (i) an annual retainer, based on the number of series portfolios of
the investment companies for which such trustee serves as director/trustee
("Series"), which annual retainer shall equal the sum of $7,500 for the first
Series, $5,000 for the second Series, $2,500 for the third Series, $1,000 for
each of the fourth through tenth Series, and $750 for each additional Series,
with 50% of such annual retainer being allocated equally among the Series for
which the trustee serves as director/trustee, and 50% of such annual retainer
being allocated among the Series based upon their relative net assets; and (ii)
a meeting fee of $250 per Series, up to a maximum of $1,000 per meeting, for
each board meeting attended in person by such trustee, with 50% of such meeting
fee being allocated equally among the Series for which the trustee serves as
director/trustee, and 50% allocated among the Series based upon their relative
net assets.
6
<PAGE>
During the fiscal year ended August 31, 1994, the Fund paid $8,407 and
$32,897 in trustees' fees and expenses allocated to the Portfolio and the
Treasury Portfolio, respectively.
The Fund paid Reid & Priest $6,735 in legal fees for services provided to
the Portfolio during the fiscal year ended August 31, 1994. Mr. Carl
Frischling, a trustee of the Fund, was a partner in such firm.
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 November 3, 1994, the total
assets of the investment company portfolios managed or advised by AIM and its
affiliates were approximately $28.3 billion.
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:
Net Assets Rate
---------- ----
First $250 million 0.20%
Over $250 million to $500 million 0.15%
Over $500 million 0.10%
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, AIM received fees (net of fee waivers, if any) from the Fund
for the fiscal years ended August 31, 1994, 1993 and 1992, in the amounts of
$640,698, $904,014 and $714,988, respectively. For the fiscal years ended
August 31, 1994, 1993, and 1992, AIM waived fees with respect to the Portfolio
in the amounts of $131,042, $0, and $154,233 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."
7
<PAGE>
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, 1995 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.
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"). In addition, AIM and A I M
Institutional Fund Services, Inc. ("AIFS") have entered into an Administrative
Services Agreement, dated as of September 16, 1994 (the "AIFS 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, 1994, 1993 and 1992, in the amounts of $29,642, $29,382
and $27,765, respectively, for fund accounting services for the Portfolio.
The AIFS Administrative Services Agreement between AIM and AIFS, a
registered transfer agent and wholly-owned subsidiary of AIM, provides that AIFS
may perform certain shareholder services for the Fund. For such services, AIFS
is entitled to receive from AIM such reimbursement of its costs associated with
each such Fund as may be approved by the Fund's Board of Trustees. For the
period from June 1, 1994 through August 31, 1994, AIFS or its affiliates
received shareholder services fees with respect to the Portfolio in the amount
of $1,892.
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
8
<PAGE>
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 borrowings;
postage; insurance premiums on property or personnel (including officers and
trustees) of the Fund which inure to its benefit; and extraordinary 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 based upon the relative net assets of each class.
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 based upon the relative net assets of each such
class. 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.
9
<PAGE>
TRANSFER AGENTS 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.
State Street Bank and Trust Company serves as a transfer agent for the
shares of the Class and receives such compensation from the Fund for its
services in such capacity as is agreed to from time to time by State Street Bank
and Trust Company and the Fund. The address of State Street Bank and Trust
Company is 225 Franklin Street, Boston, Massachusetts 02110.
A I M Institutional Fund Services, Inc. also serves as a transfer agent
for the shares of the Class and currently receives no compensation from the Fund
for its services in such capacity. The address of A I M Institutional Fund
Services, Inc. is 11 Greenway Plaza, Suite 1919, Houston, Texas 77046.
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 and
the Treasury Portfolio.
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 31, 1994, and the percentage of such shares owned by
such shareholders as of such date are as follows:
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS
- -------------------
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY(a)
--------------- ------------
<S> <C>
NationsBank of Texas, N.A. 20.71%
1401 Elm Street, 11th Floor
Dallas, TX 75202-2911
Wachovia Bank of North Carolina 11.77%
Trust Operations
P.O. Box 3075 MC
Winston-Salem, NC 31051
</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.
10
<PAGE>
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY(a)
--------------- ------------
<S> <C>
Trust Company of Georgia 11.70%
P.O. Box 105213
Atlanta, GA 30348
Texas Commerce Bank 7.39%
601 Travis
Houston, TX 77002
Victoria & Co. 6.27%
Trust Operations
P.O. Box 1698
Victoria, TX 77902
U.S.Bank of Washington 6.26%
Trust Securities
1414 Fourth Avenue
Seattle, WA 98111
PERSONAL INVESTMENT CLASS
- -------------------------
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY
--------------- ------------
Republic National Bank 48.59%(a,b)
of New York
1 Hanson Place, Lower
Brooklyn, NY 11243
Frost National Bank 47.41%(b,c)
P.O. Box 1600
San Antonio, TX 78296
</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 25% or more 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.
(c) The Fund has knowledge as to certain shares beneficially owned, however
to the best knowledge of the Fund, no one beneficially owns 5% or more of
the outstanding shares of the class.
11
<PAGE>
<TABLE>
<CAPTION>
PRIVATE INVESTMENT CLASS
- ------------------------
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY
--------------- ------------
<S> <C>
VAR & Co. 32.17%(a,b)
180 East 5th Street
St. Paul, MN 55101
Liberty Bank and Trust Company 31.70%(a,b)
of Tulsa, N.A.
P.O. Box 25848
Tulsa, OK 74101
Huntington Capital 19.35%(c)
41 South High Street
Columbus, OH 43287
CoreStates Bank, N.A. 11.22%(a)
Penn Mutual Insurance Bldg.
530 Walnut Street
Philadelphia, PA 19106
</TABLE>
<TABLE>
<CAPTION>
CASH MANAGEMENT CLASS
- ---------------------
PERCENT PERCENT
NAME AND ADDRESS OWNED OWNED OF
OF RECORD OWNER BENEFICIALLY ONLY RECORD ONLY
---------------- ----------------- -----------
<S> <C> <C>
United Counties Trust Company -0- 25.16%(a,b)
30 Maple Street
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 25% or more 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.
(c) The Fund has knowledge as to certain shares beneficially owned, however
to the best knowledge of the Fund, no one beneficially owns 5% or more of
the outstanding shares of the class.
12
<PAGE>
<TABLE>
<CAPTION>
PERCENT PERCENT
NAME AND ADDRESS OWNED OWNED OF
OF RECORD OWNER BENEFICIALLY ONLY RECORD ONLY
---------------- ----------------- -----------
<S> <C> <C>
City of Burbank 9.44% -0-
333 South Beaudry Avenue
25th Floor
Los Angeles, CA 95691
Montgomery County 7.80% -0-
101 Monrose Street
15th Floor
Rockville, MD 20850
City of Ontario 6.07% -0-
303 East "B" Street
Ontario, CA 91764
City of Beaumont-Meridian Trust 5.86% -0-
Company of California
35 North 6th Street
Reading, PA 19603
City of West Sacramento 5.80% -0-
2101 Stone Blvd.
West Sacramento, CA 95691
</TABLE>
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 31, 1994, and the percentage of such shares
owned by such shareholders as of such date are as follows:
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS
- -------------------
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY(a)
--------------- --------------
<S> <C>
FirsTier Bank Omaha 26.87%(b)
1700 Farnam Street
Omaha, NE 68102
</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 25% or more 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>
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY(a)
--------------- --------------
<S> <C>
Muchmore & Co. 19.03%
P.O. Box 1205
Cranford, NJ 07016
First National Bank of Maryland 8.69%
P.O. Box 1596
Baltimore, MD 21203
Sanwa Bank 5.75%
P.O. Box 60078
Los Angeles, CA 90060
Wachovia Bank of North Carolina 5.21%
P.O. Box 3075
Winston-Salem, NC 27150
Liberty Bank and 5.09%
Trust Company, N.A.
P.O. Box 25848
Oklahoma City, OK 73125
Boatmen's Trust Co. 5.03%
100 North Broadway
St. Louis, MO 63101
</TABLE>
PRIVATE INVESTMENT CLASS
- ------------------------
AIM provided the initial capitalization of the Private Investment Class of
the Treasury TaxAdvantage Portfolio and, accordingly, as of the date of this
Statement of Additional Information, owned all the outstanding shares of
beneficial interest of the Private Investment Class of the Treasury TaxAdvantage
Portfolio. Although the Private Investment Class of the Treasury TaxAdvantage
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 Private Investment Class of the Treasury TaxAdvantage
Portfolio that are outstanding, it may be presumed to be in "control" of the
Private Investment Class of the Treasury TaxAdvantage Portfolio, as defined in
the 1940 Act.
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.
- ----------------------
(a) The Fund has no knowledge as to whether all or any portion of the shares
owned of record only are also owned beneficially.
14
<PAGE>
To the best of the knowledge of the Fund, as of October 31, 1994, the
trustees and officers of the Fund beneficially owned less than 1% of each class
of the Fund's outstanding shares.
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.
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, 1995 and it
15
<PAGE>
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.
The Fund may compare the performance of the Class or the performance of
securities in which it may invest to:
. IBC/Donoghue's Money Fund Averages, which are average yields of
various types of money market funds that include the effect of compounding
distributions;
16
<PAGE>
. 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;
. 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
. 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's 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.
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
17
<PAGE>
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) of 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 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
- ----------------------
(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.
18
<PAGE>
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) 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 borrowings in excess of 5% of its total
assets are outstanding;
(2) mortgage, pledge or hypothecate any assets except to secure permitted
borrowings 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;
(3) 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;
(4) 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;
(5) 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;
(6) purchase or sell commodities or commodity futures contracts, purchase
securities on margin, make short sales or invest in puts or calls;
(7) invest in any obligation not payable as to principal and interest in
United States currency; or
(8) acquire for value the securities of any other investment company,
except in connection with a merger, consolidation, reorganization or acquisition
of assets.
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
19
<PAGE>
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.
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
20
<PAGE>
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.
The Board of Trustees has adopted procedures pursuant to Rule 17a-7 under the
1940 Act relating to portfolio transactions among the Portfolios and the AIM
Funds and each of the Portfolios may from time to time enter into transactions
in accordance with such Rule and procedures.
TAX MATTERS
The following is only a summary of certain additional tax considerations
generally affecting the Fund and its shareholders that are not described in the
Prospectus. No attempt is made to present a detailed explanation of the tax
treatment of the Fund 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 Fund 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 Fund 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 Fund 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, a fund 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 a fund 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 a fund 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.
21
<PAGE>
In addition to satisfying the requirements described above, a regulated
investment company 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 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). 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
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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 results 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 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, and, in certain cases, 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 Fund 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
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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 Class 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 noncorporate 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.
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 the date
of this Statement of Additional Information. 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.
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