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PROSPECTUS
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PERSONAL INVESTMENT CLASS
OF THE
TREASURY PORTFOLIO
OF
SHORT-TERM INVESTMENTS TRUST
11 GREENWAY PLAZA, SUITE 1919
HOUSTON, TEXAS 77046-1173
(800) 877-4744
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The Treasury 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 Portfolio
seeks to achieve its objective by investing in direct obligations of the U.S.
Treasury and repurchase agreements secured by such obligations. The instruments
purchased by the Treasury Portfolio will have maturities of 397 days or less.
The Treasury 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 Personal Investment Class of the
Treasury 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 in a diversified money market fund.
The Fund also offers shares of the following classes of the Treasury
Portfolio pursuant to separate prospectuses: the Institutional Class, Private
Investment Class, Cash Management Class and Resource Class, as well as shares of
classes of another portfolio of the Fund, the Treasury TaxAdvantage Portfolio.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
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This Prospectus sets forth basic information that a prospective investor
should know before investing in shares of the Personal Investment Class of the
Treasury Portfolio and should be read and retained for future reference. A
Statement of Additional Information, dated December 14, 1995, has been filed
with the United States Securities and Exchange Commission and is hereby
incorporated by reference. For a copy of the Statement of Additional
Information without charge, write to the address above or call (800) 877-4744.
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 PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF
$1.00 PER SHARE. SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
PROSPECTUS DATED: DECEMBER 14, 1995
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TABLE OF CONTENTS
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PAGE
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PAGE
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SUMMARY.......................................... 2
TABLE OF FEES AND EXPENSES....................... 4
FINANCIAL HIGHLIGHTS............................. 5
SUITABILITY FOR INVESTORS........................ 6
INVESTMENT PROGRAM............................... 6
PURCHASE OF SHARES............................... 9
REDEMPTION OF SHARES............................. 10
DIVIDENDS........................................ 11
TAXES............................................ 12
NET ASSET VALUE.................................. 13
YIELD INFORMATION................................ 13
REPORTS TO SHAREHOLDERS.......................... 14
MANAGEMENT OF THE FUND........................... 14
GENERAL INFORMATION.............................. 17
</TABLE>
SUMMARY
THE PORTFOLIO AND ITS INVESTMENT OBJECTIVE
The Fund is an open-end diversified series management investment company.
This Prospectus relates to the Personal Investment Class (the "Class") of the
Treasury Portfolio (the "Portfolio"). The Portfolio is a money market fund which
invests in direct obligations of the U.S. Treasury and repurchase agreements
secured by such obligations. 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.
Pursuant to separate prospectuses, the Fund also offers shares of other
classes of shares representing an interest in the Portfolio. Such classes have
different distribution arrangements and are designed for institutional and other
categories of investors. The Fund also offers shares of two classes of another
portfolio, the Treasury TaxAdvantage Portfolio, each pursuant to a separate
prospectus. The portfolios of the Fund are referred to collectively as the
"Portfolios."
Because the Portfolio 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 $1,000. There is no minimum
amount for subsequent investments. Payment for shares purchased must be in funds
immediately available to the Portfolio. See "Purchase of Shares."
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REDEMPTION OF SHARES
Redemptions may be made without charge at net asset value. Payment for
redeemed shares of the Class for which redemption orders are received prior to
4:00 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 4:00 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 5:00 p.m. Eastern Time on that day.
See "Dividends."
CONSTANT NET ASSET VALUE
The Portfolio uses the amortized cost method of valuing its portfolio
securities and rounds its 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 Portfolio's investment advisor
and receives a fee based on the Portfolio's average daily net assets. During the
fiscal year ended August 31, 1995, AIM received advisory fees with respect to
the Portfolio which represented 0.06% 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 a separate 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" and "-- Administrative Services."
DISTRIBUTOR AND DISTRIBUTION PLAN
Fund Management Company ("FMC") acts as the exclusive distributor of shares
of the Class. Pursuant to a plan of distribution adopted by the Fund's Board of
Trustees, the Fund may pay to FMC as well as certain broker-dealers or other
financial institutions up to 0.75% of the average daily net asset value of the
Portfolio attributable to the Class. Of this amount, up to 0.25% may be for
continuing personal services to shareholders provided by broker-dealers, banks
or other financial 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. The Portfolio may invest in repurchase agreements and purchase
securities for delayed delivery. Accordingly, an investment in the Portfolio may
entail somewhat different risks from an investment in an investment company that
does not engage in such practices. There can be no assurance that the Portfolio
will be able to maintain a stable net asset value of $1.00 per share. See
"Investment Program."
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
Logo), AIM and Design, AIM, AIM LINK and AIM Institutional Funds are registered
service marks of A I M Management Group Inc.
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TABLE OF FEES AND EXPENSES
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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 -- PERSONAL INVESTMENT CLASS
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management fees......................................................... 0.06%
12b-1 fees (after fee waivers)*......................................... 0.50%**
Other expenses:
Custodian fees....................................................... 0.01%
Other (after expense reimbursements)*................................ 0.03%
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Total other expenses............................................ 0.04%
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Total portfolio operating expenses --
Personal investment class............................................ 0.60%
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* Had there been no fee waivers and no expense reimbursements, 12b-1 fees and
Other expenses would have been 0.75% and 0.09%, respectively.
** It is possible that as a result of Rule 12b-1 fees, long-term shareholders
may pay more than the economic equivalent of the maximum front-end sales
charges permitted under rules of the National Association of Securities
Dealers, Inc. Given the Rule 12b-1 fee of the Class, however, it is estimated
that it would take a substantial number of years for a shareholder to exceed
such maximum front-end sales charges.
EXAMPLE
An investor in the Class would pay the following expenses on a $1,000
investment, assuming (1) a 5% annual return and (2) redemption at the end of
each time period.
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1 year....................................................... $ 6
3 years...................................................... $ 19
5 years...................................................... $ 33
10 years...................................................... $ 75
</TABLE>
The Table of Fees and Expenses is designed to assist an investor in
understanding the various costs and expenses that an investor in the Class will
bear directly or indirectly. (For more complete descriptions of the various
costs and expenses, see "Management of the Fund" below.) The expense figures are
based upon actual costs and fees charged to the Class for the fiscal year ended
August 31, 1995. There can be no assurance that future waivers of 12b-1 fees (if
any) will not vary from the figures reflected in the Fee Table. To the extent
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any service providers assume additional expenses of the Class, such assumption
of additional expenses will have the effect of lowering the Class' 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 -- Personal 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 LESS THAN THOSE SHOWN.
FINANCIAL HIGHLIGHTS
Shown below are the per share data, ratios and supplemental data
(collectively "data") for each of the years in the four-year period ended August
31, 1995 and the period August 8, 1991 (date operations commenced) through
August 31, 1991. The data has been audited by KPMG Peat Marwick LLP, independent
auditors, whose unqualified report thereon appears in the Statement of
Additional Information.
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1995 1994 1993 1992 1991
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Net asset value, beginning
of period..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment
operations:
Net investment income......... 0.05 0.03 0.03 0.04 0.003
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Total from investment
operations.......... 0.05 0.03 0.03 0.04 0.003
-------- ------- ------- ------- -------
Less distributions:
Dividends (from net investment
income).................... (0.05) (0.03) (0.03) (0.04) (0.003)
-------- ------- ------- ------- -------
Net asset value, end of
period........................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======= ======= ======= =======
Total return.................... 5.13% 3.02% 2.77% 4.07% 5.04%(a)
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Ratios/supplemental data:
Net assets, end of period
(000s omitted)................ $114,527 $88,582 $69,867 $23,853 $ 330
======== ======= ======= ======= =======
Ratio of expenses to average net
assets(b)..................... 0.60%(c) 0.58% 0.53% 0.49% 0.81%(a)
======== ======= ======= ======= =======
Ratio of net investment income
to average net assets(b)...... 5.03%(c) 2.99% 2.70% 3.55% 5.03%(a)
======== ======= ======= ======= =======
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(a) Annualized.
(b) Had there been no expense reimbursements, the ratios of expenses and net
investment income to average net assets would have been 0.65% and 4.98%,
respectively, for the year ended August 31, 1995, 0.66% and 2.91%,
respectively, for the year ended August 31, 1994, 0.63% and 2.59%,
respectively, for the year ended August 31, 1993.
(c) Ratios are based on average net assets of $89,767,973.
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SUITABILITY FOR INVESTORS
The Shares of the Class are 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 minimum initial investment is $1,000.
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.
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 seeks to achieve its objective by
investing in direct obligations of the U.S. Treasury and repurchase agreements
secured by such obligations. 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 consists exclusively of money market instruments which have
maturities of 397 days or less from the date of purchase (except that securities
subject to repurchase agreements may have longer maturities).
INVESTMENT POLICIES
The Portfolio invests exclusively in direct obligations of the U.S.
Treasury, which include Treasury bills, notes and bonds, and repurchase
agreements relating to such securities. The Portfolio may also engage in the
investment practices described below. 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.
REPURCHASE AGREEMENTS. The Portfolio intends to invest in repurchase
agreements with banks and broker-dealers pertaining to the securities described
above and which at the date of purchase are "First Tier" securities as defined
in Rule 2a-7 under the Investment Company Act of 1940, as amended (the "1940
Act"), as such Rule may be amended from time to time. Generally, "First Tier"
securities are securities that are rated in the highest rating category by two
nationally recognized statistical rating organizations ("NRSROs") or, if only
rated by one NRSRO, are rated in the highest rating category by that NRSRO or,
if unrated, are determined by A I M Advisors, Inc. ("AIM") (under the
supervision of and pursuant to guidelines established by the Fund's Board of
Trustees) to be of comparable quality to a rated security that meets the
foregoing quality standards. A repurchase agreement is an instrument under which
the Portfolio acquires ownership of a debt security and the seller agrees, at
the time of the sale, to repurchase the obligation at a mutually agreed-upon
time and price, thereby determining the yield during the Portfolio's holding
period. Repurchase transactions are limited to a term not to exceed 365 days.
The Portfolio may enter into repurchase agreements only with institutions
believed by the Fund's Board of Trustees to present minimal credit risk. With
regard to repurchase transactions, in the event of a bankruptcy or other default
of a seller of a repurchase agreement (such as the seller's failure to
repurchase the obligation in accordance with the terms of the agreement), the
Portfolio could experience both delays in liquidating the underlying securities
and losses,
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including: (a) a possible decline in the value of the underlying security during
the period while the Portfolio seeks to enforce its rights thereto, (b) possible
subnormal levels of income and lack of access to income during this period and
(c) the expense of enforcing its rights. Repurchase agreements are considered to
be loans under the 1940 Act.
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. Reverse repurchase
agreements involve the sale by the Portfolio of a portfolio security at an
agreed-upon price, date and interest payment. The Portfolio will borrow money or
enter into reverse repurchase agreements solely for temporary or defensive
purposes, such as to facilitate the orderly sale of portfolio securities or to
accommodate abnormally heavy redemption requests should they occur. Reverse
repurchase transactions are limited to a term not to exceed 92 days. The
Portfolio will use reverse repurchase agreements when the interest income to be
earned from the securities that would otherwise have to be liquidated to meet
redemption requests is greater than the interest expense of the reverse
repurchase transaction. Reverse repurchase agreements involve the risk that the
market value of securities retained by the Portfolio in lieu of liquidation may
decline below the repurchase price of the securities sold by the Portfolio which
it is obligated to repurchase. The risk, if encountered, could cause a reduction
in the net asset value of the Portfolio's shares. Reverse repurchase agreements
are considered to be borrowings under the 1940 Act.
LENDING OF PORTFOLIO SECURITIES. The Portfolio may 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.
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 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. 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. In addition, AIM will continually monitor the creditworthiness of
issuers whose securities are held by the Portfolio, and securities held by the
Portfolio may be disposed of prior to maturity as a result of a revised credit
evaluation of the issuer or other circumstances or considerations. The
Portfolio's policy of investing in securities with maturities of 397 days or
less will result in high portfolio turnover. Since brokerage commissions are not
normally paid on investments of the type made by the Portfolio, the high
turnover rate should not adversely affect the Portfolio's net income.
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
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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.
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 provide that the Portfolio will not:
(1) purchase securities of any one issuer (other than obligations of
the U.S. Government, its agencies or instrumentalities) if, immediately
after such purchase, more than 5% of the value of the Portfolio's total
assets would be invested in such issuer, except as permitted by Rule 2a-7
under the 1940 Act, as such Rule may be amended from time to time; or
(2) borrow money or issue senior securities except (a) for temporary
or emergency purposes (e.g., in order to facilitate the orderly sale of
portfolio securities or to accommodate abnormally heavy redemption
requests), the Portfolio may borrow money from banks or obtain funds by
entering into reverse repurchase agreements, and (b) to the extent that
entering into commitments to purchase securities in accordance with the
Portfolio's investment program may be considered the issuance of senior
securities. The Portfolio will not purchase securities while borrowings in
excess of 5% of its total assets are outstanding.
The foregoing investment restrictions of the Portfolio (as well as certain
others set forth in the Statement of Additional Information) are matters 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 govern the operations of money market funds,
and may be more restrictive than the policies described herein. The United
States Securities and Exchange Commission (the "SEC") has proposed certain
changes to Rule 2a-7. While such proposed changes may have a prospective impact
on the investments of the Portfolio, the Portfolio anticipates
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no difficulty in complying with any proposed change if adopted by the SEC. A
description of further investment restrictions applicable to the Portfolio is
contained in the Statement of Additional Information.
PURCHASE OF SHARES
Shares of the Class are sold on a continuing basis at their net asset value
next determined after an order has been received by the Portfolio. As discussed
below, the Fund reserves the right to reject any purchase order. Although there
is no sales charge imposed on the purchase of shares of the Class, banks or
other institutions may charge a recordkeeping, account maintenance or other fee
to their customers, and beneficial holders of the shares 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 4:00 p.m. Eastern
Time on a business day of the Portfolio. Purchase orders received after such
time will be processed at the next day's net asset value. Shares of the Class
will earn the dividend declared on the effective date of purchase.
A "business day of the Portfolio" is any day on which both the Federal
Reserve Bank of New York and The Bank of New York, the Fund's custodian, are
open for business. It is expected that The Bank of New York and the Federal
Reserve Bank of New York will be closed during the next twelve months on
Saturdays and Sundays, and on the observed holidays of New Year's Day, Martin
Luther King Jr.'s Birthday, Presidents' Day, Memorial Day, Independence Day,
Labor Day, Columbus Day, Veterans' Day, Thanksgiving Day and Christmas Day.
Shares of the Class are sold to customers of banks, certain broker-dealers
and other financial institutions (individually, an "Institution" and,
collectively, "Institutions"). Individuals, corporations, partnerships and other
businesses that maintain qualified accounts at an Institution may invest in the
Class. Each Institution will render administrative support services to its
customers who are the beneficial owners 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; 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 laws
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
Application, which can be obtained from A I M Institutional Fund Services, Inc.
("AIFS"), must be completed and sent to AIFS at 11 Greenway Plaza, Suite 1919,
Houston, Texas 77046-1173. Any changes made to the information provided in the
Account Application must be made in writing or by completing a new form and
providing it to AIFS. An investor must open an account in the Class through an
Institution in accordance with procedures established by such Institution. Each
Institution separately determines the rules applicable to accounts in the Class
opened with it, including minimum initial and subsequent investment requirements
and the procedures to be followed by investors to effect purchases of the Class.
The minimum initial investment is $1,000, and there is no minimum amount of
subsequent purchases of the Class by an Institution on behalf of its customers.
An investor who proposes to open a Portfolio account with an Institution should
consult with a representative of such Institution to obtain a description of the
rules governing such an account. The Institution holds shares of the Class
registered in its name, as agent for the customer, on the books of the
Institution. A statement with
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regard to the customer's shares in 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 each customer proxies, periodic reports and
other information with regard to the customer's shares. The customer's shares
are fully assignable and subject to encumbrance by the customer.
All agreements which relate to a customer's account with an Institution are
with the Institution. An investor may terminate his relationship with an
Institution at any time, in which case an account in the investor's name will be
established directly with the Portfolio and the investor will become a
shareholder of record. In such case, however, the investor will not be able to
purchase additional shares in the Class directly, except through reinvestment of
dividends and distributions.
Orders for the purchase of shares in the Class are placed by the investor
with the Institution. The Institution is responsible for the prompt transmission
of the order to the Fund. The Portfolio will normally be required to make
immediate settlement in federal funds (member bank deposits with a Federal
Reserve Bank) for portfolio securities purchased. Accordingly, payment for
shares purchased by Institutions on behalf of their customers must be in federal
funds. If an investor's order to purchase shares is paid for other than in
federal funds, the Institution, acting on behalf of the investor, completes the
conversion into federal funds (which may take two business days), or itself
advances federal funds prior to conversion, and promptly transmits the order and
payment in the form of federal funds to AIFS.
Subject to the conditions stated above and to the Portfolio's right to
reject any purchase order, orders will be accepted (i) when payment for the
shares purchased is received by the Portfolio in the form described above and
notice of such order is provided to AIFS or (ii) at the time the order is
placed, if the Portfolio is assured of payment. Shares purchased by orders which
are accepted prior to 4:00 p.m. Eastern Time will earn the dividend declared on
the date of purchase.
Federal Reserve wires should be sent as early in the day 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 Personal Investment Class of the Treasury Portfolio," otherwise
any funds received will be returned to the sending Institution.
In the interest of economy and convenience, certificates representing
shares 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(R), a personal computer application software product.
Normally, the net asset value per share of the Portfolio will remain constant at
$1.00. See "Net Asset Value." Redemption requests with respect to shares for
which certificates have not been issued are normally made through a customer's
Institution.
10
<PAGE> 11
Payment for redeemed shares of the Class is normally made by Federal
Reserve wire to the commercial bank account designated in the Institution's
Account Application, but may be remitted by check upon request by a shareholder.
If a redemption request is received by AIFS prior to 4:00 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 AIFS after 4:00 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 4:00 p.m. Eastern Time on
the next business day of the Portfolio, and the proceeds of such redemption will
normally be wired on the effective day of the redemption.
A shareholder may change the bank account designated to receive redemption
proceeds by written notice to the Fund. The authorized signature on the notice
must be guaranteed by a commercial bank or a trust company. Additional
documentation may be required when deemed appropriate by the Fund or AIFS, the
Fund's transfer agent.
Shareholders may request a redemption by telephone. AIFS and FMC will not
be liable for any loss, expense or cost arising out of any telephone redemption
request effected in accordance with the authorization set forth in the account
application if they reasonably believe such request to be genuine but may in
certain cases be liable for losses due to unauthorized or fraudulent
transactions. Procedures for certification of telephone transactions may include
recordings of telephone transactions (maintained for six months), and mailings
of confirmations promptly after the transaction.
Payment for shares of the Class redeemed by mail and payment for telephone
redemptions in amounts of less than $1,000 will be made by check mailed within
seven days after receipt of the redemption request in proper form. The Fund may
make payment for telephone redemptions in excess of $1,000 by check when it is
considered to be in the Portfolio's best interest to do so.
Shares of the Class are not redeemable at the option of the Fund unless the
Board of Trustees of the Fund determines in its sole discretion that failure to
so redeem may have materially adverse consequences to the shareholders of the
Fund.
DIVIDENDS
Dividends from the net income of the Portfolio are declared daily to
shareholders of record of the Class of the Portfolio as of immediately after
4:00 p.m. Eastern Time on the day of declaration. Net income for dividend
purposes is determined daily as of 4:00 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' pro rata share of the total
outstanding shares representing an interest in the Portfolio, less (b) Fund
expenses, such as custodian fees, trustees' fees and accounting and legal
expenses, based upon such class' pro rata share of the net assets of the
Portfolio, less (c) expenses directly attributable to such class, such as
distribution expenses, if any, transfer agent fees or registration fees that may
be unique to such class. Although realized gains and losses on the assets of the
Portfolio are reflected in its net asset value, they are not expected to be of
an amount which would affect its $1.00 per-share net asset value for purposes of
purchases and redemptions. See "Net Asset Value." Distributions from net
realized short-term gains may be declared and paid yearly or more frequently.
See "Taxes." The Fund does not expect to realize any long-term capital gains or
losses in the Portfolio.
11
<PAGE> 12
All dividends declared during a month will normally be paid by wire
transfer. Payment will normally be made on the first business day of the
following month. A shareholder may elect to have all dividends automatically
reinvested in additional full and fractional shares of the Class at the net
asset value as of 4:00 p.m. Eastern Time on the last business day of the month.
Such election, or any revocation thereof, must be made either in writing by the
Institution to AIFS, 11 Greenway Plaza, Suite 1919, Houston, TX 77046-1173 and
will become effective with dividends paid after its receipt by AIFS. If a
shareholder redeems all the shares 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 Fund uses its best efforts to maintain the net asset value per share of
the Portfolio at $1.00 for purposes of sales and redemptions. See "Net Asset
Value." Should the Fund incur or anticipate any unusual expense, loss or
depreciation which could adversely affect the income or net asset value of the
Portfolio, the Fund's Board of Trustees would at that time consider whether to
adhere to the present dividend policy described above or to revise it in light
of the then prevailing circumstances. For example, under such unusual
circumstances, the Board of Trustees might reduce or suspend the daily dividend
in order to prevent to the extent possible the net asset value per share of the
Portfolio from being reduced below $1.00. Thus, such expenses, losses or
depreciation may result in a shareholder receiving no dividends for the period
during which it held its shares of the Class and cause such a shareholder to
receive upon redemption a price per share lower than the shareholder's original
cost.
TAXES
The policy of 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 Portfolio also
intends to meet the distribution requirements imposed by the Code in order to
avoid the imposition of a 4% excise tax. The Portfolio intends 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 period ending on October 31. The
Portfolio also intends 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 taxes on net investment income and net
realized capital gains paid to shareholders.
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 Class. 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 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 Portfolio will be treated as a separate corporation for purposes of
determining taxable income, distribution requirements and other requirements of
Subchapter M. Therefore, the Portfolio may not offset its gains against the
losses of the other portfolio of the Fund and each portfolio of the Fund must
specifically comply with all the provisions of the Code.
Distributions and 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
12
<PAGE> 13
herein. Shareholders are advised to consult with their own tax advisers
concerning the application of state, local or foreign taxes.
The foregoing discussion of federal income tax consequences is based on tax
laws and regulations in effect on November 1, 1995, which are subject to change
by legislation or administrative action.
NET ASSET VALUE
The net asset value per share of the Portfolio is determined daily as of
4:00 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 its
liabilities (including accrued expenses and dividends payable) by the number of
shares outstanding of the Portfolio and rounding the resulting per share net
asset value to the nearest one cent.
The securities of the Portfolio are valued on the basis of amortized cost
pursuant to rules promulgated by the SEC applicable to money market funds. This
method values a security at its cost on the date of purchase and thereafter
assumes a constant amortization to maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the market value of
the security. While this method provides certainty in valuation, it may result
in periods during which value, as determined by amortized cost, is higher or
lower than the price the Portfolio would receive if the security were sold.
During such periods, the daily yield on shares of the Portfolio computed as
described in "Purchases and Redemptions -- Performance Information" in the
Statement of Additional Information, may differ somewhat from an identical
computation made by an investment company with identical investments utilizing
available indications as to market value to value its portfolio securities.
YIELD INFORMATION
Yield information for the Class can be obtained by calling the Fund at
(800) 877-4744. 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 the
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 other Institution. These factors
should be carefully considered by the investor before investing in the
Portfolio.
For the seven-day period ended August 31, 1995, the current yield and the
effective yield of the Class (which assumes the reinvestment of dividends for a
365-day year and a return for the entire year equal to the annualized current
yield for the period) were 5.21% and 5.35%, respectively, excluding capital
gains distributions. For the seven-day period ended August 31, 1995, the current
distribution rate and the effective distribution rate of the Class, including
capital gains distributions, (which assumes the reinvestment of dividends for a
365-day year and a return for the entire year equal to the average annualized
current distribution rate for the period) were 5.24% and 5.38%, respectively.
These performance numbers are quoted for illustration purposes only. The
performance numbers for any other seven-day period may be substantially
different from those quoted above.
To assist banks and other institutions performing their own sub-accounting,
same day information as to the daily dividend per share for the Portfolio to
eight decimal places and current yield normally will be available by 5:00 p.m.
Eastern Time.
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<PAGE> 14
From time to time and in its discretion, AIM may waive all or a portion of
its advisory fees and/or assume certain expenses of the Portfolio. Such a
practice will have the effect of increasing the Portfolio's yield and total
return.
REPORTS TO SHAREHOLDERS
The Fund furnishes shareholders with semi-annual reports containing
information about the Portfolio and its operations, including a list of the
investments held by 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 by its Institution a written confirmation for each transaction.
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES
The overall management of the business and affairs of the Fund is vested
with the 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 objective 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 October 31, 1995, the
total assets of the investment company portfolios managed or advised by AIM and
its affiliates were approximately $39.3 billion. All of the directors and
certain of the officers of AIM are also trustees or executive officers of the
Fund. AIM is a wholly-owned subsidiary of A I M Management Group Inc. ("AIM
Management"), a privately held corporation. AIM Management is a holding company
engaged in the financial services business.
Pursuant to the terms of the Advisory Agreement, AIM manages the investment
of the Portfolio's assets and obtains and evaluates economic, statistical and
financial information to formulate and implement investment policies for the
Portfolio. The Advisory Agreement requires AIM to reduce its fee to the extent
required to satisfy any expense limitations imposed by the securities laws or
regulations thereunder of any state in which the Portfolio's shares are
qualified for sale.
For the fiscal year ended August 31, 1995, AIM received fees with respect
to the Portfolio from the Fund under an advisory agreement previously in effect,
which provided for the same level of compensation to AIM as the Advisory
Agreement, which represented 0.06% of the Portfolio's average daily net assets.
During such fiscal year, the expenses of the Class, including AIM's fees,
amounted to 0.60% of the Class' average daily net assets.
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<PAGE> 15
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")
entered into an Administrative Services Agreement pursuant to which AIFS was
reimbursed by AIM for its costs in providing shareholder services for the Fund.
AIFS or its affiliates received reimbursement of shareholder services costs of
$73,366 with respect to the Portfolio for the year ended August 31, 1995 which
represented 0.002% of the Portfolio's average daily net assets. The
Administrative Services Agreement between AIM and AIFS was terminated July 1,
1995. Beginning July 1, 1995, AIFS received fees with respect to the Portfolio
for its provision of shareholder services pursuant to a Transfer Agency and
Service Agreement with the Fund. For the period July 1, 1995 through August 31,
1995, AIFS received transfer agency fees from AIM with respect to the Portfolio
in the amount of $40,813.
FEE WAIVERS
AIM may in its discretion from time to time agree to waive voluntarily all
or any portion of its advisory fee and/or assume certain expenses of the
Portfolio but will retain its ability to be reimbursed prior to the end of the
fiscal year. FMC may in its discretion from time to time voluntarily agree to
waive its 12b-1 fee, but will retain its ability to be reimbursed prior to the
end of the fiscal year.
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. The Distribution Agreement provides that FMC has the
exclusive right to distribute shares of the Fund 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 .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. Sales of shares
of the Class may not be used 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 the shares
15
<PAGE> 16
of the Class an amount equal to 0.75% 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, payment of 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 daily 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 the
Plan and the purposes for which such expenditures were made. The Board of
Trustees shall review these reports in connection with their decisions with
respect to the Plan.
As required by Rule 12b-1 under the 1940 Act, the Plan was initially
approved by the Fund's 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 July 19,
1993. In approving the continuance of 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 shares 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 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 votes 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. The
Portfolio may
16
<PAGE> 17
also purchase securities from underwriters at prices which include a concession
paid by the issuer to the underwriter.
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 Portfolio (the "Predecessor
Portfolio") of Short-Term Investments Co., a Massachusetts business trust
("STIC"), pursuant to an Agreement and Plan of Reorganization between the Fund
and STIC. All historical financial and other information contained in this
Prospectus for periods prior to October 15, 1993 relating to the Portfolio (or a
class thereof) is that of the Predecessor Portfolio (or the corresponding class
thereof). Shares of beneficial interest of the Fund are divided into seven
classes. Five classes, including the Class, represent interests in the Portfolio
and two classes represent interests in the Treasury TaxAdvantage Portfolio. Each
class of shares has a par value of $.01 per share. The other classes of the Fund
may have different sales charges and other expenses which may affect
performance. An investor may obtain information concerning the Fund's other
classes by contacting FMC.
All shares of the Fund have equal rights with respect to voting, except
that the holders of shares of a particular portfolio or class will have the
exclusive right to vote on matters pertaining solely to that portfolio or 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 holders of shares of the Portfolio 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 or allocated to the respective portfolio based on the liquidation
value of the 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.
17
<PAGE> 18
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 or
classes of the Fund without shareholder approval.
TRANSFER AGENT AND CUSTODIAN
The Bank of New York, 110 Washington Street, 8th Floor, New York, New York
10286, acts as custodian for the portfolio securities and cash of the Portfolio.
A I M Institutional Fund Services, Inc., 11 Greenway Plaza, Suite 1919, Houston,
Texas 77046-1173, acts as transfer agent for shares of the Class.
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 the Fund at 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173, or may be made by calling (800) 877-4744.
OTHER INFORMATION
This Prospectus sets forth basic information that investors should know
about the Fund and the Portfolio prior to investing. A Statement of Additional
Information has been filed with the SEC. Copies of the Statement of Additional
Information are available upon request and without charge by writing or calling
the Fund or FMC. This Prospectus omits certain information contained in the
registration statement filed with the SEC. Copies of the registration statement,
including items omitted herein, may be obtained from the SEC by paying the
charges prescribed under its rules and regulations.
18
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(This page intentionally left blank)
<PAGE> 20
SHORT-TERM INVESTMENTS TRUST SHORT-TERM
11 Greenway Plaza, Suite 1919 INVESTMENTS TRUST
Houston, Texas 77046-1173
(800) 877-4744
INVESTMENT ADVISOR
A I M ADVISORS, INC.
11 Greenway Plaza, Suite 1919 PERSONAL
Houston, Texas 77046-1173 INVESTMENT CLASS
(713) 626-1919 OF THE
----------------------------------
DISTRIBUTOR
FUND MANAGEMENT COMPANY TREASURY PORTFOLIO PROSPECTUS
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
(800) 877-4744
AUDITORS
KPMG PEAT MARWICK LLP
NationsBank Building
700 Louisiana DECEMBER 14, 1995
Houston, Texas 77002
CUSTODIAN
THE BANK OF NEW YORK
110 Washington Street, 8th Floor
New York, New York 10286
TRANSFER AGENT
A I M INSTITUTIONAL FUND
SERVICES, INC.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
NO PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS, AND
IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE FUND OR
THE DISTRIBUTOR. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER IN ANY
JURISDICTION TO ANY PERSON TO WHOM [LOGO APPEARS HERE]
SUCH OFFERING MAY NOT LAWFULLY BE MADE. Fund Management Company
<PAGE> 21
STATEMENT OF
ADDITIONAL INFORMATION
PERSONAL INVESTMENT CLASS
OF THE
TREASURY PORTFOLIO
OF
SHORT-TERM INVESTMENTS TRUST
11 GREENWAY PLAZA
SUITE 1919
HOUSTON, TEXAS 77046-1173
(800) 877-4744
______________________
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS.
IT SHOULD BE READ IN CONJUNCTION WITH
THE PROSPECTUS DATED DECEMBER 14, 1995
COPIES OF WHICH MAY BE OBTAINED BY WRITING
FUND MANAGEMENT COMPANY, P.O. BOX 4333,
HOUSTON, TEXAS 77210-4333
OR CALLING (800) 877-4744
______________________
STATEMENT OF ADDITIONAL INFORMATION DATED: DECEMBER 14, 1995
RELATING TO THE PROSPECTUS DATED: DECEMBER 14, 1995
<PAGE> 22
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Administrative Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Banking Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Transfer Agent and Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Principal Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
PURCHASES AND REDEMPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Net Asset Value Determination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Distribution Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Distribution Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Performance Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Suspension of Redemption Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
INVESTMENT PROGRAM AND RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Investment Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Other Investment Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Qualification as a Regulated Investment Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Excise Tax on Regulated Investment Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Portfolio Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Sale or Redemption of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Foreign Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Effect of Future Legislation; Local Tax Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FS
</TABLE>
i
<PAGE> 23
INTRODUCTION
The Treasury Portfolio (the "Portfolio") is an investment portfolio of
Short-Term Investments Trust (the "Fund"), a mutual fund. The rules and
regulations of the United States Securities and Exchange Commission (the "SEC")
require all mutual funds to furnish prospective investors certain information
concerning the activities of the fund being considered for investment. This
information is included in a Prospectus dated December 14, 1995 (the
"Prospectus"). Copies of the Prospectus and additional copies of this
Statement of Additional Information may be obtained without charge by writing
to 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) 877-4744. Investors must receive a Prospectus before they invest.
This Statement of Additional Information is intended to furnish
prospective investors with additional information concerning the Personal
Investment Class of the Portfolio. Some of the information required to be in
this Statement of Additional Information is also included in the Prospectus;
and, in order to avoid repetition, reference will be made to sections of the
Prospectus. Additionally, the Prospectus and this Statement of Additional
Information omit certain information contained in the registration statement
filed with the SEC. Copies of the registration statement, including items
omitted from the Prospectus and this Statement of Additional Information, may
be obtained from the SEC by paying the charges prescribed under its rules and
regulations.
GENERAL INFORMATION ABOUT THE FUND
THE FUND AND ITS SHARES
The Fund is an open-end diversified series management investment
company which was originally organized as a corporation under the laws of the
State of Maryland on January 24, 1977, but which had no operations prior to
November 10, 1980. The Fund was reorganized as a business trust under the laws
of the Commonwealth of Massachusetts on December 31, 1986. The Fund was again
reorganized as a business trust under the laws of the State of Delaware on
October 15, 1993. On October 15, 1993, the Portfolio succeeded to the assets
and assumed the liabilities of the Treasury Portfolio (the "Predecessor
Portfolio") of Short-Term Investments Co., a Massachusetts business trust
("STIC"), pursuant to 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). A copy of the Agreement and Declaration of Trust ("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 TaxAdvantage
Portfolio (together, the "Portfolios"). The Portfolio consists of the
following five classes of shares: Private Investment Class, Personal
Investment Class, Institutional Class, Cash Management Class and Resource
Class. Each such class has different shareholder qualifications and bears
expenses differently. This Statement of Additional Information and the
Prospectus relate solely to the Personal Investment Class (the "Class") of the
Portfolio. Shares of the other classes of the Portfolio and the classes of the
Treasury TaxAdvantage 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
1
<PAGE> 24
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 Portfolio and any class thereof, however, may be
terminated at any time, upon the recommendation of the 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, of $.01 par value, of each class of
shares of beneficial interest of the Fund. The Board of Trustees may establish
additional series or classes of shares from time to time without shareholder
approval. Additional information concerning the rights of share ownership is
set forth in the prospectus applicable to each such class or series of shares
of the Fund.
The assets received by the Fund for the issue or sale of shares of
each class relating to a Portfolio and all income, earnings, profits, losses
and proceeds therefrom, subject only to the rights of creditors, will be
allocated to that Portfolio, and constitute the underlying assets of that
Portfolio. The underlying assets of each Portfolio will be segregated and will
be charged with the expenses with respect to that Portfolio and with a share of
the general expenses of the Fund. While certain expenses of the Fund will be
allocated to the separate books of account of each Portfolio, certain other
expenses may be legally chargeable against the assets of the entire Fund.
Under Delaware law, shareholders of a Delaware business trust shall be
entitled to the same limitations of liability extended to shareholders of
private for-profit corporations. There is a remote possibility that
shareholders could, under certain circumstances, be held liable for the
obligations of the Fund to the extent the courts of another state which does
not recognize such limited liability were to apply the laws of such state to a
controversy involving such obligations. However, the Declaration of Trust
disclaims shareholder liability for acts or obligations of the Fund and
requires that notice of such disclaimer be given in each agreement, obligation
or instrument entered into or executed by the Fund or the trustees to all
parties, and each party thereto must expressly waive all rights of action
directly against shareholders of the Fund. The Declaration of Trust provides
for indemnification out of the Fund's property for all losses and expenses of
any shareholder of the Fund held liable on account of being or having been a
shareholder. Thus, the risk of a shareholder incurring financial loss due to
shareholder liability is limited to circumstances in which the Fund would be
unable to meet its obligations and wherein the complaining party was held not
to be bound by the disclaimer.
The Declaration of Trust further provides that the trustees will not
be liable for errors of judgment or mistakes of fact or law. However, nothing
in the Declaration of Trust protects a trustee against any liability to which a
trustee would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct
of his office. The Declaration of Trust provides for indemnification by the
Fund of the trustees and the officers of the Fund except with respect to any
matter as to which any such person did not act in good faith in the reasonable
belief that his action was in or not opposed to the best interests of the Fund.
Such person may not be indemnified against any liability to the Fund or to the
Fund's shareholders to which he would otherwise be subject by reason of willful
misfeasance,
2
<PAGE> 25
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office. The Declaration of Trust also authorizes the purchase
of liability insurance on behalf of trustees and officers.
As described in the Prospectus, the Fund will not normally hold annual
shareholders' meetings. At such time as less than a majority of the trustees
have been elected by the shareholders, the trustees then in office will call a
shareholders' meeting for the election of trustees. In addition, trustees may
be removed from office by a written consent signed by the holders of two-thirds
of the outstanding shares of the Fund and filed with the Fund's custodian or by
a vote of the holders of two-thirds of the outstanding shares at a meeting duly
called for the purpose, which meeting shall be held upon written request of the
holders of not less than 10% of the outstanding shares of the Fund.
TRUSTEES AND OFFICERS
The trustees and officers of the Fund and their principal occupations
during the last five years are set forth below. Unless otherwise indicated,
the address of each trustee and officer is 11 Greenway Plaza, Suite 1919,
Houston, Texas 77046-1173.
*CHARLES T. BAUER, Trustee and Chairman (76)
Director, Chairman and Chief Executive Officer, A I M Management Group
Inc.; Chairman of the Board of Directors, A I M Advisors, Inc., A I M Capital
Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc., A I M
Global Associates, Inc., A I M Global Holdings, Inc., A I M Institutional Fund
Services, Inc. and Fund Management Company; and Director, AIM Global Advisors
Limited, A I M Global Management Company Limited and AIM Global Ventures Co.
BRUCE L. CROCKETT, Trustee (51)
COMSAT Corporation
6560 Rock Spring Drive
Bethesda, MD 20817
Director, President and Chief Executive Officer, COMSAT Corporation
(Includes COMSAT World Systems, COMSAT Mobile Communications, COMSAT Video
Enterprises, COMSAT RSI and COMSAT International Ventures). Previously,
President and Chief Operating Officer, COMSAT Corporation; President, World
Systems Division, COMSAT Corporation; and Chairman, Board of Governors of
INTELSAT; (each of the COMSAT companies listed above is an international
communication, information and entertainment-distribution services company).
OWEN DALY II, Trustee (71)
6 Blythewood Road
Baltimore, MD 21210
Director, Cortland Trust Inc. (investment company). Formerly,
Director, CF & I Steel Corp., Monumental Life Insurance Company and Monumental
General Insurance Company; and Chairman of the Board of Equitable
Bancorporation.
__________________________________
* A trustee who is an "interested person" of the Fund and A I M
Advisors, Inc., as defined in the Investment Company Act of 1940, as
amended (the "1940 Act").
3
<PAGE> 26
*CARL FRISCHLING, Trustee (58)
919 Third Avenue
New York, NY 10022
Partner, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel (law firm).
Formerly, Partner, Reid & Priest (law firm); and, prior thereto, Partner,
Spengler Carlson Gubar Brodsky & Frischling (law firm).
**ROBERT H. GRAHAM, Trustee and President (49)
Director, President and Chief Operating Officer, A I M Management
Group Inc.; Director and President, A I M Advisors, Inc.; Director and
Executive Vice President, A I M Distributors, Inc.; Director and Senior Vice
President, A I M Capital Management, Inc., A I M Fund Services, Inc., A I M
Global Associates, Inc., A I M Global Holdings, Inc., AIM Global Ventures Co.,
A I M Institutional Fund Services, Inc. and Fund Management Company; Senior
Vice President, AIM Global Advisors Limited.
JOHN F. KROEGER, Trustee (71)
24875 Swan Road - Martingham
Box 464
St. Michaels, MD 21663
Director, Flag Investors International Fund, Inc., Flag Investors
Emerging Growth Fund, Inc., Flag Investors Telephone Income Fund, Inc., Flag
Investors Equity Partners Fund, Inc., Total Return U.S. Treasury Fund, Inc.,
Flag Investors Intermediate Term Income Fund, Inc., Managed Municipal Fund,
Inc., Flag Investors Value Builder Fund, Inc., Flag Investors Maryland
Intermediate Tax-Free Income Fund, Inc., Flag Investors Real Estate Securities
Fund, Inc., Alex. Brown Cash Reserve Fund, Inc. and North American Government
Bond Fund, Inc. (investment companies). Formerly, Consultant, Wendell & Stockel
Associates, Inc. (consulting firm).
LEWIS F. PENNOCK, Trustee (53)
6363 Woodway, Suite 825
Houston, TX 77057
Attorney in private practice in Houston, Texas.
IAN W. ROBINSON, Trustee (72)
183 River Drive
Tequesta, FL 33469
Formerly, Executive Vice President and Chief Financial Officer, Bell
Atlantic Management Services, Inc. (provider of centralized management
services to telephone companies); Executive Vice President, Bell Atlantic
Corporation (parent of seven telephone companies); and Vice President and Chief
Financial Officer, Bell Telephone Company of Pennsylvania and Diamond State
Telephone Company.
__________________________________
* A trustee who is an "interested person" of the Fund, as defined in the
1940 Act.
** A trustee who is an "interested person" of the Fund and A I M Advisors,
Inc., as defined in the 1940 Act.
4
<PAGE> 27
LOUIS S. SKLAR, Trustee (56)
Transco Tower, 50th Floor
2800 Post Oak Blvd.
Houston, TX 77056
Executive Vice President, Development and Operations, Hines Interests
Limited Partnership (real estate development).
***JOHN J. ARTHUR, Senior Vice President and Treasurer (51)
Senior Vice President and Treasurer, A I M Advisors, Inc.; and Vice
President and Treasurer, A I M Management Group Inc., A I M Capital Management,
Inc., A I M Distributors, Inc., A I M Fund Services, Inc., A I M Institutional
Fund Services, Inc. and Fund Management Company; and Vice President, AIM Global
Advisors Limited, A I M Global Associates, Inc., A I M Global Holdings, Inc.,
and AIM Global Ventures Co.
GARY T. CRUM, Senior Vice President (48)
Director and President, A I M Capital Management, Inc.; Director and
Senior Vice President, A I M Management Group Inc., A I M Advisors, Inc., A I M
Global Associates, Inc., A I M Global Holdings, Inc. and AIM Global Ventures
Co., Director, A I M Distributors, Inc.; and Senior Vice President, AIM Global
Advisors Limited.
***CAROL F. RELIHAN, Vice President and Secretary (41)
Vice President, General Counsel and Secretary, A I M Management Group
Inc., A I M Advisors, Inc., A I M Fund Services, Inc., A I M Institutional Fund
Services, Inc., and Fund Management Company; Vice President and Secretary,
A I M Distributors, Inc., A I M Global Associates, Inc. and AIM Global
Holdings, Inc.; Vice President and Assistant Secretary, AIM Global Advisors
Limited and AIM Global Ventures Co.; and Secretary, A I M Capital
Management, Inc.
DANA R. SUTTON, Vice President and Assistant Treasurer (36)
Vice President and Fund Controller, A I M Advisors, Inc.; and
Assistant Vice President and Assistant Treasurer, Fund Management Company.
MELVILLE B. COX, Vice President (52)
Vice President, A I M Advisors, Inc., A I M Capital Management, Inc.,
A I M Fund Services, Inc. and A I M Institutional Fund Services, Inc., and
Assistant Vice President, A I M Distributors, Inc. and Fund Management Company.
Formerly, Vice President, Charles Schwab & Co., Inc.; Assistant Secretary,
Charles Schwab Family of Funds and Schwab Investments; Chief Compliance
Officer, Charles Schwab Investment Management, Inc.; and Vice President,
Integrated Resources Life Insurance Co. and Capitol Life Insurance Co.
__________________________________
*** Mr. Arthur and Ms. Relihan are married to each other.
5
<PAGE> 28
KAREN DUNN KELLEY, Vice President (35)
Director, A I M Global Management Company Limited; Senior Vice
President, A I M Capital Management, Inc. and AIM Global Advisors Limited; and
Vice President, A I M Advisors, Inc. and AIM Global Ventures Co.
J. ABBOTT SPRAGUE, Vice President (40)
Director and President, A I M Institutional Fund Services, Inc. and
Fund Management Company; Director and Senior Vice President, A I M Advisors,
Inc.; and Senior Vice President, A I M Fund Services, Inc. and A I M Management
Group Inc.
The Board of Trustees has an Audit Committee, an Investments
Committee, and a Nominating and Compensation Committee.
The members of the Audit Committee are Messrs. Daly, Kroeger
(Chairman), Pennock and Robinson. The Audit Committee is responsible for
meeting with the Fund's auditors to review audit procedures and results and to
consider any matters arising from an audit to be brought to the attention of
the trustees as a whole with respect to the Fund's 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 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 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
of Trustees and such committee.
All of the Fund's trustees also serve as directors or trustees of some
or all of the other investment companies managed or advised by A I M Advisors,
Inc. ("AIM") or distributed and administered by FMC. All of the Fund's
executive officers hold similar offices with some or all of such investment
companies.
6
<PAGE> 29
Remuneration of Trustees
Set forth below is information regarding compensation paid or accrued
during the fiscal year ended August 31, 1995 for each trustee of the Fund:
<TABLE>
<CAPTION>
====================================================================================================
DIRECTOR AGGREGATE RETIREMENT TOTAL
COMPENSATION BENEFITS COMPENSATION
FROM FUND(1) ACCRUED FROM ALL AIM
BY ALL AIM FUNDS(3)
FUNDS(2)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Charles T. Bauer $ 0 $ 0 $ 0
- ----------------------------------------------------------------------------------------------------
Bruce L. Crockett 3,281 2,814 45,094
- ----------------------------------------------------------------------------------------------------
Owen Daly II 3,298 14,375 45,844
- ----------------------------------------------------------------------------------------------------
Carl Frischling 3,281 7,542 45,094
- ----------------------------------------------------------------------------------------------------
Robert H. Graham 0 0 0
- ----------------------------------------------------------------------------------------------------
John F. Kroeger 3,298 20,517 45,844
- ----------------------------------------------------------------------------------------------------
Lewis F. Pennock 3,298 5,093 45,844
- ----------------------------------------------------------------------------------------------------
Ian W. Robinson 3,249 10,396 45,094
- ----------------------------------------------------------------------------------------------------
Louis S. Sklar 3,249 4,682 45,094
====================================================================================================
</TABLE>
______________________
(1) The total amount of compensation deferred by all Trustees of the Fund
during the fiscal year ended August 31, 1995, including interest
earned thereon, was $13,735.
(2) During the fiscal year ended August 31, 1995, the total amount of
expenses allocated to the Fund in respect of such retirement benefits
was $8,673. Data reflects compensation earned for the calendar year
ended December 31, 1994.
(3) Messrs. Bauer, Daly, Graham, Kroeger and Pennock each serves as a
Director or Trustee of a total of 11 AIM Funds. Messrs. Crockett,
Frischling, Robinson and Sklar each serves as a Director or Trustee of
a total of 10 AIM Funds. Data reflects compensation earned for the
calendar year ended December 31, 1994.
AIM Funds Retirement Plan for Eligible Directors/Trustees
Under the terms of the AIM Funds Retirement Plan for Eligible
Directors/Trustees (the "Plan"), each director (who is not a employee of any of
the AIM Funds, A I M Management Group Inc. or any of their affiliates) may be
entitled to certain benefits upon retirement from the Board of Directors.
Pursuant to the Plan, the normal retirement date is the date on which the
eligible director has attained age 65 and has completed at least five years of
continuous service with one or more of the regulated investment companies
7
<PAGE> 30
managed, administered or distributed by AIM or its affiliates (the "AIM
Funds"). Each eligible director is entitled to receive an annual benefit from
the AIM Funds commencing on the first day of the calendar quarter coincident
with or following his date of retirement equal to 5% of such Trustees'
compensation paid by the AIM Funds multiplied by the number of such Trustee's
years of service (not in excess of 10 years of service) completed with respect
to any of the AIM Funds. Such benefit is payable to each eligible trustee in
quarterly installments for a period of no more than five years. If an eligible
trustee dies after attaining the normal retirement date but before receipt of
any benefits under the Plan commences, the trustee's surviving spouse (if any)
shall receive a quarterly survivor's benefit equal to 50% of the amount payable
to the deceased trustee, for no more than five years beginning the first day of
the calendar quarter following the date of the director's death. Payments
under the Plan are not secured or funded by any AIM Fund.
Set forth below is a table that shows the estimated annual benefits
payable to an eligible director upon retirement assuming various compensation
and years of service classifications. The estimated credited years of service
as of December 31, 1994 for Messrs. Crockett, Daly, Frischling, Kroeger,
Pennock, Robinson and Sklar are 7, 8, 17, 17, 13, 7, and 5 years, respectively.
<TABLE>
Annual Compensation Paid
By All AIM Funds
<CAPTION>
<S> <C> <C> <C>
$60,000 $65,000
=========================================
Number of Years of 10 $30,000 $32,500
Service with the -----------------------------------------
AIM Funds 9 $27,000 $29,250
-----------------------------------------
8 $24,000 $26,000
-----------------------------------------
7 $21,000 $22,750
-----------------------------------------
6 $18,000 $19,500
-----------------------------------------
5 $15,000 $16,250
=========================================
</TABLE>
Deferred Compensation Agreements
Messrs. Daly, Frischling, Kroeger, Robinson and Sklar (for purposes of
this paragraph only, the "deferring directors") have each executed a Deferred
Compensation Agreement (collectively, the "Agreements"). Pursuant to the
Agreements, the deferring directors may elect to defer receipt of up to 100% of
their compensation payable by the Fund, and such amounts are placed into a
deferral account. Currently, the deferring directors may select various AIM
Funds in which all or part of his deferral account shall be deemed to be
invested. Distributions from the deferring directors' deferral accounts will
be paid in cash, in generally equal quarterly installments over a period of
five years beginning on the date the deferring director's retirement benefits
commence under the Plan. The Fund's Board of Trustees, in its sole discretion,
may accelerate or extend the distribution of such deferral accounts after the
deferring director's termination of service as a director of the Fund. If a
deferring director dies prior to the distribution of amounts in his deferral
account, the balance of the deferral account will be distributed to his
designated beneficiary in a single lump sum payment as soon as practicable
after such deferring director's death. The Agreements are not funded and, with
respect to the payments of amounts held in the deferral accounts, the deferring
directors have the status of unsecured creditors of the Fund and of each other
AIM Fund from which they are deferring compensation.
The Portfolio paid legal fees of $9,818 for the year ended August 31,
1995 for services rendered by Reid & Priest as counsel to the Board of
Trustees. In September 1994, Kramer, Levin, Naftalis, Nessen Kamin & Frankel
was appointed as counsel to the Board of Trustees and the Portfolio paid legal
fees of $8,687 for services rendered by that firm as counsel to the Board of
Trustees. A trustee of the Fund was
8
<PAGE> 31
a partner of Reid & Priest until September 1994, when he became a partner of
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel.
INVESTMENT ADVISOR
A I M Advisors, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173, acts as the investment advisor of the Portfolio pursuant to a
Master Investment Advisory Agreement dated as of October 18, 1993 (the
"Agreement"). AIM was organized in 1976, and together with its affiliates
manages or advises 37 investment company portfolios. As of October 31, 1995,
the total assets of the investment company portfolios managed or advised by AIM
and its affiliates were approximately $39.3 billion.
AIM and the Fund have adopted a Code of Ethics which requires
investment personnel (a) to pre-clear all personal securities transactions, (b)
to file reports regarding such transactions, and (c) to refrain from personally
engaging in (i) short-term trading of a security, (ii) transactions involving a
security within seven days of an AIM Fund transaction involving the same
security and (iii) transactions involving securities being considered for
investment by an AIM Fund. The Code also prohibits investment personnel from
purchasing securities in an initial public offering. Personal trading reports
are reviewed periodically by AIM, and the Board of Trustees reviews annually
such reports (including information on any substantial violations of the Code).
Violations of the Code may result in censure, monetary penalties, suspension or
termination of employment.
Pursuant to the terms of the Agreement, AIM manages the investment of
the assets of the Portfolio. AIM obtains and evaluates economic, statistical
and financial information to formulate and implement investment policies for
the Portfolio. Any investment program undertaken by AIM will at all times be
subject to the policies and control of the Fund's Board of Trustees. AIM shall
not be liable to the Fund or to its shareholders for any act or omission by AIM
or for any loss sustained by the Fund or its shareholders except in the case of
willful misfeasance, bad faith, gross negligence or reckless disregard of duty.
As compensation for its services with respect to the Portfolio, AIM
receives a monthly fee which is calculated by applying the following annual
rates to the average daily net assets of the Portfolio:
<TABLE>
<CAPTION>
Net Assets Rate
---------- ----
<S> <C>
First $300 million 0.15%
Over $300 million to $1.5 billion 0.06%
Over $1.5 billion 0.05%
</TABLE>
The 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.
The Agreement provides, that, upon the request of the Board of
Trustees, AIM may perform 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."
Pursuant to an investment advisory agreement between the Fund and AIM
previously in effect (the "Prior Advisory Agreement"), which provided for the
same level of compensation to AIM as the Agreement and the Advisory Agreement
currently in effect, AIM received fees from the Fund for the fiscal years ended
9
<PAGE> 32
August 31, 1995, 1994 and 1993, with respect to the Portfolio in the amounts of
$1,925,198, $2,337,627, and $2,211,262 respectively.
The Agreement was approved for its initial term by the Board of
Trustees on July 19, 1993. The Agreement will continue in effect until June
30, 1996, and from year to year thereafter provided that it 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. 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 a wholly-owned subsidiary of
AIM. FMC acts as distributor of the Shares.
ADMINISTRATIVE SERVICES
AIM also provides the Portfolio with administrative services pursuant
to a Master Administrative Services Agreement dated as of October 18, 1993
between AIM and the Fund (the "Administrative Services Agreement").
The Administrative Services Agreement was initially approved by the
Board of Trustees on July 19, 1993. Under the Administrative Services
Agreement, AIM has agreed to perform or arrange for the performance of certain
accounting, and other administrative services for the Portfolio. As full
compensation for the performance of such services, AIM is reimbursed for any
personnel and other costs (including 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.
Under the terms of the Prior Advisory Agreement, which provided that
AIM would be reimbursed for its costs in providing certain accounting services.
AIM was reimbursed for the fiscal year ended August 31, 1993, in the amount of
$82,419, for performing additional services for the Portfolio.
Under the Administrative Services Agreement, AIM was reimbursed for
the fiscal years ended August 31, 1995 and 1994, $135,387 and $97,055,
respectively, for fund accounting services.
Under the terms of a Transfer Agency and Service Agreement, dated July
1, 1995, between the Fund and AIFS, a registered transfer agent and
wholly-owned subsidiary of AIM, as well as under previous agreements, AIFS
received $114,179 and $13,752, for the fiscal years ended August 31, 1995
and 1994, respectively, for the provision of certain shareholder serivces for
the Fund.
EXPENSES
In addition to fees paid to AIM pursuant to the Agreement and the
expenses reimbursed to AIM under the Administrative Services Agreement, the
Fund also pays or causes to be paid all other expenses of the Fund, including,
without limitation: the charges and expenses of any registrar, any custodian or
depository appointed by the Fund for the safekeeping of its cash, portfolio
securities and other property,
10
<PAGE> 33
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 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. Expenses of the Fund which are not directly
attributable to a specific class of shares but are directly attributable to a
specific portfolio are prorated among all classes of such Portfolio. Expenses
of the Fund which are directly attributable to a specific class of shares are
charged against the income available for distribution as dividends to the
holders of such shares.
BANKING REGULATIONS
The Glass-Steagall Act and other applicable laws, 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.
11
<PAGE> 34
TRANSFER AGENT AND CUSTODIAN
The Bank of New York acts as custodian for the portfolio securities
and cash of the Portfolio. The Bank of New York receives such compensation from
the Fund for its services in such capacity as is agreed to from time to time by
The Bank of New York and the Fund. The address of The Bank of New York is 110
Washington Street, 8th Floor, New York, New York 10286.
A I M Institutional Fund Services, Inc., 11 Greenway Plaza, Suite
1919, Houston, TX 77046-1173, acts as transfer agent for the shares of the
Class and receives an annual fee from the Fund for its services in such
capacity in the amount of .007% of average daily net assets of the Fund,
payable monthly. Such compensation may be changed from time to time as is
agreed to by A I M Institutional Fund Services, Inc. and the Fund.
REPORTS
The Fund furnishes shareholders with semi-annual reports containing
information about the Fund and its operations, including a schedule of
investments held in the Portfolio and its financial statements. The annual
financial statements are audited by the Fund's independent auditors. The 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.
PRINCIPAL HOLDERS OF SECURITIES
TREASURY PORTFOLIO
To the best of the knowledge of the Fund, the names and addresses of
the holders of 5% or more of the outstanding shares of any class of the
Treasury Portfolio as of October 25, 1995 and the percentage of such shares
owned by such shareholders as of such date are as follows:
INSTITUTIONAL CLASS
- -------------------
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY(a)
--------------- -------------
<S> <C>
NationsBank Texas 14.27%
P.O. Box 831000
Dallas, TX 75283-1000
Wachovia Bank and Trust 12.50%
P.O. Box 3075
Winston-Salem, NC 27150
Trust Company Bank 11.96%
P.O. Box 105504
Atlanta, GA 30348
</TABLE>
- -------------------------
(a) The Fund has no knowledge as to whether all or any portion of
the shares owned of record only are also owned beneficially.
12
<PAGE> 35
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY(a)
--------------- -----------
<S> <C>
Victoria Bank & Trust 7.84%
One O'Connor Plaza 6th Fl.
Victoria, TX 77902
Texas Commerce Bank 6.47%
601 Travis
Houston, TX 77002
U.S. Bank of Washington 5.62%
P.O. Box 3168
Portland, OR 97208
FRNCO 5.04%
P.O. Box 939
Rogers, AR 72757-0939
</TABLE>
PERSONAL INVESTMENT CLASS
- -------------------------
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY(a)
--------------- -----------
<S> <C>
Frost National Bank 49.42%(b)
P.O. Box 2358
San Antonio, TX 78299
Republic National Bank 27.58%(b)
1 Hanson Pl., Lower Level
Brooklyn, NY 11243
The Bank of New York 21.30%
440 Mamaroneck Ave.
Harrison, NY 10528
</TABLE>
- ---------------
(a) The Fund has no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
(b) A shareholder who holds more than 25% of the outstanding shares of a
class may be presumed to be in "control" of such class of shares, as
defined in the 1940 Act.
13
<PAGE> 36
PRIVATE INVESTMENT CLASS
- ------------------------
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY(a)
--------------- -----------
<S> <C>
Liberty Bank and Trust Co. 41.02%(b)
of Oklahoma, N.A.
P.O. Box 25848
Oklahoma City, OK 73125
First Trust/VAR & Co. 29.92%(b)
180 E. 5th Street
St. Paul, MN 55101
Huntington Capital Corp 14.82%
41 S. High St.
Columbus, OH 43287
Charter National Bank 6.39%
P.O. Box 1494
Houston, TX 77251-1494
United Counties Trust Co. 5.20%
30 Maple St.
Summit, NJ 07901
</TABLE>
CASH MANAGEMENT CLASS
- ---------------------
<TABLE>
<CAPTION>
PERCENT PERCENT
NAME AND ADDRESS OWNED OWNED OF
OF RECORD OWNER BENEFICIALLY ONLY RECORD ONLY
--------------- ----------------- -----------
<S> <C> <C>
City of Riverside 21.65% -0-
P.O. Box 12005
Riverside, CA 92502-2205
LA Export Terminal -0- 11.72%(a)
P.O. Box 1769
San Pedro, CA 90733
State Street Bank and Trust -0- 10.87%(a)
61 Broadway 15th Fl.
New York, NY 10006
</TABLE>
- ----------------------
(a) The Fund has no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
(b) A shareholder who holds more than 25% of the outstanding shares of a
class may be presumed to be in "control" of such class of shares, as
defined in the 1940 Act.
14
<PAGE> 37
<TABLE>
<CAPTION>
PERCENT PERCENT
NAME AND ADDRESS OWNED OWNED OF
OF RECORD OWNER BENEFICIALLY ONLY RECORD ONLY
--------------- ----------------- -----------
<S> <C> <C>
Montgomery County 6.76% -0-
101 Monroe Street 15th Fl.
Rockville, MD 20850
City of West Sacramento 6.60% -0-
2101 Stone Blvd.
W. Sacramento, CA 95691
City of Ontario 5.26% -0-
303 East "B" St.
Ontario, CA 91764
</TABLE>
RESOURCE CLASS
- --------------
AIM provided the initial capitalization of the Resource Class of the
Treasury Portfolio and, accordingly, as of the date of this Statement of
Additional Information, owned all the outstanding shares of beneficial interest
of the Resource Class of the Treasury Portfolio. Although the Resource Class
of the Treasury Portfolio expects that the sale of its shares to the public
pursuant to the Prospectus will promptly reduce the percentage of such shares
owned by AIM to less than 1% of the total shares outstanding, as long as AIM
owns over 25% of the shares of the Resource Class of the Treasury Portfolio
that are outstanding, it may be presumed to be in "control" of the Resource
Class of the Treasury Portfolio, as defined in the 1940 Act.
TREASURY TAXADVANTAGE PORTFOLIO
To the best of the knowledge of the Fund, the names and addresses of
the holders of 5% or more of the outstanding shares of any class of the
Treasury TaxAdvantage Portfolio as of October 25, 1995, and the percentage of
such shares owned by such shareholders as of such date are as follows:
INSTITUTIONAL CLASS
- -------------------
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY(a)
--------------- -----------
<S> <C>
FirsTier Bank Omaha 28.6%(b)
1700 Farnam Street
Omaha, NE 68102
</TABLE>
- -------------------------
(a) The Fund has no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
(b) A shareholder who holds more than 25% of the outstanding shares of a
class may be presumed to be in "control" of such class of shares, as
defined in the 1940 Act.
15
<PAGE> 38
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY(a)
--------------- -----------
<S> <C>
Muchmore & Co. 13.7%
750 Walnut Street
Cranford, NJ 07016-1205
Key Trust Company 10.1%
4900 Tiedeman
Cleveland, OH 44101-5971
Boatmen's Trust Company 8.7%
P.O. Box 14737
St. Louis, MO 63178
Wachovia Bank and Trust Co NA 7.6%
P.O. Box 3075
Winston-Salem, NC 27150
Liberty Bank & Trust Company 7.5%
of Tulsa, N.A.
P.O. Box 25848
Oklahoma City, OK 73125
</TABLE>
PRIVATE INVESTMENT CLASS
- ------------------------
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY(a)
--------------- -----------
<S> <C>
Huntington Capital Corp 100%(b)
41 S. High St.
Columbus, OH 43287
</TABLE>
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.
To the best of the knowledge of the Fund, as of October 25, 1995, the
trustees and officers of the fund beneficially owned less than 1% of each class
of the Fund's outstanding shares.
- ------------------
(a) The Fund has no knowledge as to whether all or any portion of the
shares owned of record only are also owned beneficially.
(b) A shareholder who holds more than 25% of the outstanding shares of a
class may be presumed to be in "control" of such class of shares, as
defined in the 1940 Act.
16
<PAGE> 39
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, which require
the Fund to adhere to certain conditions. 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 sales 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 pursuant
to Rule 12b-1 adopted by the Fund's Board of Trustees. FMC has not undertaken
to sell any specified number of shares of the Class.
On July 19, 1993, the Board of Trustees (including the affirmative
vote of all the trustees who are not parties to the Distribution Agreement or
"interested persons" of any such party) initially approved the Distribution
Agreement for its initial term. The Distribution Agreement will remain in
effect until June 30, 1996 and it will continue in effect from year to year
thereafter only if such continuation is specifically approved at least annually
by the Fund's Board of Trustees and the affirmative vote of the trustees who
are not parties to the Distribution Agreement or "interested persons" of any
such party by votes cast in person at a meeting called for such purpose. A
prior distribution agreement between the Fund and FMC, with terms substantially
17
<PAGE> 40
the same as those of the Distribution Agreement was in effect through October
17, 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 Portfolio. These services may include
among other things: (i) answering customer inquiries regarding the shares 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 of customer cash account
balances in shares of the Class; (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, 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.
For the fiscal year ended August 31, 1995, FMC received compensation
pursuant to the Plan in the amount of $448,840 or an amount equal to 0.50%, of
the average daily net assets of the Class. Of such amount, $365,612 (or an
amount equal to 0.41% of the average daily net assets of the Class) was paid to
dealers and financial institutions and $83,228 (or an amount equal to 0.09% of
the average daily net assets of the Class) was retained by FMC.
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 Class may be obtained by calling the Fund at (800)
877-4744. The current yield quoted will be the net average annualized yield for
an identified period. 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 shares, and dividends declared on shares
purchased with dividends accrued and paid, if any, but would not include
realized gains and losses or unrealized appreciation or depreciation) will be
multiplied by 365 and then divided by the number of days in the period, with
the resulting figure carried to the nearest hundredth of one percent. The Fund
may also furnish a quotation of effective yield that assumes the reinvestment
of dividends for a 365 day year and a return for the entire year equal to the
average annualized yield for the period, which will be computed by compounding
the unannualized current yield for the period by adding 1 to the unannualized
current yield, raising the sum to a power equal to 365 divided by the number of
days in the period, and then subtracting 1 from the result.
For the seven-day period ended August 31, 1995, the current yield and
the effective yield of the Class (which assumes the reinvestment of dividends
for a 365-day year and a return for the entire year equal to the annualized
current yield for the period) were 5.21% and 5.35%, respectively, excluding
capital gains distributions. For the seven-day period ended August 31, 1995,
the current distribution rate and the effective distribution rate of the Class,
including capital gains distributions (which assumes the reinvestment of
dividends for a 365-day year and a return for the entire year equal to the
annualized current distribution rate
18
<PAGE> 41
for the period) were 5.24% and 5.38%, respectively. These performance numbers
are quoted for illustration purposes only. The performance numbers for any
other seven-day period may be substantially different from those quoted above.
The Fund may compare the performance of the Class or the performance
of securities in which it may invest to:
o IBC/Donoghue's Money Fund Averages, which are average
yields of various types of money market funds that include the effect
of compounding distributions;
o other mutual funds, especially those with similar
investment objectives. These comparisons may be based on data
published by IBC/Donoghue's Money Fund Report of Holliston,
Massachusetts or by Lipper Analytical Services, Inc., a widely
recognized independent service located in Summit, New Jersey, which
monitors the performance of mutual funds;
o yields on other money market securities or averages
of other money market securities as reported by the Federal Reserve
Bulletin, by TeleRate, a financial information network, or by
Bloomberg, a financial information firm; and
o other fixed-income investments such as Certificates
of Deposit ("CDs").
The principal value and interest rate of CDs and money market
securities are fixed at the time of purchase whereas the Class'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
Rule 2a-7 under the 1940 Act, which governs the operations of money
market funds, including the Portfolio, 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
19
<PAGE> 42
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 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(2) 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).
INVESTMENT RESTRICTIONS
As a matter of fundamental policy which may not be changed without a
majority vote of shareholders of the Portfolio (as that term is defined under
"General Information about the Fund -- The Fund and its Shares"), the Portfolio
may not:
- -------------------------------
(1) "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 at 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.
("Fitch") 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.
20
<PAGE> 43
(1) concentrate more than 25% of the value of its total assets in the
securities of one or more issuers conducting their principal business
activities in the same industry, provided that there is no limitation with
respect to investments in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and bank instruments, such as
CDs, bankers' acceptances, time deposits and bank repurchase agreements;
(2) purchase securities of any one issuer (other than obligations of
the U.S. Government, its agencies and instrumentalities) if, immediately after
such purchase, more than 5% of the value of the Portfolio's total assets would
be invested in such issuer, except as permitted by Rule 2a-7 under the 1940
Act, as amended from time to time;
(3) 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;
(4) 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;
(5) 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;
(6) 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;
(7) 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;
(8) purchase or sell commodities or commodity futures contracts,
purchase securities on margin, make short sales or invest in puts or calls;
(9) invest in any obligation not payable as to principal and interest
in United States currency; or
(10) 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.
21
<PAGE> 44
The Fund may, from time to time in order to qualify shares of the
Portfolio for sale in a particular state, agree to certain investment
restrictions in addition to or more stringent than those set forth above. Such
restrictions are not fundamental and may be changed without the approval of
shareholders. For example, the Portfolio will not invest in oil, gas or other
mineral leases, rights, royalty contracts or exploration or development
programs (Texas). This restriction, however, does not prevent the Portfolio
from purchasing and selling securities of companies engaged in the exploration,
development, production, refining, transporting and marketing of oil, gas or
minerals. In addition, the Portfolio will not purchase or retain securities of
any issuer if the officers or trustees of the Fund or the officers or directors
of AIM owning beneficially more than one-half of one percent of the securities
of an issuer together own beneficially more than five percent of the securities
of that issuer. The Portfolio also will not invest in illiquid securities or
enter into reverse repurchase agreements. The Fund will notify the appropriate
shareholder(s) if, upon the advice of AIM, the Portfolio intends to begin
investing in illiquid securities or entering into reverse repurchase agreements.
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 may also purchase securities from underwriters at prices
which include a commission paid by the issuer to the underwriter.
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 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. The amortized cost method of valuing portfolio securities requires
that the Portfolio maintain an average weighted portfolio maturity of ninety
days or less. Thus, there is likely to be relatively high portfolio turnover,
but since brokerage commissions are not normally paid on money market
instruments, the high rate of portfolio turnover is not expected to have a
material effect on the net income or expenses of the Portfolio.
AIM's primary consideration in effecting a security transaction is to
obtain the best net price and the most favorable execution of the order. To the
extent that the execution and prices offered by more than one dealer are
comparable, AIM may, in its discretion, effect transactions with dealers that
furnish statistical, research or other information or services which are deemed
by AIM to be beneficial to the Portfolio's investment program. Certain research
services furnished by dealers may be useful to AIM with respect to clients
other than the Portfolio. Similarly, any research services received by AIM
through placement of portfolio transactions of other clients may be of value to
AIM in fulfilling its obligations to the Portfolio. AIM is of the opinion that
the material received is beneficial in supplementing AIM's research and
analysis; and, therefore, it may benefit the Portfolio by improving the quality
of AIM's investment advice. The advisory fees paid by the Portfolio are not
reduced because AIM receives such services.
From time to time, the Fund may sell a security, or purchase a
security from an AIM Fund or another investment account advised by AIM or A I M
Capital Management, Inc. ("AIM Capital"), when such transactions comply with
applicable rules and regulations and are deemed consistent with the investment
objective(s) and policies of the investment accounts advised by AIM or AIM
Capital. Procedures pursuant to Rule 17a-7 under the 1940 Act regarding
transactions between investment accounts advised by AIM or
22
<PAGE> 45
AIM Capital have been adopted by Boards of Directors/Trustees of the various AIM
Funds, including the Fund. Although such transactions may result in custodian,
tax or other related expenses, no brokerage commissions or other direct
transaction costs are generated by transactions among the investment accounts
advised by AIM or AIM Capital.
Provisions of the 1940 Act and rules and regulations thereunder have
also been construed to prohibit the Fund from purchasing securities or
instruments from, or selling securities or instruments to, any holder of 5% or
more of the voting securities of any investment company managed or advised by
AIM. The Fund has obtained an order of exemption from the SEC which permits
the Fund to engage in certain transactions with such 5% holder, if the Fund
complies with conditions and procedures designed to ensure that such
transactions are executed at fair market value and present no conflicts of
interest.
AIM and its affiliates manage several other investment accounts, some
of which may have objectives similar to the Portfolio's. It is possible that
at times identical securities will be acceptable for one or more of such
investment accounts. However, the position of each account in the securities of
the same issue may vary and the length of time that each account may choose to
hold its investment in the securities of the same issue may likewise vary. The
timing and amount of purchase by each account will also be determined by its
cash position. If the purchase or sale of securities consistent with the
investment policies of the Portfolio and one or more of these accounts is
considered at or about the same time, transactions in such securities will be
allocated in good faith among such accounts, in accordance with applicable laws
and regulations, in order to obtain the best net price and most favorable
execution. The allocation and combination of simultaneous securities purchases
on behalf of the Portfolio will be made in the same way that such purchases are
allocated among or combined with those of other AIM accounts. Simultaneous
transactions could adversely affect the ability of the Portfolio to obtain or
dispose of the full amount of a security which it seeks to purchase or sell.
Under the 1940 Act, persons affiliated with the Fund are prohibited
from dealing with the Portfolios as principal in any purchase or sale of
securities unless an exemptive order allowing such transactions is obtained
from the SEC. Furthermore, the 1940 Act prohibits the Fund from purchasing a
security being publicly underwritten by a syndicate of which persons affiliated
with the Fund are a member except in accordance with certain conditions. These
conditions may restrict the ability of the Portfolio to purchase Money Market
obligations being publicly underwritten by such a syndicate, and the Portfolio
may be required to wait until the syndicate has been terminated before buying
such securities. At such time, the market price of the securities may be
higher or lower than the original offering price. A person affiliated with the
Fund may, from time to time, serve as placement agent or financial advisor to
an issuer of Money Market obligations and be paid a fee by such issuer. The
Portfolio may purchase such Money Market obligations directly from the issuer,
provided that the purchase made in accordance with procedures adopted by the
Fund's Board of Trustees and any such purchases are reviewed at least quarterly
by the Fund's Board of Trustees and a determination is made that all such
purchases were effected in compliance with such procedures, including a
determination that the placement fee or other remuneration paid by the issuer
to the person affiliated with the Fund was fair and reasonable in relation to
the fees charged by others performing similar services. During the fiscal year
ended August 31, 1995, no securities or instruments were purchased by the
Portfolio from issuers who paid placement fees or other compensation to a
broker affiliated with the Portfolio.
TAX MATTERS
The following is only a summary of certain additional tax
considerations generally affecting the Portfolio and its shareholders that are
not described in the Prospectus. No attempt is made to present a detailed
explanation of the tax treatment of the Portfolio or its shareholders, and the
discussion here and in the Prospectus is not intended as a substitute for
careful planning.
23
<PAGE> 46
QUALIFICATION AS A REGULATED INVESTMENT COMPANY
The Portfolio has elected to be taxed as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"). As a regulated investment company, the Portfolio is not subject
to federal income tax on the portion of its net investment income (i.e.,
taxable interest, dividends and other taxable ordinary income, net of expenses)
and capital gain net income (i.e., the excess of capital gains over capital
losses) that it distributes to shareholders, provided that it distributes at
least 90% of its investment company taxable income (i.e., net investment income
and the excess of net short-term capital gain over net long-term capital loss)
for the taxable year (the "Distribution Requirement"), and satisfies certain
other requirements of the Code that are described below. Distributions by the
Portfolio made during the taxable year or, under specified circumstances, within
twelve months after the close of the taxable year, will be considered
distributions of income and gains for the taxable year and can therefore satisfy
the Distribution Requirement.
In addition to satisfying the Distribution Requirement, a regulated
investment company must (1) derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, gains
from the sale or other disposition of stock or securities or foreign currencies
(to the extent such currency gains are directly related to the regulated
investment company's principal business of investing in stock or securities)
and other income (including but not limited to gains from options, futures or
forward contracts) derived with respect to its business of investing in such
stock, securities or currencies (the "Income Requirement"); and (2) derive less
than 30% of its gross income (exclusive of certain gains on designated hedging
transactions that are offset by realized or unrealized losses on offsetting
positions) from the sale or other disposition of stock, securities or foreign
currencies (or of options, futures or forward contracts thereon) held for less
than three months (the "Short-Short Gain Test"). However, foreign currency
gains, including those derived from options, futures and forward contracts,
will not be characterized as Short-Short Gain if they are directly related to
the regulated investment company's principal business of investing in stock or
securities (or in options or futures thereon). Because of the Short-Short Gain
Test, 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.
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.
24
<PAGE> 47
EXCISE TAX ON REGULATED INVESTMENT COMPANIES
A 4% non-deductible excise tax is imposed on a regulated investment
company that fails to distribute in each calendar year an amount equal to 98%
of ordinary taxable income for the calendar year and 98% of capital gain net
income for the one-year period ended on October 31 of such calendar year (or,
at the election of a regulated investment company having a taxable year ending
November 30 or December 31, for its taxable year (a "taxable year election")).
The balance of such income must be distributed during the next calendar year.
For the foregoing purposes, a regulated investment company is treated as having
distributed any amount on which it is subject to income tax for any taxable year
ending in such calendar year.
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.
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 Portfolio. 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.
Ordinarily, shareholders are required to take distributions by the
Portfolio into account in the year in which the distributions are made.
However, dividends 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.
25
<PAGE> 48
FOREIGN SHAREHOLDERS
Taxation of a shareholder who, as to the United States, is a
nonresident alien individual, foreign trust or estate, foreign corporation, or
foreign partnership ("foreign shareholder"), depends on whether the income from
the Portfolio is "effectively connected" with a U.S. trade or business carried
on by such shareholder.
If the income from the Portfolio is not effectively connected with a
U.S. trade or business carried on by a foreign shareholder, dividends and
distributions (other than capital gains dividends) will be subject to U.S.
withholding tax at the rate of 30% (or lower treaty rate) upon the gross amount
of the dividend or distribution. Such a foreign shareholder would generally be
exempt from U.S. federal income tax on gains realized on the sale of shares of
the Portfolio, capital gain dividends and amounts retained by the 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 November 1, 1995. Future legislative or administrative changes or
court decisions may significantly change the conclusions expressed herein, and
any such changes or decisions may have a retroactive effect with respect to the
transactions contemplated herein.
Rules of state and local taxation of ordinary income dividends and
capital gain dividends from regulated investment companies often differ from
the rules for U.S. federal income taxation described above. Shareholders are
urged to consult their tax advisers as to the consequences of these and other
state and local tax rules affecting investment in the Fund.
26
<PAGE> 49
FINANCIAL STATEMENTS
FS
<PAGE> 50
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders
Short-Term Investments Trust:
We have audited the accompanying statement of assets and liabilities of the
Treasury Portfolio (a series portfolio of Short-Term Investments Trust),
including the schedule of investments, as of August 31, 1995, and the related
statement of operations for the year then ended, the statement of changes in
net assets for each of the years in the two-year period then ended, and the
financial highlights for each of the years in the ten-year period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
August 31, 1995 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Treasury Portfolio as of August 31, 1995, the results of its operations for the
year then ended, the changes in its net assets for each of the years in the
two-year period then ended, and the financial highlights for each of the years
in the ten-year period then ended, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
October 6, 1995
FS-1
<PAGE> 51
SCHEDULE OF INVESTMENTS
August 31, 1995
<TABLE>
<CAPTION>
MATURITY PAR (000) VALUE
<S> <C> <C> <C>
U.S. TREASURY SECURITIES - 26.52%
U.S. TREASURY BILLS(a) - 22.83%
5.780% 10/05/95 $ 25,000 $ 24,863,528
- ----------------------------------------------------------------------------
5.750% 10/26/95 50,000 49,560,764
- ----------------------------------------------------------------------------
5.775% 10/26/95 30,000 29,735,313
- ----------------------------------------------------------------------------
5.580% 11/02/95 25,000 24,759,750
- ----------------------------------------------------------------------------
5.620% 11/09/95 50,000 49,461,417
- ----------------------------------------------------------------------------
5.590% 11/16/95 30,000 29,645,966
- ----------------------------------------------------------------------------
5.655% 11/16/95 50,000 49,403,084
- ----------------------------------------------------------------------------
5.220% 11/30/95 12,500 12,336,875
- ----------------------------------------------------------------------------
5.590% 11/30/95 25,000 24,650,625
- ----------------------------------------------------------------------------
5.480% 12/07/95 25,000 24,630,861
- ----------------------------------------------------------------------------
5.335% 12/21/95 25,000 24,588,760
- ----------------------------------------------------------------------------
5.410% 12/21/95 50,000 49,165,958
- ----------------------------------------------------------------------------
5.330% 12/28/95 50,000 49,126,472
- ----------------------------------------------------------------------------
5.340% 12/28/95 25,000 24,562,416
- ----------------------------------------------------------------------------
5.280% 01/04/96 25,000 24,541,667
- ----------------------------------------------------------------------------
5.400% 01/04/96 20,000 19,625,000
- ----------------------------------------------------------------------------
5.410% 01/04/96 25,000 24,530,382
- ----------------------------------------------------------------------------
5.300% 01/11/96 34,200 33,535,380
- ----------------------------------------------------------------------------
5.380% 01/18/96 25,000 24,480,681
- ----------------------------------------------------------------------------
5.400% 01/25/96 25,000 24,452,500
- ----------------------------------------------------------------------------
5.415% 02/01/96 48,000 46,895,340
- ----------------------------------------------------------------------------
5.395% 02/08/96 25,000 24,400,556
- ----------------------------------------------------------------------------
5.460% 02/08/96 25,000 24,393,333
- ----------------------------------------------------------------------------
5.540% 08/22/96 20,000 18,904,224
- ----------------------------------------------------------------------------
5.550% 08/22/96 12,600 11,908,428
- ----------------------------------------------------------------------------
744,159,280
- ----------------------------------------------------------------------------
U.S. TREASURY NOTES - 3.69%
8.625% 10/15/95 25,000 25,076,660
- ----------------------------------------------------------------------------
4.250% 11/30/95 50,000 49,768,670
- ----------------------------------------------------------------------------
7.750% 03/31/96 45,000 45,488,910
- ----------------------------------------------------------------------------
120,334,240
- ----------------------------------------------------------------------------
Total U.S. Treasury Securities 864,493,520
- ----------------------------------------------------------------------------
Total Investments (excluding Repurchase
Agreements) 864,493,520
- ----------------------------------------------------------------------------
</TABLE>
FS-2
<PAGE> 52
<TABLE>
<CAPTION>
MATURITY PAR (000) VALUE
<S> <C> <C> <C>
REPURCHASE AGREEMENTS(b) - 73.86%
BT Securities Corp., 5.78%(c) -- $130,000 $ 130,000,000
- -----------------------------------------------------------------------------
Barclays de Zoete Wedd Government
Securities, Inc., 5.84%(d) 09/01/95 140,000 140,000,000
- -----------------------------------------------------------------------------
Bear, Stearns & Co. Inc., 5.84%(e) -- 140,000 140,000,000
- -----------------------------------------------------------------------------
Daiwa Securities America Inc., 5.84%(f) 09/01/95 117,902 117,902,411
- -----------------------------------------------------------------------------
Deutsche Bank Government Securities,
Inc., 5.85%(g) -- 160,000 160,000,000
5.85%(h) -- 400,000 400,000,000
- -----------------------------------------------------------------------------
First Boston Corp. (The), 5.80%(i) 09/01/95 140,000 140,000,000
- -----------------------------------------------------------------------------
Fuji Securities Inc., 5.85%(j) -- 100,000 100,000,000
5.87%(k) -- 110,000 110,000,000
- -----------------------------------------------------------------------------
Goldman, Sachs & Co., 5.80%(l) 09/01/95 140,000 140,000,000
- -----------------------------------------------------------------------------
Lehman Government Securities, Inc.,
5.82%(m) -- 140,000 140,000,000
- -----------------------------------------------------------------------------
Nikko Securities Co., Ltd., 5.85%(n) -- 130,000 130,000,000
- -----------------------------------------------------------------------------
Nomura Securities International, Inc.,
5.83%(o) 09/01/95 140,000 140,000,000
- -----------------------------------------------------------------------------
SBC Government Securities, Inc.,
5.83%(p) -- 140,000 140,000,000
- -----------------------------------------------------------------------------
State Street Bank & Trust Co., 5.81%(q) 09/01/95 140,000 140,000,000
- -----------------------------------------------------------------------------
UBS Securities Inc., 5.85%(r) -- 140,000 140,000,000
- -----------------------------------------------------------------------------
Total Repurchase Agreements 2,407,902,411
- -----------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100.38% 3,272,395,931(s)
- -----------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES --
(0.38%) (12,427,259)
- -----------------------------------------------------------------------------
NET ASSETS -- 100.00% $3,259,968,672
- -----------------------------------------------------------------------------
</TABLE>
(a) U.S. Treasury bills are traded on a discount basis. In such cases the
interest rate shown represents the rate of discount paid or received at the
time of purchase by the Portfolio.
(b) Collateral on repurchase agreements is taken into possession by the Fund
upon entering into the repurchase agreement. The collateral is marked to
market daily to ensure its market value as being 102% of the sales price of
the repurchase agreement. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds managed by
the investment advisor.
(c) Open repurchase agreement entered into 02/27/95; however, either party may
terminate the agreement upon demand. Interest rates are redetermined daily.
Collateralized by $95,590,000 U.S. Treasury Notes, 10.375% to 12.75% due
11/15/09 to 11/15/10.
(d) Entered into 08/31/95 with a maturing value of $140,022,711. Collateralized
by $138,800,000 U.S. Treasury obligations, 4.25% to 8.875% due 10/15/95 to
08/15/25.
(e) Open repurchase agreement entered into 07/06/95; however, either party may
terminate the agreement upon demand. Interest rates are redetermined daily.
Collateralized by $264,550,000 U.S. Treasury STRIPS, due 05/15/97 to
02/15/09.
(f) Joint repurchase agreement entered into 08/31/95 with a maturing value of
$209,464,857. Collateralized by $204,224,000 U.S. Treasury obligations, 0%
to 10.75% due 11/30/95 to 05/15/16.
(g) Open repurchase agreement entered into 04/13/94; however, either party may
terminate the agreement upon demand. Interest rates are redetermined daily.
Collateralized by $151,682,000 U.S. Treasury obligations, 0% to 8.75% due
04/04/96 to 05/15/21.
(h) Open repurchase agreement entered into 12/28/94; however, either party may
terminate the agreement upon demand. Interest rates are redetermined daily.
Collateralized by $339,762,000 U.S. Treasury obligations, 5.375% to 11.25%
due 09/30/96 to 02/15/20.
FS-3
<PAGE> 53
(i) Entered into 08/31/95 with a maturing value of $140,022,556. Collateralized
by $145,970,000 U.S. Treasury Bills due 11/30/95 to 01/04/96.
(j) Open repurchase agreement entered into 01/11/95; however, either party may
terminate the agreement upon demand. Interest rates are redetermined daily.
Collateralized by $216,668,000 U.S. Treasury STRIPS, due 02/15/99 to
05/15/14.
(k) Open joint repurchase agreement entered into 06/20/95; however, either
party may terminate the agreement upon demand. Interest rates are
redetermined daily. Collateralized by $332,491,000 U.S. Treasury
obligations 0% to 9.25% due 05/15/97 to 02/15/16.
(l) Entered into 08/31/95 with a maturing value of $140,022,556. Collateralized
by $131,445,000 U.S. Treasury obligations, 3.875% to 12.00% due 10/31/95 to
11/15/18.
(m) Open repurchase agreement entered into 05/15/95; however, either party may
terminate the agreement upon demand. Interest rates are redetermined daily.
Collateralized by $594,791,000 U.S. Treasury STRIPS, due 05/15/98 to
05/15/21.
(n) Open repurchase agreement entered into 05/15/95; however, either party may
terminate the agreement upon demand. Interest rates are redetermined daily.
Collateralized by $132,685,000 U.S. Treasury Notes, 5.875% due 08/15/98.
(o) Entered into 08/31/95 with a maturing value of $140,022,672. Collateralized
by $130,344,000 U.S. Treasury obligations, 0% to 11.125% due 12/28/95 to
11/15/24.
(p) Open repurchase agreement entered into 08/16/95; however, either party may
terminate the agreement upon demand. Interest rates are redetermined daily.
Collateralized by $116,853,000 U.S. Treasury obligations, 0% to 11.875% due
03/07/96 to 08/15/23.
(q) Entered into 08/31/95 with a maturing value of $140,022,594. Collateralized
by $132,870,000 U.S. Treasury Notes, 7.125% to 7.75% due 09/30/99 to
11/30/99.
(r) Open joint repurchase agreement entered into 08/18/95; however, either
party may terminate the agreement upon demand. Collateralized by
$249,645,000 U.S. Treasury Bills, due 12/14/95 to 01/18/96.
(s) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
FS-4
<PAGE> 54
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase agreements, at value
(amortized cost) $ 864,493,520
- ------------------------------------------------------------------------
Repurchase agreements 2,407,902,411
- ------------------------------------------------------------------------
Interest receivable 3,526,829
- ------------------------------------------------------------------------
Investment for deferred compensation plan 27,164
- ------------------------------------------------------------------------
Other assets 170,052
- ------------------------------------------------------------------------
Total assets 3,276,119,976
- ------------------------------------------------------------------------
LIABILITIES:
Deferred compensation payable 27,164
- ------------------------------------------------------------------------
Dividends payable 15,637,389
- ------------------------------------------------------------------------
Accrued advisory fees 173,398
- ------------------------------------------------------------------------
Accrued distribution fees 150,161
- ------------------------------------------------------------------------
Accrued transfer agent fees 30,953
- ------------------------------------------------------------------------
Accrued trustees' fees 6,457
- ------------------------------------------------------------------------
Accrued administrative services fees 22,829
- ------------------------------------------------------------------------
Accrued operating expenses 102,953
- ------------------------------------------------------------------------
Total liabilities 16,151,304
- ------------------------------------------------------------------------
NET ASSETS $3,259,968,672
========================================================================
NET ASSETS:
Institutional Class $2,669,637,166
========================================================================
Private Investment Class $ 394,585,487
========================================================================
Personal Investment Class $ 114,527,171
========================================================================
Cash Management Class $ 81,218,848
========================================================================
SHARES OF BENEFICIAL INTEREST, $.01 PAR VALUE PER SHARE:
Institutional Class 2,669,507,426
========================================================================
Private Investment Class 394,566,270
========================================================================
Personal Investment Class 114,521,888
========================================================================
Cash Management Class 81,214,894
========================================================================
Net asset value, offering and redemption price per share $ 1.00
========================================================================
</TABLE>
See Notes to Financial Statements.
FS-5
<PAGE> 55
STATEMENT OF OPERATIONS
For the year ended August 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $169,306,110
- -----------------------------------------------------------------------------
EXPENSES:
Advisory fees 1,925,198
- -----------------------------------------------------------------------------
Custodian fees 315,447
- -----------------------------------------------------------------------------
Administrative services fees 208,753
- -----------------------------------------------------------------------------
Trustees' fees and expenses 33,135
- -----------------------------------------------------------------------------
Transfer agent fees 91,597
- -----------------------------------------------------------------------------
Professional fees 96,603
- -----------------------------------------------------------------------------
Distribution fees (Note 2) 1,751,898
- -----------------------------------------------------------------------------
Other 271,094
- -----------------------------------------------------------------------------
Total expenses 4,693,725
- -----------------------------------------------------------------------------
Less expenses assumed by advisor (47,000)
=============================================================================
Net expenses 4,646,725
=============================================================================
Net investment income 164,659,385
- -----------------------------------------------------------------------------
Net realized gain on sales of investments 67,230
- -----------------------------------------------------------------------------
Net increase in net assets resulting from operations $164,726,615
=============================================================================
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
For the years ended August 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 164,659,385 $ 129,450,854
- -----------------------------------------------------------------------------
Net realized gain on sales of investments 67,230 63,526
- -----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 164,726,615 129,514,380
- -----------------------------------------------------------------------------
Distributions to shareholders from net
investment income (164,659,385) (129,450,854)
- -----------------------------------------------------------------------------
Distributions to shareholders from net
realized gains on investments (63,547) --
- -----------------------------------------------------------------------------
Share transactions-net 232,658,749 (908,258,039)
- -----------------------------------------------------------------------------
Net increase (decrease) in net assets 232,662,432 (908,194,513)
- -----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 3,027,306,240 3,935,500,753
- -----------------------------------------------------------------------------
End of period $3,259,968,672 $3,027,306,240
=============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $3,259,810,478 $3,027,151,729
- -----------------------------------------------------------------------------
Undistributed net realized gain on sales of
investments 158,194 154,511
- -----------------------------------------------------------------------------
$3,259,968,672 $3,027,306,240
=============================================================================
</TABLE>
See Notes to Financial Statements.
FS-6
<PAGE> 56
NOTES TO FINANCIAL STATEMENTS
August 31, 1995
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
Short-Term Investments Trust (the "Fund") is registered under the Investment
Company Act of 1940, as amended, as an open-end series, diversified management
investment company. The Fund is organized as a Delaware business trust
consisting of two different portfolios, each of which offers separate series of
shares: the Treasury Portfolio and the Treasury TaxAdvantage Portfolio.
Information presented in these financial statements pertains only to the
Treasury Portfolio (the "Portfolio"), with assets, liabilities and operations
of each portfolio being accounted for separately. The Portfolio consists of
four different classes of shares: the Institutional Class, the Private
Investment Class, the Personal Investment Class, and the Cash Management Class.
The following is a summary of the significant accounting policies followed by
the Portfolio in the preparation of its financial statements.
A. Security Valuations - The Portfolio invests only in securities which have
maturities of 397 days or less. The securities are valued on the basis of
amortized cost which approximates market value. This method values a
security at its cost on the date of purchase and thereafter assumes a
constant amortization to maturity of any discount or premium.
B. Securities Transactions, Investment Income and Distributions - Securities
transactions are accounted for on a trade date basis. Realized gains or
losses are computed on the basis of specific identification of the
securities sold. Interest income, adjusted for amortization of premiums and
discounts on investments, is accrued daily. Dividends to shareholders are
declared daily and are paid on the first business day of the following
month.
C. Federal Income Taxes - The Portfolio intends to comply with the requirements
of the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
D. Expenses - Operating expenses directly attributable to a class of shares are
charged to that class' operations. Expenses which are applicable to more
than one class, e.g., advisory fees, are allocated among them.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master advisory agreement, AIM
receives a monthly fee with respect to the Portfolio calculated by applying a
monthly rate, based upon the following annual rates, to the average daily net
assets of the Portfolio:
<TABLE>
<CAPTION>
NET ASSETS RATE
- -----------------------------------------------------------------------
<S> <C>
First $300 million 0.15%
- -----------------------------------------------------------------------
Over $300 million to $1.5 billion 0.06%
- -----------------------------------------------------------------------
Over $1.5 billion 0.05%
- -----------------------------------------------------------------------
</TABLE>
AIM will, if necessary, reduce its fee for any fiscal year to the extent
required so that the amount of ordinary expenses of the Portfolio (excluding
interest, taxes, brokerage commissions and extraordinary expenses) paid or
incurred by the Portfolio for such fiscal year does not exceed the applicable
expense limitations imposed by the state securities regulations in any state in
which the Portfolio's shares are qualified for sale. AIM voluntarily reimbursed
expenses of $47,000 on the Treasury Portfolio Personal Investment Class during
the year ended August 31, 1995.
The Portfolio, pursuant to a master administrative services agreement with
AIM, has agreed to reimburse AIM for certain costs incurred in providing
accounting services to the Portfolio. During the year ended August 31, 1995,
the Portfolio reimbursed AIM $135,387 for such services. During the year ended
August 31, 1995, the Portfolio paid A I M Institutional Fund Services, Inc.
("AIFS") $114,179 for shareholder and transfer agency services. Effective July
1, 1995, AIFS became the exclusive transfer agent of the Portfolio.
Under the terms of a master distribution agreement between Fund Management
Company ("FMC") and the Fund, FMC acts as the exclusive distributor of the
Fund's shares. The Fund has adopted a master distribution plan (the "Plan")
pursuant to
FS-7
<PAGE> 57
Rule 12b-1 under the 1940 Act with respect to the Private Investment Class,
Personal Investment Class and the Cash Management Class of the Portfolio. The
Plan provides that the Treasury Portfolio's Private Investment Class, Personal
Investment Class and Cash Management Class may pay up to a 0.50%, 0.75% and
0.10%, respectively, maximum annual rate of the average daily net assets
attributable to such class. Of this amount, the Fund may pay an asset-based
sales charge to FMC and the Fund may pay a service fee of (a) 0.25% of the
average daily net assets of each of the Private Investment Class and the
Personal Investment Class and (b) 0.10% of the average daily net assets of the
Cash Management Class, to selected banks, broker-dealers and other financial
institutions who offer continuing personal shareholder services to their
customers who purchase and own shares of the Private Investment Class, the
Personal Investment Class or the Cash Management Class. Any amounts not paid as
a service fee under such Plan would constitute an asset-based sales charge.
During the year ended August 31, 1995, the Treasury Portfolio Private
Investment Class, the Treasury Portfolio Personal Investment Class and the
Treasury Portfolio Cash Management Class accrued for compensation to FMC
amounts of $1,244,628, $448,840 and $58,430, respectively, under the Plan.
Certain officers and trustees of the Trust are officers of AIM, FMC and AIFS.
The Portfolio paid legal fees of $9,818 for the year ended August 31, 1995 for
services rendered by Reid & Priest as counsel to the Board of Trustees. In
September 1994, Kramer, Levin, Naftalis, Nessen, Kamin & Frankel was appointed
as counsel to the Board of Trustees and the Portfolio paid legal fees of $8,687
for services rendered by that firm as counsel to the Board of Trustees. A
trustee of the Trust was a member of the firm of Reid & Priest until September
1994, when he became a member of Kramer, Levin, Naftalis, Nessen, Kamin &
Frankel.
NOTE 3-TRUSTEES' FEES
Trustees' fees represent remuneration paid or accrued to each trustee who is
not an "interested person" of AIM. The Fund invests trustees' fees, if so
elected by a trustee, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 4-SHARE INFORMATION
Changes in shares outstanding for the years ended August 31, 1995 and 1994 were
as follows:
<TABLE>
<CAPTION>
1995 1994
--------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
Sold:
Institutional Class 13,265,129,336 $ 13,265,129,336 26,026,026,543 $ 26,026,026,543
- ---------------------------------------------------------------------------------------------
Private Investment
Class 3,483,722,415 3,483,722,415 827,921,059 827,921,059
- ---------------------------------------------------------------------------------------------
Personal Investment
Class 628,065,796 628,065,796 343,375,963 343,375,963
- ---------------------------------------------------------------------------------------------
Cash Management Class 97,195,296 97,195,296 142,326,763 142,326,763
- ---------------------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Institutional Class 11,558,277 11,558,277 11,688,081 11,688,081
- ---------------------------------------------------------------------------------------------
Private Investment
Class 2,167,906 2,167,906 361,516 361,516
- ---------------------------------------------------------------------------------------------
Personal Investment
Class 2,719,512 2,719,512 1,153,701 1,153,701
- ---------------------------------------------------------------------------------------------
Cash Management Class 2,671,137 2,671,137 1,883,744 1,883,744
- ---------------------------------------------------------------------------------------------
Reacquired:
Institutional Class (13,059,443,790) (13,059,443,790) (27,238,038,910) (27,238,038,910)
- ---------------------------------------------------------------------------------------------
Private Investment
Class (3,504,019,234) (3,504,019,234) (619,863,560) (619,863,560)
- ---------------------------------------------------------------------------------------------
Personal Investment
Class (604,841,208) (604,841,208) (325,817,071) (325,817,071)
- ---------------------------------------------------------------------------------------------
Cash Management Class (92,266,694) (92,266,694) (79,275,868) (79,275,868)
- ---------------------------------------------------------------------------------------------
Net increase (decrease) 232,658,749 $ 232,658,749 (908,258,039) $ (908,258,039)
=============================================================================================
</TABLE>
FS-8
<PAGE> 58
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share outstanding of
the Treasury Portfolio Personal Investment Class during each of the years in
the four-year period ended August 31, 1995 and the period August 8, 1991 (date
operations commenced) through August 31, 1991.
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
-------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------- -------- ------- ------- ------- ------
Income from investment
operations:
Net investment income 0.05 0.03 0.03 0.04 0.003
- -------------------------- -------- ------- ------- ------- ------
Less distributions:
Dividends from net
investment income (0.05) (0.03) (0.03) (0.04) (0.003)
- -------------------------- -------- ------- ------- ------- ------
Net asset value, end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========================== ======== ======= ======= ======= ======
Total return 5.13% 3.02% 2.77% 4.07% 5.04%(a)
========================== ======== ======= ======= ======= ======
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $114,527 $88,582 $69,867 $23,853 $330
========================== ======== ======= ======= ======= ======
Ratio of expenses to
average net assets(b) 0.60%(c) 0.58% 0.53% 0.49% 0.81%(a)
========================== ======== ======= ======= ======= ======
Ratio of net investment
income to average net
assets(b) 5.03%(c) 2.99% 2.70% 3.55% 5.03%(a)
========================== ======== ======= ======= ======= ======
</TABLE>
(a) Annualized.
(b) Had there been no expense reimbursements, the ratios of expenses and net
investment income to average net assets would have been 0.65% and 4.98%,
respectively, for the year ended August 31, 1995, 0.66% and 2.91%,
respectively, for the year ended August 31, 1994, 0.63% and 2.59%,
respectively, for the year ended August 31, 1993.
(c) Ratios are based on average net assets of $89,767,973.
FS-9
