<PAGE> 1
As filed with the Securities and Exchange Commission on December 18, 1996
Registration No. 2-58287
Investment Co. Act No. 811-2729
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------
Pre-Effective Amendment No.
------- ------
Post-Effective Amendment No. 29 X
------ ------
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
------
Amendment No. 30 X
------- ------
(Check appropriate box or boxes.)
SHORT-TERM INVESTMENTS TRUST
(Exact Name of Registrant as Specified in Charter)
11 Greenway Plaza, Suite 1919, Houston, TX 77046-1173
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (713) 626-1919
Charles T. Bauer
11 Greenway Plaza, Suite 1919, Houston, TX 77046-1173
(Name and Address of Agent for Service)
Copy to:
Stephen I. Winer, Esquire Martha J. Hays, Esquire
A I M Advisors, Inc. Ballard Spahr Andrews & Ingersoll
11 Greenway Plaza, Suite 1919 1735 Market Street, 51st Floor
Houston, Texas 77046-1173 Philadelphia, Pennsylvania 19103-7599
Approximate Date of Proposed Public Offering: As soon as practicable after
the effective date of this
Amendment
It is proposed that this filing will become effective (check appropriate box)
- ------ immediately upon filing pursuant to paragraph (b)
X on December 30,1996 pursuant to paragraph (b)
- ------ 60 days after filing pursuant to paragraph (a)(1)
- ------ on (date) pursuant to paragraph (a)(1)
- ------ 75 days after filing pursuant to paragraph (a)(2)
- ------ on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
- ------ This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE> 2
Registrant continues its election to register an indefinite number of
shares of beneficial interest under Rule 24f-2 under the Investment
Company Act of 1940 and filed its Rule 24f-2 Notice for the fiscal
period ended August 31, 1996, on October 28, 1996.
<PAGE> 3
SHORT-TERM INVESTMENTS TRUST
Registration Statement on Form N-1A
CROSS REFERENCE SHEET
(as required by Rule 495)
Note: The Registrant currently offers two portfolios of investments, the
Treasury Portfolio and the Treasury TaxAdvantage Portfolio. The Treasury
Portfolio is comprised of five classes of shares - the Cash Management Class,
the Institutional Class, the Personal Investment Class, the Private Investment
Class, and the Resource Class. Each class of shares of the Treasury Portfolio
is offered to customers of certain institutions pursuant to separate
Prospectuses and a combined Statement of Additional Information. The Treasury
TaxAdvantage Portfolio is comprised of two classes of shares. Each class of
shares of the Treasury TaxAdvantage Portfolio is offered to customers of
certain institutions pursuant to separate Prospectuses and a combined Statement
of Additional Information.
Form N-1A
Item Number
- -----------
I. TREASURY PORTFOLIO -CASH MANAGEMENT CLASS
Part A - Prospectus
<TABLE>
<CAPTION>
Item No. Prospectus Location
- -------- -------------------
<S> <C>
1. Cover Page . . . . . . . . . . . . . . . . . . . . . Cover Page
2. Synopsis . . . . . . . . . . . . . . . . . . . . . . Summary; Table
of Fees and
Expenses
3. Condensed Financial Information . . . . . . . . . . . Financial
Highlights
4. General Description of Registrant . . . . . . . . . . Cover Page;
Investment
Program; General
Information
5. Management of the Fund . . . . . . . . . . . . . . . Management;
General
Information
5A. Management's Discussion of Fund Performance . . . . . [included in
annual report]
6. Capital Stock and Other Securities . . . . . . . . . General
Information;
Dividends; Taxes
7. Purchase of Securities Being Offered . . . . . . . . Purchase of
Shares; Net
Asset Value
8. Redemption or Repurchase . . . . . . . . . . . . . . Redemption of
Shares
9. Pending Legal Proceedings . . . . . . . . . . . . . . Not Applicable
</TABLE>
1
<PAGE> 4
II. TREASURY PORTFOLIO - INSTITUTIONAL CLASS
Part A - Prospectus
<TABLE>
<CAPTION>
Item No. Prospectus Location
- -------- -------------------
<S> <C>
1. Cover Page . . . . . . . . . . . . . . . . . . . . . Cover Page
2. Synopsis . . . . . . . . . . . . . . . . . . . . . . Summary; Table
of Fees and
Expenses
3. Condensed Financial Information . . . . . . . . . . . Financial
Highlights
4. General Description of Registrant . . . . . . . . . . Cover Page;
Investment
Program; General
Information
5. Management of the Fund . . . . . . . . . . . . . . . Management of
the Trust;
General
Information
5A. Management's Discussion of Fund Performance . . . . . [included in
annual report]
6. Capital Stock and Other Securities . . . . . . . . . General
Information;
Dividends; Taxes
7. Purchase of Securities Being Offered . . . . . . . . Purchase of
Shares; Net
Asset Value;
Management of
the Fund -
Distribution
Plan
8. Redemption or Repurchase . . . . . . . . . . . . . . Redemption of
Shares
9. Pending Legal Proceedings . . . . . . . . . . . . . . Not Applicable
III. TREASURY PORTFOLIO - PERSONAL INVESTMENT CLASS
Part A - Prospectus
Item No. Prospectus Location
- -------- -------------------
1. Cover Page . . . . . . . . . . . . . . . . . . . . . Cover Page
2. Synopsis . . . . . . . . . . . . . . . . . . . . . . Summary; Table
of Fees and
Expenses
3. Condensed Financial Information . . . . . . . . . . Financial
Highlights
4. General Description of Registrant . . . . . . . . . . Cover Page;
Investment
Program; General
Information
5. Management of the Fund . . . . . . . . . . . . . . . Management of
the Trust;
General
Information
5A. Management's Discussion of Fund Performance . . . . . [included in
annual report]
6. Capital Stock and Other Securities . . . . . . . . . General
Information;
Dividends; Taxes
7. Purchase of Securities Being Offered . . . . . . . . Purchase of
Shares; Net
Asset Value;
Management of
the Fund -
Distribution
Plan
</TABLE>
2
<PAGE> 5
<TABLE>
<S> <C>
8. Redemption or Repurchase . . . . . . . . . . . . . . Redemption of
Shares
9. Pending Legal Proceedings . . . . . . . . . . . . . . Not Applicable
IV. TREASURY PORTFOLIO - PRIVATE INVESTMENT CLASS
Part A - Prospectus
Item No. Prospectus Location
- -------- -------------------
1. Cover Page . . . . . . . . . . . . . . . . . . . . . Cover Page
2. Synopsis . . . . . . . . . . . . . . . . . . . . . . Summary; Table
of Fees and
Expenses
3. Condensed Financial Information . . . . . . . . . . . Financial
Highlights
4. General Description of Registrant . . . . . . . . . . Cover Page;
Summary;
Investment
Program; General
Information
5. Management of the Fund . . . . . . . . . . . . . . . Management of
the Trust;
General
Information
5A. Management's Discussion of Fund Performance . . . . . [included in
annual report]
6. Capital Stock and Other Securities . . . . . . . . . General
Information;
Dividends; Taxes
7. Purchase of Securities Being Offered . . . . . . . . Purchase of
Shares; Net
Asset Value;
Management of
the Fund -
Distribution
Plan
8. Redemption or Repurchase . . . . . . . . . . . . . . Redemption of
Shares
9. Pending Legal Proceedings . . . . . . . . . . . . . . Not Applicable
V. TREASURY PORTFOLIO - RESOURCE CLASS
Part A - Prospectus
Item No. Prospectus Location
- -------- -------------------
1. Cover Page . . . . . . . . . . . . . . . . . . . . . Cover Page
2. Synopsis . . . . . . . . . . . . . . . . . . . . . . Summary; Table
of Fees and
Expenses
3. Condensed Financial Information . . . . . . . . . . . Not Applicable
4. General Description of Registrant . . . . . . . . . . Cover Page;
Summary;
Investment
Program; General
Information
5. Management of the Fund . . . . . . . . . . . . . . . Management of
the Trust;
General
Information
5A. Management's Discussion of Fund Performance . . . . . [included in
annual report]
</TABLE>
3
<PAGE> 6
<TABLE>
<S> <C>
6. Capital Stock and Other Securities . . . . . . . . . General
Information;
Dividends; Taxes
7. Purchase of Securities Being Offered . . . . . . . . Purchase of
Shares; Net
Asset Value;
Management of
the Fund -
Distribution
Plan
8. Redemption or Repurchase . . . . . . . . . . . . . . Redemption of
Shares
9. Pending Legal Proceedings . . . . . . . . . . . . . . Not Applicable
VI. TREASURY PORTFOLIO - CASH MANAGEMENT CLASS, INSTITUTIONAL CLASS, PERSONAL
INVESTMENT CLASS, PRIVATE INVESTMENT CLASS, RESOURCE CLASS
Part B - Statement of Additional Information
Item No. Statement of Additional
- ---------- -----------------------
Information Location
--------------------
10. Cover Page . . . . . . . . . . . . . . . . . . . . . Cover Page
11. Table of Contents . . . . . . . . . . . . . . . . . . Table of
Contents
12. General Information and History . . . . . . . . . . . General
Information
About the Trust
13. Investment Objectives and Policies . . . . . . . . . Investment
Program and
Restrictions
14. Management of the Fund . . . . . . . . . . . . . . . General
Information
About the Trust
- Trustees and
Officers
15. Control Persons and Principal Holders
of Securities . . . . . . . . . . . . . . . . . . . . General
Information
About the Trust
- Principal
Holders of
Securities
16. Investment Advisory and Other Services . . . . . . . General
Information
About the Trust
- Investment
Advisor
17. Brokerage Allocation and Other Practices . . . . . . Portfolio
Transactions
18. Capital Stock and Other Securities . . . . . . . . . General
Information
About the Trust
- The Trust and
its Shares
19. Purchase, Redemption and Pricing of
Securities Being Offered . . . . . . . . . . . . . . Purchases and
Redemptions
20. Tax Status . . . . . . . . . . . . . . . . . . . . . Tax Matters
21. Underwriters . . . . . . . . . . . . . . . . . . . . Purchases and
Redemptions;
Distribution
Agreement
22. Calculation of Performance Data . . . . . . . . . . . Performance
Information
23. Financial Statements . . . . . . . . . . . . . . . . Not Applicable
</TABLE>
4
<PAGE> 7
VII. TREASURY TAXADVANTAGE PORTFOLIO - INSTITUTIONAL CLASS
Part A - Prospectus
<TABLE>
<CAPTION>
Item No. Prospectus Location
- -------- -------------------
<S> <C>
1. Cover Page . . . . . . . . . . . . . . . . . . . . . Cover Page
2. Synopsis . . . . . . . . . . . . . . . . . . . . . . Summary; Table
of Fees and
Expenses
3. Condensed Financial Information . . . . . . . . . . . Financial
Highlights
4. General Description of Registrant . . . . . . . . . . Cover Page;
Summary;
Investment
Program; General
Information
5. Management of the Fund . . . . . . . . . . . . . . . Management of
the Trust;
General
Information
5A. Management's Discussion of Fund Performance . . . . . [included in
annual report]
6. Capital Stock and Other Securities . . . . . . . . . General
Information;
Dividends; Taxes
7. Purchase of Securities Being Offered . . . . . . . . Purchase of
Shares; Net
Asset Value;
Suitability for
Investors
8. Redemption or Repurchase . . . . . . . . . . . . . . Redemption of
Shares
9. Pending Legal Proceedings . . . . . . . . . . . . . . Not Applicable
VIII. TREASURY TAX-ADVANTAGE PORTFOLIO - PRIVATE INVESTMENT CLASS
Part A - Prospectus
Item No. Prospectus Location
- -------- -------------------
1. Cover Page . . . . . . . . . . . . . . . . . . . . . Cover Page
2. Synopsis . . . . . . . . . . . . . . . . . . . . . . Summary; Table
of Fees and
Expenses
3. Condensed Financial Information . . . . . . . . . . Financial
Highlights
4. General Description of Registrant . . . . . . . . . . Cover Page;
Investment
Program; General
Information
5. Management of the Fund . . . . . . . . . . . . . . . Management of
the Trust;
General
Information
5A. Management's Discussion of Fund Performance . . . . . [included in
annual report]
6. Capital Stock and Other Securities . . . . . . . . . General
Information;
Dividends; Taxes
7. Purchase of Securities Being Offered . . . . . . . . Purchase of
Shares; Net
Asset Value;
Management of
the Trust -
Distribution
Plan
</TABLE>
5
<PAGE> 8
<TABLE>
<S> <C>
8. Redemption or Repurchase . . . . . . . . . . . . . . Redemption of
Shares
9. Pending Legal Proceedings . . . . . . . . . . . . . . Not Applicable
IX. TREASURY TAXADVANTAGE PORTFOLIO - INSTITUTIONAL CLASS AND PERSONAL
INVESTMENT CLASS
Part B - Statement of Additional Information
Item No. Statement of Additional
- ---------- -----------------------
Information Location
--------------------
10. Cover Page . . . . . . . . . . . . . . . . . . . . . Cover Page
11. Table of Contents . . . . . . . . . . . . . . . . . . Table of
Contents
12. General Information and History . . . . . . . . . . . General
Information
About the Trust
13. Investment Objectives and Policies . . . . . . . . . Investment
Program and
Restrictions
14. Management of the Fund . . . . . . . . . . . . . . . General
Information
About the Trust
- Trustees and
Officers
15. Control Persons and Principal Holders
of Securities . . . . . . . . . . . . . . . . . . . . General
Information
About the Trust
- Principal
Holders of
Securities
16. Investment Advisory and Other Services . . . . . . . General
Information
About the Trust
- Investment
Advisor
17. Brokerage Allocation and Other Practices . . . . . . Portfolio
Transactions
18. Capital Stock and Other Securities . . . . . . . . . General
Information
About the Trust
- The Trust and
its Shares
19. Purchase, Redemption and Pricing of
Securities Being Offered . . . . . . . . . . . . . . Purchases and
Redemptions
20. Tax Status . . . . . . . . . . . . . . . . . . . . . Dividends and
Tax Matters
21. Underwriters . . . . . . . . . . . . . . . . . . . . Purchases and
Redemptions;
Distribution
Agreement;
Distribution
Plan
22. Calculation of Performance Data . . . . . . . . . . . Performance
Information
23. Financial Statements . . . . . . . . . . . . . . . . Financial
Statements
X. ALL CLASSES OF REGISTRANT
</TABLE>
Part C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Registration Statement.
6
<PAGE> 9
SHORT-TERM
INVESTMENTS TRUST
Prospectus
- --------------------------------------------------------------------------------
TREASURY
PORTFOLIO The Treasury Portfolio is a money market fund
CASH whose investment objective is the maximization of
MANAGEMENT current income to the extent consistent with the
CLASS preservation of capital and the maintenance of
liquidity. The Treasury Portfolio seeks to achieve its
objective by investing in direct obligations of the
DECEMBER 30, 1996 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 "Trust"), an open-
end, diversified, series management investment company.
This Prospectus relates solely to the Cash Management
Class of the Treasury Portfolio, a class of shares
designed to be a convenient vehicle in which
institutional customers of banks, certain
broker-dealers and other financial institutions can
invest in a diversified money market fund.
The Trust also offers shares of other classes of
the Treasury Portfolio pursuant to separate
prospectuses: the Institutional Class, Private
Investment Class, Personal Investment Class and
Resource Class, as well as shares of classes of another
portfolio of the Trust, the Treasury TaxAdvantage
Portfolio.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS SETS FORTH BASIC INFORMATION THAT
A PROSPECTIVE INVESTOR SHOULD KNOW BEFORE INVESTING IN
SHARES OF THE CASH MANAGEMENT CLASS OF THE TREASURY
PORTFOLIO AND SHOULD BE READ AND RETAINED FOR FUTURE
REFERENCE. A STATEMENT OF ADDITIONAL INFORMATION, DATED
DECEMBER 30, 1996, HAS BEEN FILED WITH THE UNITED
STATES SECURITIES AND EXCHANGE COMMISSION (THE "SEC")
AND IS HEREBY INCORPORATED BY REFERENCE. FOR A COPY OF
THE STATEMENT OF ADDITIONAL INFORMATION WITHOUT CHARGE,
WRITE TO THE ADDRESS BELOW OR CALL (800) 877-7745. THE
SEC MAINTAINS A WEB SITE AT HTTP://WWW.SEC.GOV THAT
CONTAINS THE STATEMENT OF ADDITIONAL INFORMATION,
MATERIAL INCORPORATED BY REFERENCE, AND OTHER
INFORMATION REGARDING THE TRUST.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR GUARANTEED OR ENDORSED BY, ANY BANK, AND THE
TRUST'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 TRUST INVOLVE
INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
[LOGO APPEARS HERE]
Fund Management Company
11 Greenway Plaza
Suite 1919
Houston, Texas 77046-1173
(800) 877-7745
<PAGE> 10
SUMMARY
THE PORTFOLIO AND ITS INVESTMENT OBJECTIVE
The Trust is an open-end diversified series management investment company.
This Prospectus relates to the Cash Management 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 Trust also offers shares of other
classes of shares of beneficial interest of the Portfolio representing an
interest in the Portfolio. Such classes have different distribution arrangements
and are designed for institutional and other categories of investors. The Trust
also offers shares of two classes of another portfolio, the Treasury
TaxAdvantage Portfolio, each pursuant to separate prospectuses. Such classes
have different distribution arrangements and are designed for institutional and
other categories of investors. The portfolios of the Trust are referred to
collectively as the "Portfolios."
Because the Trust 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 institutional
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 $1,000,000. There is no minimum
amount for subsequent investments. Payment for shares of the Class purchased
must be in funds immediately available to the Portfolio. See "Purchase of
Shares."
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 Trust uses the amortized cost method of valuing the securities of the
Portfolio and rounds the per share net asset value to the nearest whole cent.
Accordingly, the net asset value per share of the Portfolio will normally remain
constant at $1.00. AN INVESTMENT IN THE PORTFOLIO IS NOT INSURED OR GUARANTEED
BY THE U.S. GOVERNMENT, AND THERE IS NO ASSURANCE THAT THE PORTFOLIO WILL BE
ABLE TO MAINTAIN A STABLE NET ASSET VALUE. See "Net Asset Value."
INVESTMENT ADVISOR
A I M Advisors, Inc. ("AIM") serves as the Portfolio's investment advisor and
receives a fee based on the Portfolio's average daily net assets. During the
fiscal year ended August 31, 1996, the Trust paid AIM 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 Trust for its costs of performing
certain accounting and other administrative services for the Fund. See
"Management of the Trust -- Investment Advisor" and "-- Administrative
Services."
2
<PAGE> 11
On November 4, 1996, A I M Management Group Inc. ("AIM Management"), announced
that it had entered into an Agreement and Plan of Merger among INVESCO plc,
INVESCO Group Services Inc. and AIM Management, pursuant to which AIM Management
will be merged with INVESCO Group Services, Inc. INVESCO plc and its
subsidiaries are an independent investment management group engaged in
institutional investment management and retail mutual fund businesses in the
United States, Europe and the Pacific region. It is contemplated that the merger
will occur on February 28, 1997. The Trust's investment advisor, AIM, is a
wholly-owned subsidiary of AIM Management.
The proposed transaction may be deemed to cause an "assignment" (as that term
is defined under the Investment Company Act of 1940, as amended (the "1940
Act")) of the Master Investment Advisory Agreement between the Trust and AIM.
Under the 1940 Act and the Master Investment Advisory Agreement, an assignment
results in the automatic termination of the Master Investment Advisory
Agreement.
On December 11, 1996, the Board of Trustees of the Trust approved a new
investment advisory agreement, subject to shareholder approval, between AIM and
the Trust with respect to the Portfolio. Shareholders will be asked to approve
the proposed advisory agreement at an annual meeting of shareholders to be held
on February 7, 1997 (the "Annual Meeting"). The Board of Trustees has also
approved a new administrative services agreement with AIM and a new distribution
agreement with Fund Management Company ("FMC"). There are no material changes to
the terms of the new agreements, including the fees payable by the Portfolio. No
change is anticipated in the investment advisory or other personnel responsible
for the Portfolio as a result of these new agreements.
The Board of Trustees has approved these new agreements because the
Portfolio's corresponding existing agreements will terminate upon the
consummation of the proposed merger of AIM Management into a subsidiary of
INVESCO plc. Provided that the Portfolio's shareholders approve the new
investment advisory agreement at the Annual Meeting and the merger is
consummated, the new investment advisory agreement with respect to the
Portfolio, as well as the new administrative services and distribution
agreements, will automatically become effective as of the closing date of the
merger.
DISTRIBUTOR AND DISTRIBUTION PLAN
FMC acts as the exclusive distributor of the shares of the Class. Pursuant to
a plan of distribution adopted by the Trust's Board of Trustees, FMC receives a
fee from the Trust of up to 0.10% of the average daily net assets of the
Portfolio attributable to the shares of the Class as compensation for
distribution-related services pursuant to plans of distribution adopted by the
Trust's Board of Trustees. The Trust may also make payments pursuant to such
distribution plans to certain broker-dealers or other financial institutions for
distribution-related services. 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 and La Familia AIM de Fondos and La Familia AIM de Fondos and
Design are service marks of A I M Management Group Inc.
3
<PAGE> 12
TABLE OF FEES AND EXPENSES
<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES*
Maximum sales load imposed on purchases
(as a percentage of offering price).................................... None
Maximum sales load on reinvested dividends
(as a percentage of offering price).................................... None
Deferred sales load (as a percentage of original purchase price or
redemption proceeds, as applicable).................................... None
Redemption fees (as a percentage of amount
redeemed, if applicable)............................................... None
Exchange fee.............................................................. None
ANNUAL PORTFOLIO OPERATING EXPENSES -- CASH MANAGEMENT CLASS
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management fees........................................................... 0.06%
12b-1 fees (after fee waivers)**.......................................... 0.08%
Other expenses:
Custodian fees......................................................... 0.01%
Other.................................................................. 0.02%
----
Total other expenses.............................................. 0.03%
----
Total portfolio operating expenses -- Cash Management Class............... 0.17%
=====
</TABLE>
- ---------------
* Beneficial owners of shares of the Class should consider the effect of any
charges imposed by their bank, broker-dealer or other financial institution
for various services.
** If there were no fee waivers, 12b-1 fees and Total portfolio operating
expenses would have been 0.10% and 0.19%, respectively.
EXAMPLE
An investor in the Class would pay the following expenses on a $1,000
investment, assuming (1) a 5% annual return and (2) redemption at the end of
each time period.
<TABLE>
<S> <C>
1 year............................................................... $ 2
3 years.............................................................. $ 5
5 years.............................................................. $10
10 years.............................................................. $22
</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 Trust" below.) The expense figures
are based upon actual costs and fees charged to the Class for the fiscal year
ended August 31, 1996. The Table of Fees and Expenses reflects a voluntary
waiver of 12b-1 fees for the Class. Future waivers of fees (if any) may vary
from the figures reflected in the Table of Fees and Expenses. To the extent any
service providers assume expenses of the Class, such assumption of expenses will
have the effect of lowering the Class's overall expense ratio and increasing its
yield to investors. Beneficial owners of shares of the Class should also
consider the effect of any charges imposed by the institution maintaining their
accounts.
The example in the Table of Fees and Expenses assumes that all dividends and
distributions are reinvested and that the amounts listed under "Annual Portfolio
Operating Expenses -- Cash Management Class" remain the same in the years shown.
The example shown in the above table is based on the amounts listed under
"Annual Portfolio Operating Expenses." THE EXAMPLE SHOULD NOT BE CONSIDERED TO
BE AN ACCURATE REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY
BE GREATER OR LESSER THAN THOSE SHOWN.
4
<PAGE> 13
FINANCIAL HIGHLIGHTS
Shown below are the per share data, ratios and supplemental data
(collectively, "data") for the three-year period ended August 31, 1996 and the
period August 17, 1993 (date operations commenced) through August 31, 1993. The
data has been audited by KPMG Peat Marwick LLP, independent auditors, whose
unqualified report thereon appears in the Statement of Additional Information.
<TABLE>
<CAPTION>
1996 1995 1994 1993
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Net asset value, beginning of period............ $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income......................... 0.05 0.05 0.03 0.001
-------- ------- ------- -------
Total from investment operations....... 0.05 0.05 0.03 0.001
-------- ------- ------- -------
Less distributions:
Dividends from net investment income.......... (0.05) (0.05) (0.03) (0.001)
-------- ------- ------- -------
Net asset value, end of period.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======= ======= =======
Total return.................................... 5.48% 5.57% 3.44% 2.91%(a)
======== ======= ======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted)...... $789,627 $81,219 $73,619 $ 8,681
======== ======= ======= =======
Ratio of expenses to average net assets(c).... 0.17%(a)(b) 0.18% 0.16% 0.16%(a)
======== ======= ======= =======
Ratio of net investment income to average net
assets(d)................................... 5.25%(a)(b) 5.42% 3.48% 3.00%(a)
======== ======= ======= =======
</TABLE>
- ---------------
(a) Annualized.
(b) Ratios are based on average net assets of $547,363,692.
(c) Ratios of expenses to average net assets prior to waiver of distribution
fees and/or expense reimbursements were 0.19%, 0.20%, 0.21% and 0.18% for
the periods 1996-1993, respectively. Ratios are annualized for periods less
than one year.
(d) Ratios of net investment income to average net assets prior to waiver of
distribution fees and/or expense reimbursements were 5.23%, 5.40%, 3.43% and
2.98% for the periods 1996-1993, respectively.
SUITABILITY FOR INVESTORS
The shares of the Class are intended for use primarily by institutional
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. It is expected that the shares of the Class may be particularly
suitable investments for corporate cash managers, municipalities or other public
entities. The minimum initial investment is $1,000,000.
Investors in the shares of 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 shares 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).
5
<PAGE> 14
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 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 AIM (under the
supervision of and pursuant to guidelines established by the Trust'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 Trust'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, 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) expenses 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 by the Portfolio under the 1940 Act.
LENDING OF PORTFOLIO SECURITIES. 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.
PURCHASING DELAYED DELIVERY SECURITIES. In managing the Portfolio's
investments, AIM may indicate to dealers or issuers its interest in acquiring
certain securities for the Portfolio for settlement beyond a customary
settlement date. In some cases, the Portfolio may agree to purchase such
securities at stated prices and yields. In such cases, such securities are
considered "delayed delivery" securities when traded in the secondary market.
Since this is done to facilitate the acquisition of portfolio securities and is
not for the purpose of investment leverage, the amount of delayed delivery
securities involved may not exceed the estimated amount of funds available for
investment on the settlement date. Until the settlement date, assets of the
Portfolio with a dollar value sufficient at all times to make payment for the
delayed delivery securities will be segregated. The total amount of segregated
assets may not exceed 25% of the Portfolio's total assets. The delayed delivery
securities, which will not begin to accrue interest until the settlement date,
will be recorded as an asset of the Portfolio and will be subject to the risks
of market value fluctuations. The purchase price of the delayed delivery
securities will be recorded as a liability of the Portfolio until settlement.
Absent extraordinary circumstances, the Portfolio's right to acquire delayed
delivery securities will not be divested prior to the settlement date.
ILLIQUID SECURITIES. The Portfolio will invest no more than 10% of its net
assets in illiquid securities.
6
<PAGE> 15
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 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.
The Board of Trustees has unanimously approved the elimination of or changes
to certain fundamental investment policies of the Trust, subject to shareholder
approval. Shareholders will be asked to approve these changes at the Annual
Meeting. If approved, they will become effective on March 1, 1997.
The Trust is currently generally prohibited from investing in other investment
companies. The Board of Trustees has approved the elimination of this
prohibition, and the amendment to another fundamental investment policy that
corresponds to the proposed elimination. The elimination of the fundamental
investment policy that prohibits the Trust from investing in other investment
companies and the proposed amendment to the corresponding fundamental investment
policy would permit investment in other investment companies to the extent
permitted by the 1940 Act, and rules and regulations thereunder, and, if
applicable, exemptive orders granted by the SEC.
The Board of Trustees has approved the amendment of Investment No. (1) of the
Trust indicated above. In the event shareholders approve the proposed change,
Investment Restriction No. (1) will read in full as follows:
(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, and
except that the Portfolio may purchase securities of other investment
companies to the extent permitted by applicable law or exemptive order.
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 SEC has
proposed certain changes to Rule 2a-7. While such proposed changes may have a
prospective impact on the investments of the Portfolio, the Portfolio
anticipates no difficulty in complying
7
<PAGE> 16
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 Trust reserves the right to reject any purchase order. Although there
is no sales charge imposed on the purchase of shares of the Class, banks or
other institutions may charge a recordkeeping, account maintenance or other fee
to their customers, and beneficial holders of the shares of the Class should
consult with the institutions maintaining their accounts to obtain a schedule of
applicable fees. To facilitate the investment of proceeds of purchase orders,
the 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 Trust's custodian bank, 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 institutional 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 shares of the Class. Each Institution will render administrative support
services to its customers who are the beneficial owners of the shares of the
Class. Such services may include, among other things, establishment and
maintenance of shareholder accounts and records; assistance in processing
purchase and redemption transactions in shares of the Class; providing periodic
statements showing a customer's account balance in shares of the Class;
distribution of Trust proxy statements, annual reports and other communications
to shareholders whose accounts are serviced by the Institution; and such other
services as the Trust may reasonably request. Institutions will be required to
certify to the Trust 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
Information and Authorization Form must be made in writing or by completing a
new form and providing it to AIFS. An investor must open an account in the
shares of the Class through an Institution in accordance with procedures
established by such Institution. Each Institution separately determines the
rules applicable to accounts in the shares of the Class opened with it,
including minimum initial and subsequent investment requirements and the
procedures to be followed by investors to effect purchases of shares of the
Class. The minimum initial investment is $1,000,000, and there is no minimum
amount of subsequent purchases of shares of the Class by an Institution on
behalf of its customers. An investor who proposes to open a Portfolio account
with an Institution should consult with a representative of such Institution to
obtain a description of the rules governing such an account. The Institution
holds shares of the Class registered in its name, as agent for the customer, on
the books of the Institution. A statement with regard to the customer's shares
of the Class is supplied to the customer periodically, and confirmations of all
transactions for the account of the customer are provided by the Institution to
the customer promptly upon request. In addition, the Institution sends to each
customer proxies, periodic reports and other information with regard to the
customer's shares of the Class. The customer's shares of the Class are fully
assignable and subject to encumbrance by the customer.
All agreements which relate to a customer's account with an Institution are
with the Institution. An investor may terminate his relationship with an
Institution at any time, in which case an account in the investor's name will be
established directly with the Portfolio and the investor will become a
shareholder of record. In such case, however, the investor will not be able to
purchase additional shares of the Class directly, except through reinvestment of
dividends and distributions.
Orders for the purchase of shares of the Class are placed by the investor with
the Institution. The Institution is responsible for the prompt transmission of
the order to the Trust. The Portfolio will normally be required to make
immediate settlement in federal funds (member bank deposits with a Federal
Reserve Bank) for portfolio securities purchased. Accordingly, payment for
shares of the Class purchased by Institutions on behalf of their customers must
be in federal funds. If an investor's order to purchase shares of the Class is
paid for other than in federal funds, the Institution, acting on behalf of the
investor, completes the conversion into federal funds (which may take two
business days), or itself advances federal funds prior to conversion, and
promptly transmits the order and payment in the form of federal funds to AIFS.
8
<PAGE> 17
Subject to the conditions stated above and to the Trust's right to reject any
purchase order, orders will be accepted (i) when payment for the shares of the
Class purchased is received by The Bank of New York, the Trust's custodian bank,
in the form described above and notice of such order is provided to AIFS or (ii)
at the time the order is placed, if the Portfolio is assured of payment. Shares
of the Class purchased by orders which are accepted prior to 3:00 p.m. Eastern
Time will earn the dividend declared on the date of purchase.
Federal Reserve wires should be sent as early as possible in order to
facilitate crediting to the shareholder's account. Any funds received with
respect to an order which is not accepted by the Trust 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
"Cash Management Class of the Treasury Portfolio," otherwise any funds received
will be returned to the sending Institution.
The Trust 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 Trust. Redemption requests with respect to the Class may also be
made via AIM LINK(@), a personal computer application software product.
Normally, the net asset value per share of the Portfolio will remain constant at
$1.00. See "Net Asset Value." Redemption requests with respect to shares of the
Class are normally made through a customer's Institution.
Payment for redeemed shares of the Class is normally made by Federal Reserve
wire to the commercial bank account designated in the Institution's Account
Application, but may be remitted by check upon request by a shareholder. If a
redemption request is received by 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 Trust. 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 Trust or AIFS, the
Trust'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 if they do not follow reasonable procedures for verification of
telephone transactions. Such reasonable procedures for verification 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 Trust 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.
The shares of the Class are not redeemable at the option of the Trust unless
the Board of Trustees of the Trust determines in its sole discretion that
failure to so redeem may have materially adverse consequences to the
shareholders of the Trust.
DIVIDENDS
Dividends from the net income of the Portfolio are declared daily to
shareholders of record of each class of the Portfolio as of immediately after
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) Portfolio
expenses, such as custodian fees, trustees' fees, accounting and legal expenses,
based upon such class' pro rata share of the net assets of the Portfolio, less
(c) expenses directly attributable to such class, such as distribution expenses,
if any, and transfer agency fees. 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
9
<PAGE> 18
and redemptions. See "Net Asset Value." Distributions from net realized
short-term gains may be declared and paid yearly or more frequently. See
"Taxes." The Portfolio does not expect to realize any long-term capital gains or
losses.
All dividends declared during a month will normally be paid by wire transfer.
Payment will normally be made on the first business day of the following month.
A shareholder may elect to have all dividends automatically reinvested in
additional full and fractional Shares 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 in writing by the Institution to AIFS at 11
Greenway Plaza, Suite 1919, Houston, TX 77046-1173 and will become effective
with dividends paid after its receipt by AIFS. If a shareholder redeems all the
Shares in its account at any time during the month, all dividends declared
through the date of redemption are paid to the shareholder along with the
proceeds of the redemption.
The Portfolio uses its best efforts to maintain its net asset value per share
at $1.00 for purposes of sales and redemptions. See "Net Asset Value." Should
the Trust incur or anticipate any unusual expense, loss or depreciation which
could adversely affect the income or net asset value of the Portfolio, the
Trust'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 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 Trust and each portfolio of the Trust 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 herein. Shareholders are
advised to consult with their own tax advisors concerning the application of
state, local or foreign taxes.
Foreign persons who file a United States tax return after December 31, 1996
for a U.S. tax refund and who are not eligible to obtain a social security
number must apply to the Internal Revenue Service ("IRS") for an individual
taxpayer identification number, using IRS Form W-7. For a copy of the IRS Form
W-7 and accompanying instructions, please contact your tax advisor or AIFS.
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 Portfolio. Net asset value per
share is determined by dividing the value of the Portfolio's securities, cash
and other assets (including interest accrued but not collected) less all of its
liabilities (including accrued expenses and dividends payable), by the number of
shares outstanding of the Portfolio and rounding the resulting per share net
asset value to the nearest one cent.
10
<PAGE> 19
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 Trust at (800)
877-7745. 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 INSTITUTION. These factors should
be carefully considered by an investor before making an investment in the
Portfolio.
For the seven-day period ended August 31, 1996, the current yield and the
effective yield of the Class (which assumes the reinvestment of dividends for a
365-day year and a return for the entire year equal to the average annualized
current yield for the period) were 5.15% and 5.28%, respectively. 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 subaccounting,
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.
From time to time and in its discretion, AIM or its affiliates 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 Trust 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 Trust's independent auditors.
Unless otherwise requested by the shareholder, each shareholder will be
provided by its Institution with a written confirmation for each transaction.
Institutions establishing sub-accounts will receive a written confirmation for
each transaction in a sub-account. Duplicate confirmations may be transmitted to
the beneficial owner of the sub-account if requested by the Institution. The
Institution will receive a periodic statement setting forth, for each
sub-account, the share balance, income earned for the month, income earned for
the year to date and the total current value of the account.
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES
The overall management of the business and affairs of the Trust is vested with
its Board of Trustees. The Board of Trustees approves all significant agreements
between the Trust and persons or companies furnishing services to the Trust,
including agreements with the Trust's investment advisor, distributor, custodian
and transfer agent. The day-to-day operations of the Trust are delegated to the
Trust's officers and to AIM, subject always to the objective and policies of the
Trust and to the general supervision of the Trust'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 41 investment company portfolios. As of November 14, 1996,
the total assets of the investment company portfolios managed or advised by AIM
and its affiliates were approximately $61.1 billion. All of the directors and
certain of the officers of AIM are also trustees or executive officers of the
Trust. AIM is a wholly-owned subsidiary of AIM Management. AIM Management is a
holding company in the financial services business.
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<PAGE> 20
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, 1996, AIM received fees from the Trust,
with respect to the Portfolio under 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 0.17% of the Class's
average daily net assets.
ADMINISTRATIVE SERVICES
The Trust 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 Trust 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.
EXPENSES
In addition to fees paid to AIM pursuant to the Advisory Agreement and the
expenses reimbursed to AIM under the Administrative Services Agreement, the
Trust also pays or causes to be paid all other expenses of the Trust, including,
without limitation: the charges and expenses of any registrar, any custodian or
depository appointed by the Trust for the safekeeping of its cash, portfolio
securities and other property, and any transfer, dividend or accounting agent or
agents appointed by the Trust; brokers' commissions chargeable to the Trust in
connection with portfolio securities transactions to which the Trust is a party;
all taxes, including securities issuance and transfer taxes, and fees payable by
the Trust to federal, state or other governmental agencies; the costs and
expenses of engraving or printing of certificates representing shares of the
Trust; all costs and expenses in connection with the registration and
maintenance of registration of the Trust 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 Trust and supplements thereto to the Trust'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 Trust's shares; charges and expenses
of legal counsel, including counsel to the trustees of the Trust who are not
"interested persons" (as defined in the 1940 Act) of the Trust or AIM, and of
independent accountants in connection with any matter relating to the Trust;
membership dues of industry associations; interest payable on Trust borrowings;
postage; insurance premiums on property or personnel (including officers and
trustees) of the Trust 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 Trust) 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 Trust's shares.
Expenses of the Trust which are not directly attributable to the operations of
any class of shares or portfolio of the Trust are prorated among all classes of
the Trust based upon the relative net assets of each class. Expenses of the
Trust except those listed in the next sentence are prorated among all classes of
such portfolio based upon the relative net assets of each such class.
Distribution and service fees, transfer agency fees and shareholder
recordkeeping fees 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.
FEE WAIVERS
AIM or its affiliates 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 for such
fee or expenses prior to the end of each fiscal year. FMC may in its discretion
from time to time agree to waive voluntarily its 12b-1 fee but will retain its
ability to be reimbursed prior to the end of the fiscal year. AIM voluntarily
reimbursed expenses of $113,500 on the Personal Investment Class during the year
ended August 31, 1996.
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<PAGE> 21
DISTRIBUTOR
The Trust 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 Trust are
affiliated with FMC and AIM. The Distribution Agreement provides that FMC has
the exclusive right to distribute shares of the Trust 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 financial institutions 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 financial
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 the 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 Trust has adopted a Master Distribution Plan (the "Plan") pursuant to Rule
12b-1 under the 1940 Act. The Plan provides that the Trust may compensate FMC in
connection with the distribution of the shares of the Class an amount equal to
0.10% on an annualized basis of the average daily net assets of the Portfolio
attributable to the Class. Such amount may be expended when and if authorized by
the Board of Trustees and may be used to finance such distribution-related
services as expenses of organizing and conducting sales seminars, printing of
prospectuses and statements of additional information (and supplements thereto)
and reports for other than existing shareholders, preparation and distribution
of advertising material and sales literature and costs of administering the
Plan.
Of the compensation paid to FMC under the Plan, a service fee may be paid to
dealers and other financial institutions that provide continuing personal
shareholder services to their customers who purchase and own shares of the
Class, in amounts of up to 0.10% 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. 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 Trust
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 Trust 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 Trust 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 Board of Trustees, including a majority of the trustees who are not
"interested persons" (as defined in the 1940 Act) of the Trust 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 the Plan in accordance with the requirements of
Rule 12b-1, the trustees considered various factors and determined that there is
a reasonable likelihood that the Plan will benefit the Fund and the holders 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 to which the Plan relates. Any change in the Plan that would
increase materially the distribution expenses paid by the Class requires
shareholder approval; otherwise the Plan may be amended by the trustees,
including a majority of the Qualified Trustees, by vote cast in person at a
meeting called for the purpose of voting upon such amendment. As long as the
Plan is in effect, the selection or nomination of the Qualified Trustees is
committed to the discretion of the Qualified Trustees.
PORTFOLIO TRANSACTIONS AND BROKERAGE
AIM is responsible for decisions to buy and sell securities for the Portfolio,
broker-dealer selection and negotiation of commission rates. Since purchases and
sales of portfolio securities by the Portfolio are usually principal
transactions, the Portfolio incurs little or no brokerage commissions. Portfolio
securities are normally purchased directly from the issuer or from a market
maker for the securities. The purchase price paid to dealers serving as market
makers may include a spread between the bid
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<PAGE> 22
and asked prices. The Portfolio may 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 Trust is a Delaware business trust. The Trust was originally incorporated
in Maryland on January 24, 1977, but had no operations prior to November 10,
1980. Effective December 31, 1986, the Trust was reorganized as a Massachusetts
business trust; and effective October 15, 1993, the Trust 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 Trust
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 Trust 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
Trust may have different sales charges and other expenses which may affect
performance. An investor may obtain information concerning the Trust's other
classes by contacting FMC.
All shares of the Trust 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 Trust,
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 Trust
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 Trust's outstanding shares. As of December
1, 1996, The Bank of New York was the owner of record of 68.64% of the
outstanding shares of the Class. As long as The Bank of New York owns over 25%
of such shares, it may be presumed to be in "control" of the Cash Management
Class of the Treasury Portfolio, as defined in the 1940 Act.
There are no preemptive or conversion rights applicable to any of the Trust's
shares. The Trust's shares, when issued, will be fully paid and non-assessable.
The Board of Trustees may create additional portfolios of the Trust without
shareholder approval.
TRANSFER AGENT AND CUSTODIAN
The Bank of New York, 90 Washington Street, 11th Floor, New York, New York
10286, acts as custodian for the portfolio securities and cash of the Portfolio.
A I M Institutional Fund Services, Inc., 11 Greenway Plaza, Suite 1919, Houston,
Texas 77046-1173, acts as transfer agent for the shares of the Class.
LEGAL COUNSEL
The law firm of Ballard Spahr Andrews & Ingersoll, Philadelphia, Pennsylvania,
serves as counsel to the Trust and has passed upon the legality of the shares of
the Portfolio.
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<PAGE> 23
SHAREHOLDER INQUIRIES
Shareholder inquiries concerning the status of an account should be directed
to an investor's Institution, or to the Trust at 11 Greenway Plaza, Suite 1919,
Houston, Texas 77046-1173, or may be made by calling (800) 877-7745.
OTHER INFORMATION
This Prospectus sets forth basic information that investors should know about
the Trust 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 Trust 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.
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<PAGE> 25
<TABLE>
<S> <C>
===============================================================================
SHORT-TERM INVESTMENTS TRUST PROSPECTUS
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173 December 30, 1996
(800) 877-7745
SHORT-TERM
INVESTMENT ADVISOR INVESTMENTS TRUST
A I M ADVISORS, INC.
11 Greenway Plaza, Suite 1919 ---------------------
Houston, Texas 77046-1173
(713) 626-1919 TREASURY PORTFOLIO
DISTRIBUTOR ---------------------
FUND MANAGEMENT COMPANY
11 Greenway Plaza, Suite 1919 CASH MANAGEMENT CLASS
Houston, Texas 77046-1173 TABLE OF CONTENTS
(800) 877-7745
PAGE
AUDITORS <S> <C>
KPMG PEAT MARWICK LLP Summary............................. 2
NationsBank Building Table of Fees and Expenses.......... 4
700 Louisiana Financial Highlights................ 5
Houston, Texas 77002 Suitability for Investors........... 5
Investment Program.................. 5
CUSTODIAN Purchase of Shares.................. 8
THE BANK OF NEW YORK Redemption of Shares................ 9
90 Washington Street, Dividends........................... 9
11th Floor Taxes............................... 10
New York, New York 10286 Net Asset Value..................... 10
Yield Information................... 11
TRANSFER AGENT Reports to Shareholders............. 11
A I M INSTITUTIONAL FUND SERVICES, INC. Management of the Trust............. 11
11 Greenway Plaza, Suite 1919 General Information................. 14
Houston, Texas 77046-1173
</TABLE>
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 TRUST
OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY
JURISDICTION TO ANY PERSON TO WHOM SUCH OFFERING MAY NOT LAWFULLY BE MADE.
===============================================================================
<PAGE> 26
SHORT-TERM
INVESTMENTS TRUST
Prospectus
- --------------------------------------------------------------------------------
TREASURY
PORTFOLIO The Treasury Portfolio is a money market fund
whose investment objective is the maximization of
current income to the extent consistent with the
INSTITUTIONAL preservation of capital and the maintenance of
CLASS 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
DECEMBER 30, 1996 Treasury Portfolio will have maturities of 397 days or
less.
The Treasury Portfolio is a series portfolio of
Short-Term Investments Trust (the "Trust"), an open-
end diversified series management investment company.
This Prospectus relates solely to the Institutional
Class of the Treasury Portfolio, a class of shares
designed to be a convenient vehicle in which
institutions, particularly banks, acting for
themselves or in a fiduciary, advisory, agency,
custodial or other similar capacity can invest in a
diversified money market fund.
The Trust also offers shares of other classes of
the Treasury Portfolio pursuant to separate
prospectuses: the Personal Investment Class, Private
Investment Class, Cash Management Class and Resource
Class, as well as shares of classes of another
portfolio of the Trust, the Treasury TaxAdvantage
Portfolio.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS SETS FORTH BASIC INFORMATION THAT
A PROSPECTIVE INVESTOR SHOULD KNOW BEFORE INVESTING IN
SHARES OF THE INSTITUTIONAL CLASS OF THE TREASURY
PORTFOLIO AND SHOULD BE READ AND RETAINED FOR FUTURE
REFERENCE. A STATEMENT OF ADDITIONAL INFORMATION,
DATED DECEMBER 30, 1996, HAS BEEN FILED WITH THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION THE
("SEC") AND IS HEREBY INCORPORATED BY REFERENCE. FOR A
COPY OF THE STATEMENT OF ADDITIONAL INFORMATION
WITHOUT CHARGE, WRITE TO THE ADDRESS BELOW OR CALL
(800) 877-7745. THE SEC MAINTAINS A WEB SITE AT
HTTP://WWW.SEC.GOV THAT CONTAINS THE STATEMENT OF
ADDITIONAL INFORMATION, MATERIAL INCORPORATED BY
REFERENCE, AND OTHER INFORMATION REGARDING THE TRUST.
THE TRUST'S SHARES ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY
BANK, AND THE TRUST'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 TRUST INVOLVE INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
[LOGO APPEARS HERE]
Fund Management Company
11 Greenway Plaza
Suite 1919
Houston, Texas 77046-1173
(800) 659-1005
<PAGE> 27
SUMMARY
THE PORTFOLIO AND ITS INVESTMENT OBJECTIVE
The Trust is an open-end diversified series management investment company.
This Prospectus relates to the Institutional 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 preservations
of capital and the maintenance of liquidity.
Pursuant to separate prospectuses, the Trust also offers shares of other
classes of shares of beneficial interest of the Portfolio representing an
interest in the Portfolio. Such classes have different distribution arrangements
and are designed for institutional and other categories of investors. The Trust
also offers shares of two classes of another portfolio, the Treasury
TaxAdvantage Portfolio, each pursuant to a separate prospectus. The portfolios
of the Trust are referred to collectively as the "Portfolios."
Because the Trust 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 and economical vehicle in which
institutions, particularly banks, acting for themselves or in a fiduciary,
advisory, agency, custodial or other similar capacity can invest short-term cash
reserves. Although shares of the Class may not be purchased by individuals
directly, institutions may purchase shares for accounts maintained by
individuals. See "Suitability for Investors." For the fiscal year ended August
31, 1996, the expenses of operation for the Class represented 0.09% of the
average daily net assets of the Class.
PURCHASE OF SHARES
Shares of the Class are sold at net asset value without a sales charge. The
minimum initial investment in the Class is $1,000,000. There is no minimum
amount for subsequent investments. Payment for shares of the Class purchased
must be in federal funds or other funds immediately available to the Portfolio.
See "Purchase of Shares."
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 in federal funds on the same day.
See "Redemption of Shares."
DIVIDENDS
The net income of each 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 Trust uses the amortized cost method of valuing the securities held by the
Portfolio and rounds the per share net asset value to the nearest whole cent.
Accordingly, the net asset value per share of the Portfolio will normally remain
constant at $1.00. AN INVESTMENT IN THE PORTFOLIO IS NOT INSURED OR GUARANTEED
BY THE U.S. GOVERNMENT, AND THERE IS NO ASSURANCE THAT THE PORTFOLIO WILL BE
ABLE TO MAINTAIN A STABLE NET ASSET VALUE. See "Net Asset Value."
INVESTMENT ADVISOR
A I M Advisors, Inc. ("AIM") serves as the Portfolio's investment advisor and
receives a fee based on the Portfolio's average daily net assets. During the
fiscal year ended August 31, 1996, the Trust paid AIM 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
2
<PAGE> 28
advisor to investment companies. Under an Administrative Services Agreement, AIM
may be reimbursed by the Trust for its costs of performing certain accounting
and other administrative services for the Trust. See "Management of the
Trust -- Investment Advisor" and "-- Administrative Services."
On November 4, 1996, A I M Management Group Inc. ("AIM Management"), announced
that it had entered into an Agreement and Plan of Merger among INVESCO plc,
INVESCO Group Services, Inc. and AIM Management, pursuant to which AIM
Management will be merged with INVESCO Group Services, Inc. INVESCO plc and its
subsidiaries are an independent investment management group engaged in
institutional investment management and retail mutual fund businesses in the
United States, Europe and the Pacific region. It is contemplated that the merger
will occur on February 28, 1997. The Trust's investment advisor, AIM, is a
wholly-owned subsidiary of AIM Management.
The proposed transaction may be deemed to cause an "assignment" (as that term
is defined under the Investment Company Act of 1940, as amended (the "1940
Act")) of the Master Investment Advisory Agreement between the Trust and AIM.
Under the 1940 Act and the Master Investment Advisory Agreement, an assignment
results in the automatic termination of the Master Investment Advisory
Agreement.
On December 11, 1996, the Board of Trustees of the Trust approved a new
investment advisory agreement, subject to shareholder approval, between AIM and
the Trust with respect to the Portfolio. Shareholders will be asked to approve
the proposed advisory agreement at an annual meeting of shareholders to be held
on February 7, 1997 (the "Annual Meeting"). The Board of Trustees has also
approved a new administrative services agreement with AIM and a new distribution
agreement with Fund Management Company ("FMC"). There are no material changes to
the terms of the new agreements, including the fees payable by the Portfolio. No
change is anticipated in the investment advisory or other personnel responsible
for the Portfolio as a result of these new agreements.
The Board of Trustees has approved these new agreements because the
Portfolio's corresponding existing agreements will terminate upon the
consummation of the proposed merger of AIM Management into a subsidiary of
INVESCO plc. Provided that the Portfolio's shareholders approve the new
investment advisory agreement at the Annual Meeting and the merger is
consummated, the new investment advisory agreement with respect to the
Portfolio, as well as the new administrative services and distribution
agreements, will automatically become effective as of the closing date of the
merger.
DISTRIBUTOR
Fund Management Company ("FMC") acts as the exclusive distributor of the
Trust's shares. FMC does not receive any fee for distribution services from the
Trust. See "Purchase of Shares."
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 and La Familia AIM de Fondos and La Familia AIM de Fondos and
Design are service marks of A I M Management Group Inc.
3
<PAGE> 29
TABLE OF FEES AND EXPENSES
<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES*
Maximum sales load imposed on purchases (as a percentage of
offering price)................................................ None
Maximum sales load on reinvested dividends (as a percentage of
offering price)................................................ None
Deferred sales load (as a percentage of original purchase price or
redemption proceeds, as applicable)............................ None
Redemption fees (as a percentage of amount redeemed, if
applicable).................................................... None
Exchange fee...................................................... None
ANNUAL PORTFOLIO OPERATING EXPENSES -- INSTITUTIONAL CLASS
(as a percentage of average net assets)
Management fees................................................... 0.06%
12b-1 fees........................................................ None
Other expenses:
Custodian fees................................................. 0.01%
Other.......................................................... 0.02%
----
Total other expenses......................................... 0.03%
----
Total portfolio operating expenses -- Institutional Class......... 0.09%
====
</TABLE>
- ---------------
* Beneficial owners of shares of the Class should consider the effect of any
charges imposed by their bank or other financial institution for various
services.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time period.
<TABLE>
<S> <C>
1 year............................................................... $ 1
3 years.............................................................. $ 3
5 years.............................................................. $ 5
10 years.............................................................. $12
</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 Trust" below.) The expense figures
are based upon actual costs and fees charged to the Class for the fiscal year
ended August 31, 1996. To the extent any service providers assume expenses of
the Class, such assumption of expenses will have the effect of lowering the
Class's overall expense ratio and increasing its yield to investors. Beneficial
owners of shares of the Class should also consider the effect of any charges
imposed by the institution maintaining their accounts.
The example in the Table of Fees and Expenses assumes that all dividends and
distributions are reinvested and that the amounts listed under "Annual Portfolio
Operating Expenses -- Institutional Class" remain the same in the years shown.
The example shown in the above table is based on the amounts listed under
"Annual Portfolio Operating Expenses." THE EXAMPLE SHOULD NOT BE CONSIDERED TO
BE AN ACCURATE REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY
BE GREATER OR LESSER THAN THOSE SHOWN.
4
<PAGE> 30
FINANCIAL HIGHLIGHTS
Shown below are the per share data, ratios and supplemental data
(collectively, "data") for each of the years in the ten-year period ended August
31, 1996. The data has been audited by KPMG Peat Marwick LLP, independent
auditors, whose unqualified report on the financial statements and the related
notes appears in the Statement of Additional Information.
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment
operations:
Net investment income...... 0.05 0.06 0.04 0.03 0.05 0.07 0.08
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total from investment
operations........... 0.05 0.06 0.04 0.03 0.05 0.07 0.08
---------- ---------- ---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net
investment
income................... (.05) (0.06) (0.04) (0.03) (0.05) (0.07) (0.08)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of
period..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ========== ========== ==========
Total return................ 5.57% 5.66% 3.53% 3.22% 4.56% 7.04% 8.52%
========== ========== ========== ========== ========== ========== ==========
Ratios/supplemental data:
Net assets, end of period
(000s omitted)........... $2,335,441 $2,669,637 $2,452,389 $3,652,672 $3,835,387 $2,437,902 $1,703,460
========== ========== ========== ========== ========== ========== ==========
Ratio of expenses to average
net assets................. 0.09%(a) 0.10% 0.08% 0.08% 0.09% 0.10% 0.12%
========== ========== ========== ========== ========== ========== ==========
Ratio of net investment
income to average net
assets..................... 5.43%(a) 5.53% 3.39% 3.17% 4.38% 6.73% 8.19%
========== ========== ========== ========== ========== ========== ==========
<CAPTION>
1989 1988 1987
---------- ---------- --------
<S> <C> <C> <C>
Net asset value, beginning
of period.................. $ 1.00 $ 1.00 $ 1.00
Income from investment
operations:
Net investment income...... 0.09 0.07 0.06
---------- ---------- --------
Total from investment
operations........... 0.09 0.07 0.06
---------- ---------- --------
Less distributions:
Dividends from net
investment
income................... (0.09) (0.07) (0.06)
---------- ---------- --------
Net asset value, end of
period..................... $ 1.00 $ 1.00 $ 1.00
========== ========== =========
Total return................ 9.03% 6.98% 6.17%
========== ========== =========
Ratios/supplemental data:
Net assets, end of period
(000s omitted)........... $1,189,822 $1,121,144 $650,547
========== ========== =========
Ratio of expenses to average
net assets................. 0.11% 0.13% 0.14%
========== ========== =========
Ratio of net investment
income to average net
assets..................... 8.69% 6.76% 6.01%
========== ========== =========
</TABLE>
- ---------------
(a) Ratios are based on average net assets of $2,499,257,005.
5
<PAGE> 31
SUITABILITY FOR INVESTORS
The Class is intended for use primarily by institutions, particularly banks,
acting for themselves or in a fiduciary, advisory, agency, custodial or other
similar capacity. They are designed to be a convenient and economical vehicle in
which such institutions can invest short-term cash reserves. Shares of the Class
may not be purchased directly by individuals, although institutions may purchase
shares for accounts maintained by individuals. Prospective investors should
determine if an investment in the Class is consistent with the objectives of an
account and with applicable state and federal laws and regulations.
An investment in the Class may relieve the institution of many of the
investment and administrative burdens encountered when investing in money market
instruments directly. These include: selection of portfolio investments;
surveying the market for the best price at which to buy and sell; valuation of
portfolio securities; selection and scheduling of maturities; receipt, delivery
and safekeeping of securities; and portfolio recordkeeping. It is anticipated
that most investors will perform their own sub-accounting. To assist these
institutions, information concerning the dividends declared by the Portfolios on
any particular day will normally be available by 5:00 p.m. Eastern Time on that
day.
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 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. However, these
expenses are expected to be relatively small due primarily to the following
factors: the Class will have a small number of shareholders who do not need many
of the services provided by other money market investment companies, thereby
resulting in lower transfer agent fees and costs for printing reports and proxy
statements; sales of the shares of the Class to institutions acting for
themselves or in a fiduciary capacity are exempt from the registration
requirements of most state securities laws, thereby resulting in reduced state
registration fees; and the relatively low investment advisory fee paid to AIM.
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 certain 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 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 AIM (under the
supervision of and pursuant to guidelines established by the Trust'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 Trust'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, 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) expenses of enforcing its rights. Repurchase
agreements are considered to be loans under the 1940 Act.
6
<PAGE> 32
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 by the Portfolio under the 1940 Act.
LENDING OF PORTFOLIO SECURITIES. 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.
PURCHASING DELAYED DELIVERY SECURITIES. In managing the Portfolio's
investments, AIM may indicate to dealers or issuers its interest in acquiring
certain securities for the Portfolio for settlement beyond a customary
settlement date. In some cases, the Portfolio may agree to purchase such
securities at stated prices and yields. In such cases, such securities are
considered "delayed delivery" securities when traded in the secondary market.
Since this is done to facilitate the acquisition of portfolio securities and is
not for the purpose of investment leverage, the amount of delayed delivery
securities involved may not exceed the estimated amount of funds available for
investment on the settlement date. Until the settlement date, assets of the
Portfolio with a dollar value sufficient at all times to make payment for the
delayed delivery securities will be segregated. The total amount of segregated
assets may not exceed 25% of the Portfolio's total assets. The delayed delivery
securities, which will not begin to accrue interest until the settlement date,
will be recorded as an asset of the Portfolio and will be subject to the risks
of market value fluctuations. The purchase price of the delayed delivery
securities will be recorded as a liability of the Portfolio until settlement.
Absent extraordinary circumstances, the Portfolio's right to acquire delayed
delivery securities will not be divested prior to the settlement date.
ILLIQUID SECURITIES. The Portfolio will invest no more than 10% of its net
assets in illiquid securities.
PORTFOLIO TRANSACTIONS. The Portfolio does not seek profits through short-term
trading and will generally hold portfolio securities to maturity, but AIM may
seek to enhance the yield of the Portfolio by taking advantage of yield
disparities or other factors that occur in the money 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.
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 in-
7
<PAGE> 33
vested 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.
The Board of Trustees has unanimously approved the elimination of or changes
to certain fundamental investment policies of the Trust, subject to shareholder
approval. Shareholders will be asked to approve these changes at the Annual
Meeting. If approved, they will become effective on March 1, 1997.
The Trust is currently generally prohibited from investing in other investment
companies. The Board of Trustees has approved the elimination of this
prohibition, and the amendment to another fundamental investment policy that
corresponds to the proposed elimination. The elimination of the fundamental
investment policy that prohibits the Trust from investing in other investment
companies and the proposed amendment to the corresponding fundamental investment
policy would permit investment in other investment companies to the extent
permitted by the 1940 Act, and rules and regulations thereunder, and, if
applicable, exemptive orders granted by the SEC.
The Board of Trustees has approved the amendment of Investment No. (1) of the
Trust indicated above. In the event shareholders approve the proposed change,
Investment Restriction No. (1) will read in full as follows:
(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, and
except that the Portfolio may purchase securities of other investment
companies to the extent permitted by applicable law or exemptive order.
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 SEC has
proposed certain changes to Rule 2a-7. While such proposed changes may have a
prospective impact on the investments of the Portfolio, the Portfolio
anticipates no difficulty in complying with any proposed change if adopted by
the SEC. A description of further investment restrictions applicable to the
Portfolio is contained in the Statement of Additional Information.
PURCHASE OF SHARES
Shares of the Class are sold on a continuing basis at their net asset value
next determined after an order has been received by the Portfolio. As discussed
below, the Trust 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 record keeping, account maintenance or other fee
to their customers, and beneficial holders of the shares of the Class should
consult with the institutions maintaining their accounts to obtain a schedule of
applicable fees. To facilitate the investment of proceeds of purchase orders,
the 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 Trust's custodian bank, 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.
8
<PAGE> 34
Subject to the conditions stated above and the Trust's right to reject any
purchase order, orders will be accepted (i) when payment for the shares of the
Class purchased is received by The Bank of New York, the Trust's custodian bank,
in the form described below and notice of such order is provided to A I M
Institutional Fund Services, Inc. ("AIFS") (the Trust's transfer agent), or (ii)
at the time the order is placed, if the Portfolio is assured of payment. Shares
of the Class purchased by orders which are accepted prior to 4:00 p.m. Eastern
Time will earn the dividend declared on the date of purchase.
Payments for shares of the Class purchased must be in the form of federal
funds or other funds immediately available to the Portfolio. Federal Reserve
wires should be sent as early as possible in order to facilitate crediting to
the shareholder's account. Any funds received with respect to an order which is
not accepted by the Trust and any funds received for which an order has not been
received will be returned to the sending institution. An order to purchase
shares must specify that it is for the purchase of "Shares of the Institutional
Class of the Treasury Portfolio," otherwise any funds received will be returned
to the sending institution.
The minimum initial investment in the Class is $1,000,000. Institutions may be
requested to maintain separate Master Accounts in the shares of the Class held
by the institution (i) for its own account, for the account of other
institutions and for accounts for which the institution acts as a fiduciary, and
(ii) for accounts for which the institution acts in some other capacity. An
institution's Master Account(s) and sub-accounts in the shares of the Class may
be aggregated for the purpose of the minimum investment requirement. No minimum
amount is required for subsequent investments in the Portfolio nor are minimum
balances required. Prior to the initial purchase of shares of the Class, an
Account Application must be completed and sent to A I M Institutional Fund
Services, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173.
Account Applications may be obtained from AIFS. 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.
Banks will be required to certify to the Trust that they comply with
applicable state law regarding registration as broker-dealers, or that they are
exempt from such registration.
The Trust 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 Trust. Redemption requests with respect to the Class may also be
made via AIM LINK(R), a personal computer application software product.
Normally, the net asset value per share of the Portfolio will remain constant at
$1.00. See "Net Asset Value." Redemption requests with respect to shares of the
Class are normally made by calling the Trust.
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 Trust. 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 Trust or AIFS, the
Trust'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 if they do not follow reasonable procedures for verification of
telephone transactions. Such reasonable procedures for verification 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 Trust 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.
9
<PAGE> 35
The shares of the Class are not redeemable at the option of the Trust unless
the Board of Trustees of the Trust determines in its sole discretion that
failure to so redeem may have materially adverse consequences to the
shareholders of the Trust.
DIVIDENDS
Dividends from the net income of the Portfolio are declared daily to
shareholders of record of each class of the Portfolio as of immediately after
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's pro rata share of the total
outstanding shares representing an interest in the Portfolio, less (b) Portfolio
expenses, such as custodian fees, trustees' fees, accounting and legal expenses,
based upon such class' pro rata share of the net assets of the Portfolio, less
(c) expenses directly attributable to such class, such as distribution expenses,
if any, and transfer agency fees. Although realized gains and losses on the
assets of the Portfolio are reflected in its net asset value, they are not
expected to be of an amount which would affect its $1.00 per share net asset
value for purposes of purchases and redemptions. See "Net Asset Value."
Distributions from net realized short-term gains may be declared and paid yearly
or more frequently. See "Taxes." The Portfolio does not expect to realize any
long-term capital gains or losses.
All dividends declared during a month will normally be paid by wire transfer.
Payment will normally be made on the first business day of the following month.
A shareholder may elect to have all dividends automatically reinvested in
additional full and fractional shares of the Class at the net asset value as of
4:00 p.m. Eastern Time on the last business day of the month. Such election, or
any revocation thereof, must be made in writing by the institution to AIFS, 11
Greenway Plaza, Suite 1919, Houston, Texas 77046-1173 and will become effective
with dividends paid after its receipt by AIFS. If a shareholder redeems all the
shares of the Class in its account at any time during the month, all dividends
declared through the date of redemption are paid to the shareholder along with
the proceeds of the redemption.
The Portfolio uses its best efforts to maintain its net asset value per share
of the Portfolio at $1.00 for purposes of sales and redemptions. See "Net Asset
Value." Should the Trust incur or anticipate any unusual expense, loss or
depreciation which could adversely affect the income or net asset value of the
Portfolio, the Trust'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 Trust and each portfolio of the Trust 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 herein. Shareholders are
advised to consult with their own tax advisors concerning the application of
state, local or foreign taxes.
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<PAGE> 36
Foreign persons who file a United States tax return after December 31, 1996
for a U.S. tax refund and who are not eligible to obtain a social security
number must apply to the Internal Revenue Service ("IRS") for an individual
taxpayer identification number, using IRS Form W-7. For a copy of the IRS Form
W-7 and accompanying instructions, please contact your tax advisor or AIFS.
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 Portfolio. Net asset value per
share is determined by dividing the value of the Portfolio's securities, cash
and other assets (including interest accrued but not collected) less all of its
liabilities (including accrued expenses and dividends payable), by the number of
shares outstanding of the Portfolio and rounding the resulting per share net
asset value to the nearest one cent.
The securities of the Portfolio are valued on the basis of amortized cost
pursuant to rules promulgated by the SEC applicable to money market funds. This
method values a security at its cost on the date of purchase and thereafter
assumes a constant amortization to maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the market value of
the security. While this method provides certainty in valuation, it may result
in periods during which value, as determined by amortized cost, is higher or
lower than the price the Portfolio would receive if the security were sold.
During such periods, the daily yield on shares of the Portfolio, computed as
described in "Purchases and Redemptions -- Performance Information" in the
Statement of Additional Information, may differ somewhat from an identical
computation made by an investment company with identical investments utilizing
available indications as to market value to value its portfolio securities.
YIELD INFORMATION
Yield information for the Class can be obtained by calling the Trust at (800)
659-1005. 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 INSTITUTION. These factors should
be carefully considered by the investor before making an investment in the
Portfolio.
For the seven-day period ended August 31, 1996, 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 5.23% and 5.36%. 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 subaccounting,
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.
From time to time and in its discretion, AIM or its affiliates 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 Portfolios'
yield and total return.
REPORTS TO SHAREHOLDERS
The Trust 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 Trust's independent auditors.
Unless otherwise requested by the shareholder, each shareholder will be
provided with a written confirmation for each transaction. Institutions
establishing sub-accounts will receive a written confirmation for each
transaction in a sub-account. Duplicate confirmations may be transmitted to the
beneficial owner of the sub-account if requested by the institution. The
institution will receive a periodic statement setting forth, for each
sub-account, the share balance, income earned for the month, income earned for
the year to date and the total current value of the account.
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES
The overall management of the business and affairs of the Trust is vested with
its Board of Trustees. The Board of Trustees approves all significant agreements
between the Trust and persons or companies furnishing services to the Trust,
including agreements with the Trust's investment advisor, distributor, custodian
and transfer agent. The day-to-day operations of the
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<PAGE> 37
Trust are delegated to the Trust's officers and to AIM, subject always to the
objectives and policies of the Trust and to the general supervision of the
Trust'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, organized in 1976, together with its affiliates, manages or
advises 41 investment company portfolios. As of November 14, 1996, the total
assets of the investment company managed, advised or administered by AIM and its
affiliates were approximately $61.1 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 AIM Management. 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, 1996, AIM received fees from the Trust
under an advisory agreement previously in effect, which provided for the same
level of compensation to AIM as the Advisory Agreement, with respect to the
Portfolio 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 0.09% of the Class' average daily net assets.
ADMINISTRATIVE SERVICES
The Trust 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 Trust 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.
FEE WAIVERS
AIM or its affiliates 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 for such
fee or expenses prior to the end of each fiscal year. AIM voluntarily reimbursed
expenses of $113,500 on the Portfolio during the year ended August 31, 1996.
DISTRIBUTOR
The Trust 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 Trust are
affiliated with FMC and AIM. The Distribution Agreement provides that FMC has
the exclusive right to distribute shares of the Trust either directly or through
other broker-dealers. FMC is the distributor of several of the mutual funds
managed or advised by AIM.
PORTFOLIO TRANSACTIONS AND BROKERAGE
AIM is responsible for decisions to buy and sell securities for the
Portfolios, 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 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
12
<PAGE> 38
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 Trust is a Delaware business trust. The Trust was originally incorporated
in Maryland on January 24, 1977, but had no operations prior to November 10,
1980. Effective December 31, 1986, the Trust was reorganized as a Massachusetts
business trust; and effective October 15, 1993, the Trust 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 Trust
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 Trust are divided into seven
classes of which five, 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
Trust may have different sales charges and other expenses which may affect
performance. An investor may obtain information concerning the Trust's other
classes by contacting FMC.
All shares of the Trust 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 Trust,
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 Trust
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 Trust's outstanding shares.
There are no preemptive or conversion rights applicable to any of the Trust's
shares. The Trust's shares, when issued, will be fully paid and non-assessable.
The Board of Trustees may create additional portfolios of the Trust without
shareholder approval.
TRANSFER AGENT AND CUSTODIAN
The Bank of New York, 90 Washington Street, 11th Floor, New York, New York
10286, acts as custodian for the portfolio securities and cash of the Portfolio.
A I M Institutional Fund Services, Inc., 11 Greenway Plaza, Suite 1919, Houston,
Texas 77046-1173, acts as transfer agent for the shares of the Class.
LEGAL COUNSEL
The law firm of Ballard Spahr Andrews & Ingersoll, Philadelphia, Pennsylvania,
serves as counsel to the Trust 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 Trust at 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, or may
be made by calling (800) 659-1005.
OTHER INFORMATION
This Prospectus sets forth basic information that investors should know about
the Trust 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 Trust 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.
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<PAGE> 40
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<PAGE> 41
<TABLE>
<S> <C>
===============================================================================
SHORT-TERM INVESTMENTS TRUST PROSPECTUS
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173 December 30, 1996
(800) 659-1005
SHORT-TERM
INVESTMENT ADVISOR INVESTMENTS TRUST
A I M ADVISORS, INC.
11 Greenway Plaza, Suite 1919 ---------------------
Houston, Texas 77046-1173
(713) 626-1919 TREASURY PORTFOLIO
DISTRIBUTOR ---------------------
FUND MANAGEMENT COMPANY
11 Greenway Plaza, Suite 1919 INSTITUTIONAL CLASS
Houston, Texas 77046-1173
(800) 659-1005 TABLE OF CONTENTS
PAGE
AUDITORS ----
KPMG PEAT MARWICK LLP <S> <C>
NationsBank Building Summary............................. 2
700 Louisiana Table of Fees and Expenses.......... 4
Houston, Texas 77002 Financial Highlights................ 5
Suitability For Investors........... 6
CUSTODIAN Investment Program.................. 6
THE BANK OF NEW YORK Purchase of Shares.................. 8
90 Washington Street Redemption of Shares................ 9
11th Floor Dividends........................... 10
New York, New York 10286 Taxes............................... 10
Net Asset Value..................... 11
TRANSFER AGENT Yield Information................... 11
A I M INSTITUTIONAL FUND SERVICES, INC. Reports to Shareholders............. 11
11 Greenway Plaza, Suite 1919 Management of the Trust............. 11
Houston, Texas 77046-1173 General Information................. 13
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 THE PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST
OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY
JURISDICTION TO ANY PERSON TO WHOM SUCH OFFERING MAY NOT LAWFULLY BE MADE.
===============================================================================
</TABLE>
<PAGE> 42
PROSPECTUS
PERSONAL INVESTMENT CLASS
OF THE
TREASURY PORTFOLIO
OF
SHORT-TERM INVESTMENTS TRUST
11 GREENWAY PLAZA, SUITE 1919
HOUSTON, TEXAS 77046-1173
(800) 877-4744
------------------
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 "Trust"), 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 Trust 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 Trust, the Treasury TaxAdvantage Portfolio.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
------------------
THIS PROSPECTUS SETS FORTH BASIC INFORMATION THAT A PROSPECTIVE INVESTOR
SHOULD KNOW BEFORE INVESTING IN SHARES OF THE PERSONAL INVESTMENT CLASS OF THE
TREASURY PORTFOLIO AND SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE. A
STATEMENT OF ADDITIONAL INFORMATION, DATED DECEMBER 30, 1996, HAS BEEN FILED
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE "SEC") 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 SEC MAINTAINS A WEB SITE AT HTTP://WWW.SEC.GOV THAT CONTAINS THE STATEMENT
OF ADDITIONAL INFORMATION, MATERIAL INCORPORATED BY REFERENCE, AND OTHER
INFORMATION REGARDING THE TRUST.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND THE TRUST'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 TRUST INVOLVE INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
PROSPECTUS DATED: DECEMBER 30, 1996
<PAGE> 43
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY.......................................... 2
TABLE OF FEES AND EXPENSES....................... 5
FINANCIAL HIGHLIGHTS............................. 6
SUITABILITY FOR INVESTORS........................ 7
INVESTMENT PROGRAM............................... 7
PURCHASE OF SHARES............................... 10
REDEMPTION OF SHARES............................. 12
DIVIDENDS........................................ 13
TAXES............................................ 13
NET ASSET VALUE.................................. 14
YIELD INFORMATION................................ 14
REPORTS TO SHAREHOLDERS.......................... 15
MANAGEMENT OF THE TRUST.......................... 15
GENERAL INFORMATION.............................. 18
</TABLE>
SUMMARY
THE PORTFOLIO AND ITS INVESTMENT OBJECTIVE
The Trust 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 Trust also offers shares of other
classes of shares of beneficial interest of the Portfolio representing an
interest in the Portfolio. Such classes have different distribution arrangements
and are designed for institutional and other categories of investors. The Trust
also offers shares of two classes of another portfolio, the Treasury
TaxAdvantage Portfolio, each pursuant to a separate prospectus. The portfolios
of the Trust are referred to collectively as the "Portfolios."
Because the Trust 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 Trust. See "Purchase of Shares."
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<PAGE> 44
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 Trust 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 Trust's investment advisor and
receives a fee based on the Trust's average daily net assets. During the fiscal
year ended August 31, 1996, 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 Trust for its costs of performing
certain accounting and other administrative services for the Trust. See
"Management of the Trust -- Investment Advisor" and "-- Administrative
Services."
On November 4, 1996, A I M Management Group Inc. ("AIM Management"),
announced that it had entered into an Agreement and Plan of Merger among INVESCO
plc, INVESCO Group Services Inc. and AIM Management, pursuant to which AIM
Management will be merged with INVESCO Group Services Inc. INVESCO plc and its
subsidiaries are an independent investment management group engaged in
institutional investment management and retail mutual fund businesses in the
United States, Europe and the Pacific region. It is contemplated that the merger
will occur on February 28, 1997. The Trust's investment advisor, AIM, is a
wholly-owned subsidiary of AIM Management.
The proposed transaction may be deemed to cause an "assignment" (as that
term is defined under the Investment Company Act of 1940, as amended (the "1940
Act")) of the Master Investment Advisory Agreement between the Trust and AIM.
Under the 1940 Act and the Master Investment Advisory Agreement, an assignment
results in the automatic termination of the Master Investment Advisory
Agreement.
On December 11, 1996, the Board of Trustees of the Trust approved a new
investment advisory agreement, subject to shareholder approval, between AIM and
the Trust with respect to the Portfolio. Shareholders will be asked to approve
the proposed advisory agreement at an annual meeting of shareholders
3
<PAGE> 45
to be held on February 7, 1997 (the "Annual Meeting"). The Board of Trustees has
also approved a new administrative services agreement with AIM and a new
distribution agreement with Fund Management Company ("FMC"). There are no
material changes to the terms of the new agreements, including the fees payable
by the Portfolio. No change is anticipated in the investment advisory or other
personnel responsible for the Portfolio as a result of these new agreements.
The Board of Trustees has approved these new agreements because the
Portfolio's corresponding existing agreements will terminate upon the
consummation of the proposed merger of AIM Management into a subsidiary of
INVESCO plc. Provided that the Portfolio's shareholders approve the new
investment advisory agreement at the Annual Meeting and the merger is
consummated, the new investment advisory agreement with respect to the
Portfolio, as well as the new administrative services and distribution
agreements, will automatically become effective as of the closing date of the
merger.
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 Trust's Board of
Trustees, the Trust 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 and La Familia AIM de Fondos and La Familia AIM de Fondos and
Design are service marks of A I M Management Group Inc.
4
<PAGE> 46
TABLE OF FEES AND EXPENSES
<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES*
Maximum sales load imposed on purchases
(as a percentage of offering price).................................. None
Maximum sales load on reinvested dividends
(as a percentage of offering price).................................. None
Deferred sales load (as a percentage of original purchase price or
redemption proceeds, as applicable).................................. None
Redemption fees (as a percentage of amount
redeemed, if applicable)............................................. None
Exchange fee............................................................ None
ANNUAL PORTFOLIO OPERATING EXPENSES -- 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)**............................... 0.02%
-----
Total other expenses............................................ 0.03%
----
Total portfolio operating expenses --
Personal Investment Class............................................ 0.59%
=====
</TABLE>
- ------------
* Beneficial owners of shares of the Class should consider the effect of any
charges imposed by their bank, broker-dealer or financial institution for
various services.
** Had there been no fee waivers and no expense reimbursements, 12b-1 fees,
Other expenses and Total portfolio operating expenses would have been 0.75%,
0.10% and 0.92%, respectively.
*** It is possible that as a result of Rule 12b-1 fees, long-term shareholders
may pay more than the economic equivalent of the maximum front-end sales
charges permitted under rules of the National Association of Securities
Dealers, Inc. Given the Rule 12b-1 fee of the Class, however, it is
estimated that it would take a substantial number of years for a shareholder
to exceed such maximum front-end sales charges.
EXAMPLE
An investor in the Class would pay the following expenses on a $1,000
investment, assuming (1) a 5% annual return and (2) redemption at the end of
each time period.
<TABLE>
<S> <C>
1 year............................................... $6
3 years.............................................. $19
5 years.............................................. $33
10 years.............................................. $74
</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 Trust" below.) The expense figures
are based upon actual
5
<PAGE> 47
costs and fees charged to the Class for the fiscal year ended August 31, 1996.
Future waivers of fees (if any) may vary from the figures reflected in the Table
of Fees and Expenses. To the extent any service providers assume additional
expenses of the Class, such assumption of additional expenses will have the
effect of lowering the Class' 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 shown in the above table is based on the amounts listed under
"Annual Portfolio Operating Expenses." THE EXAMPLE SHOULD NOT BE CONSIDERED TO
BE AN ACCURATE REPRESENTATION OF PAST OR FUTURE EXPENSES 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 five-year period ended August
31, 1996 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.
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992 1991
-------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income........... 0.05 0.05 0.03 0.03 0.04 0.003
-------- -------- ------- ------- ------- -------
Total from investment
operations.............. 0.05 0.05 0.03 0.03 0.04 0.003
-------- -------- ------- ------- ------- -------
Less distributions:
Dividends (from net investment
income)....................... (0.05) (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 $ 1.00
======== ======== ======= ======= ======= =======
Total return...................... 5.04% 5.13% 3.02% 2.77% 4.07% 5.04%(a)
======== ======== ======= ======= ======= =======
Ratios/supplemental data:
Net assets, end of period
(000s omitted).................. $192,947 $114,527 $88,582 $69,867 $23,853 $ 330
======== ======== ======= ======= ======= =======
Ratio of expenses to average net
assets(c)....................... 0.59%(b) 0.60% 0.58% 0.53% 0.49% 0.81%(a)
======== ======== ======= ======= ======= =======
Ratio of net investment income to
average net assets(d)........... 4.91%(b) 5.03% 2.99% 2.70% 3.55% 5.03%(a)
======== ======== ======= ======= ======= =======
</TABLE>
- ---------------
(a) Annualized.
(b) Ratios are based on average net assets of $142,591,904.
(c) Ratios of expenses to average net assets prior to waiver of distribution
fees and/or expense reimbursements were 0.92%, 0.90%, 0.91%, 0.93%, 1.03%
and 12.68% for the periods 1996-1991, respectively.
(d) Ratios of net investment income to average net assets prior to waiver of
distribution fees and/or expense reimbursements were 4.58%, 4.73%, 2.66%,
2.29%, 3.01% and (6.84%) for the periods 1996-1991, respectively.
6
<PAGE> 48
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 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 AIM (under the
supervision of and pursuant to guidelines established by the Trust'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 Trust'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, including: (a) a possible decline in the value of the underlying
security during the period while the Portfolio
7
<PAGE> 49
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 investment leverage, the amount of delayed delivery
securities involved may not exceed the estimated amount
8
<PAGE> 50
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.
The Board of Trustees has unanimously approved the elimination of or
changes to certain fundamental investment policies of the Trust, subject to
shareholder approval. Shareholders will be asked to approve these changes at the
Annual Meeting. If approved, they will become effective on March 1, 1997.
The Trust is currently generally prohibited from investing in other
investment companies. The Board of Trustees has approved the elimination of this
prohibition, and the amendment to another fundamental investment policy that
corresponds to the proposed elimination. The elimination of the fundamental
investment policy that prohibits the Trust from investing in other investment
companies and the proposed amendment to the corresponding fundamental investment
policy would permit investment in other investment
9
<PAGE> 51
companies to the extent permitted by the 1940 Act, and rules and regulations
thereunder, and, if applicable, exemptive orders granted by the SEC.
The Board of Trustees has approved the amendment of Investment No. (1) of
the Trust indicated above. In the event shareholders approve the proposed
change, Investment Restriction No. (1) will read in full as follows:
(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, and
except that the Portfolio may purchase securities of other investment
companies to the extent permitted by applicable law or exemptive order.
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 SEC has
proposed certain changes to Rule 2a-7. While such proposed changes may have a
prospective impact on the investments of the Portfolio, the Portfolio
anticipates no difficulty in complying with any proposed change if adopted by
the SEC. A description of further investment restrictions applicable to the
Portfolio is contained in the Statement of Additional Information.
PURCHASE OF SHARES
Shares of the Class are sold on a continuing basis at their net asset value
next determined after an order has been received by the Portfolio. As discussed
below, the Trust 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 Trust's custodian bank,
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 Trust proxy statements,
10
<PAGE> 52
annual reports and other communications to shareholders whose accounts are
serviced by the Institution; and such other services as the Trust may reasonably
request. Institutions will be required to certify to the Trust 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 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 Trust. 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 Trust's right to reject
any purchase order, orders will be accepted (i) when payment for the shares
purchased is received by The Bank of New York, the Trust's custodian bank, 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 Trust and any funds
received for which an order has not been received will be returned to the
sending Institution. An order
11
<PAGE> 53
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.
The Trust 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 Trust. Redemption requests with respect to the Class may also be
made via AIM LINK(@), 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 are
normally made through a customer's Institution.
Payment for redeemed shares of the Class is normally made by Federal
Reserve wire to the commercial bank account designated in the Institution's
Account Application, but may be remitted by check upon request by a shareholder.
If a redemption request is received by 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 Trust. 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 Trust or AIFS, the
Trust'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 if they do not follow reasonable procedures for verification of
telephone transactions. Such reasonable procedures for verification 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 Trust 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 Trust unless
the Board of Trustees of the Trust determines in its sole discretion that
failure to so redeem may have materially adverse consequences to the
shareholders of the Trust.
12
<PAGE> 54
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) Portfolio
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, and transfer agency fees. Although realized gains
and losses on the assets of the Portfolio are reflected in its net asset value,
they are not expected to be of an amount which would affect its $1.00 per share
net asset value for purposes of purchases and redemptions. See "Net Asset
Value." Distributions from net realized short-term gains may be declared and
paid yearly or more frequently. See "Taxes." The Portfolio does not expect to
realize any long-term capital gains or losses in the Portfolio.
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 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 Portfolio 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 Trust incur or anticipate any unusual expense, loss or
depreciation which could adversely affect the income or net asset value of the
Portfolio, the Trust'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.
13
<PAGE> 55
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 Trust and each portfolio of the Trust 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 herein. Shareholders
are advised to consult with their own tax advisors concerning the application of
state, local or foreign taxes.
Foreign persons who file a United States tax return after December 31, 1996
for a U.S. tax refund and who are not eligible to obtain a social security
number must apply to the Internal Revenue Service ("IRS") for an individual
taxpayer identification number, using IRS Form W-7. For a copy of the IRS Form
W-7 and accompanying instructions, please contact your tax advisor or AIFS.
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 Portfolio. 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 Trust 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
14
<PAGE> 56
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, 1996, 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 4.73% and 4.84%, respectively, excluding capital
gains distributions. 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.
From time to time and in its discretion, AIM or its affiliates 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 Trust 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 Trust's independent auditors.
Unless otherwise requested by the shareholder, each shareholder will be
provided by its Institution a written confirmation for each transaction.
Institutions establishing sub-accounts will receive a written confirmation for
each transaction in a sub-account. Duplicate confirmations may be transmitted to
the beneficial owner of the sub-account if requested by the Institution. The
Institution will receive a periodic statement setting forth, for each
sub-account, the share balance, income earned for the month, income earned for
the year to date and the total current value of the account.
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES
The overall management of the business and affairs of the Trust is vested
with the Board of Trustees. The Board of Trustees approves all significant
agreements between the Trust and persons or companies furnishing services to the
Trust, including agreements with the Trust's investment advisor, distributor,
custodian and transfer agent. The day-to-day operations of the Trust are
delegated to the Trust's officers and to AIM, subject always to the objective
and policies of the Trust and to the general supervision of the Trust'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 41 investment company portfolios. As of November 14, 1996,
the total assets of the
15
<PAGE> 57
investment company portfolios managed or advised by AIM and its affiliates were
approximately $61.1 billion. All of the directors and certain of the officers of
AIM are also trustees or executive officers of the Trust. AIM is a wholly-owned
subsidiary of 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, 1996, AIM received fees with respect
to the Portfolio from the Trust 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 0.59% of the Class' average daily net assets.
ADMINISTRATIVE SERVICES
The Trust 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 Trust 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.
FEE WAIVERS
AIM or its affiliates 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 for such
fee or expenses 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 each fiscal year. AIM voluntarily
reimbursed expenses of $113,500 on the Portfolio during the year ended August
31, 1996.
DISTRIBUTOR
The Trust 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
Trust are affiliated with FMC. The Distribution Agreement provides that FMC has
the exclusive right to distribute shares of the Trust 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
16
<PAGE> 58
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 Trust has adopted a Master Distribution Plan (the "Plan") pursuant to
Rule 12b-1 under the 1940 Act. The Plan provides that the Trust may compensate
FMC in connection with the distribution of the shares 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 Trust 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 Trust 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 Trust 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 Trust's Board of Trustees, including a majority of the trustees
who are not "interested persons" (as defined in the 1940 Act) of the Trust 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 the Plan in accordance with the
requirements of Rule 12b-1, the trustees considered various factors and
determined that there is a reasonable likelihood that the Plan will benefit the
Trust 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.
17
<PAGE> 59
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 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 Trust is a Delaware business trust. The Trust was originally
incorporated in Maryland on January 24, 1977, but had no operations prior to
November 10, 1980. Effective December 31, 1986, the Trust was reorganized as a
Massachusetts business trust; and effective October 15, 1993, the Trust 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 Trust 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 Trust 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 Trust may have different sales charges and other
expenses which may affect performance. An investor may obtain information
concerning the Trust's other classes by contacting FMC.
All shares of the Trust 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 Trust,
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 Trust
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.
18
<PAGE> 60
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 Trust's outstanding shares. As of December
1, 1996, Cullen/Frost Discount Brokers was the owner of record of 64.64%, and
The Bank of New York was the owner of record of 26.55%, of the outstanding
shares of the Class. As long as each of Cullen/Frost Discount Brokers and The
Bank of New York owns over 25% of such shares, it may be presumed to be in
"control" of the Personal Investment Class of the Treasury Portfolio as defined
in the 1940 Act.
There are no preemptive or conversion rights applicable to any of the
Trust's shares. The Trust's shares, when issued, will be fully paid and
non-assessable. The Board of Trustees may create additional portfolios or
classes of the Trust without shareholder approval.
TRANSFER AGENT AND CUSTODIAN
The Bank of New York, 90 Washington Street, 11th 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 Trust 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 Trust 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 Trust 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 Trust 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.
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[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 62
<TABLE>
<S> <C>
SHORT-TERM INVESTMENTS TRUST SHORT-TERM
11 Greenway Plaza, Suite 1919 INVESTMENTS TRUST
Houston, Texas 77046-1173
(800) 877-4744 PERSONAL
INVESTMENT CLASS
INVESTMENT ADVISOR OF THE
A I M ADVISORS, INC. --------------------------------------------
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173 TREASURY PORTFOLIO PROSPECTUS
(713) 626-1919
DISTRIBUTOR DECEMBER 30, 1996
FUND MANAGEMENT COMPANY
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173 [LOGO APPEARS HERE]
(800) 877-4744 Fund Management Company
AUDITORS
KPMG PEAT MARWICK LLP
NationsBank Building
700 Louisiana
Houston, Texas 77002
CUSTODIAN
THE BANK OF NEW YORK
90 Washington Street
11th Floor
New York, New York 10286
TRANSFER AGENT
A I M INSTITUTIONAL FUND
SERVICES, INC.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING
MADE BY THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR
THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY
JURISDICTION TO ANY PERSON TO WHOM SUCH OFFERING MAY NOT LAWFULLY BE MADE.
</TABLE>
<PAGE> 63
PROSPECTUS
PRIVATE INVESTMENT CLASS
OF THE
TREASURY PORTFOLIO
OF
SHORT-TERM INVESTMENTS TRUST
11 GREENWAY PLAZA, SUITE 1919
HOUSTON, TEXAS 77046-1173
(800) 877-7748
------------------
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 "Trust"), an open-end diversified, series, management investment
company. This Prospectus relates solely to the Private 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 short-term cash reserves.
The Trust also offers shares of other classes of the Treasury Portfolio
pursuant to separate prospectuses: the Institutional Class, Cash Management
Class, Personal Investment Class and Resource Class, as well as shares of
classes of another portfolio of the Trust, the Treasury TaxAdvantage Portfolio.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
------------------
THIS PROSPECTUS SETS FORTH BASIC INFORMATION THAT A PROSPECTIVE INVESTOR
SHOULD KNOW BEFORE INVESTING IN SHARES OF THE PRIVATE INVESTMENT CLASS OF THE
TREASURY PORTFOLIO AND SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE. A
STATEMENT OF ADDITIONAL INFORMATION, DATED DECEMBER 30, 1996, HAS BEEN FILED
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE "SEC") AND IS
HEREBY INCORPORATED BY REFERENCE. FOR A COPY OF THE STATEMENT OF ADDITIONAL
INFORMATION WITHOUT CHARGE, WRITE TO THE ADDRESS ABOVE OR CALL (800) 877-7748.
THE SEC MAINTAINS A WEB SITE AT HTTP://WWW.SEC.GOV THAT CONTAINS THE STATEMENT
OF ADDITIONAL INFORMATION, MATERIAL INCORPORATED BY REFERENCE, AND OTHER
INFORMATION REGARDING THE TRUST.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND THE TRUST'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 TRUST INVOLVE INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
PROSPECTUS DATED: DECEMBER 30, 1996
<PAGE> 64
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY.......................................... 2
TABLE OF FEES AND EXPENSES....................... 5
FINANCIAL HIGHLIGHTS............................. 6
SUITABILITY FOR INVESTORS........................ 7
INVESTMENT PROGRAM............................... 7
PURCHASE OF SHARES............................... 10
REDEMPTION OF SHARES............................. 12
DIVIDENDS........................................ 13
TAXES............................................ 13
NET ASSET VALUE.................................. 14
YIELD INFORMATION................................ 14
REPORTS TO SHAREHOLDERS.......................... 15
MANAGEMENT OF THE TRUST.......................... 15
GENERAL INFORMATION.............................. 18
</TABLE>
SUMMARY
THE PORTFOLIO AND ITS INVESTMENT OBJECTIVE
The Trust is an open-end diversified series management investment company.
This Prospectus relates to the Private 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 Trust also offers other shares of
other classes of shares of beneficial interest of the Portfolio representing an
interest in the Portfolio. Such classes have different distribution arrangements
and are designed for institutional and other categories of investors. The Trust
also offers shares of two classes of another portfolio, the Treasury
TaxAdvantage Portfolio, each pursuant to a separate prospectus. The portfolios
of the Trust are referred to collectively as "Portfolios."
Because the Trust declares dividends on a daily basis, shares of each class
of the Portfolio have the same net asset value (proportionate interest in the
net assets of the Portfolio) and bear equally those expenses, such as the
advisory fee, that are allocated to the Portfolio as a whole. All classes of the
Portfolio share a common investment objective and portfolio of investments.
However, different classes of the Portfolio have different shareholder
qualifications, and are separately allocated certain class expenses, such as
those associated with the distribution of their shares. Therefore, each class
will have a different dividend payment and a different yield.
INVESTORS IN THE CLASS
The Class is designed to be a convenient vehicle in which customers of
banks, certain broker-dealers and other financial institutions can invest in a
diversified open-end money market fund.
PURCHASE OF SHARES
Shares of the Class that are offered hereby are sold at net asset value.
The minimum initial investment in the Class is $10,000. There is no minimum
amount for subsequent investments. Payment for shares of the Class purchased
must be in funds immediately available to the Trust. See "Purchase of Shares."
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<PAGE> 65
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 Trust uses the amortized cost method of valuing the securities held by
the Portfolio and rounds the per share net asset value to the nearest whole
cent. Accordingly, the net asset value per share of the Portfolio will normally
remain constant at $1.00. AN INVESTMENT IN THE PORTFOLIO IS NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, AND THERE IS NO ASSURANCE THAT THE PORTFOLIO
WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE. See "Net Asset Value."
INVESTMENT ADVISOR
A I M Advisors, Inc. ("AIM") serves as the Trust's investment advisor and
receives a fee based on the Trust's average daily net assets. During the fiscal
year ended August 31, 1996, the Trust paid AIM 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 an Administrative Services Agreement, AIM
may be reimbursed by the Trust for its costs of performing certain accounting
and other administrative services for the Trust. See "Management of the
Trust -- Investment Advisor" "-- Administrative Services."
On November 4, 1996, A I M Management Group Inc. ("AIM Management"),
announced that it had entered into an Agreement and Plan of Merger among INVESCO
plc, INVESCO Group Services Inc. and AIM Management, pursuant to which AIM
Management will be merged with INVESCO Group Services, Inc. INVESCO plc and its
subsidiaries are an independent investment management group engaged in
institutional investment management and retail mutual fund businesses in the
United States, Europe and the Pacific region. It is contemplated that the merger
will occur on February 28, 1997. The Trust's investment advisor, AIM, is a
wholly-owned subsidiary of AIM Management.
The proposed transaction may be deemed to cause an "assignment" (as that
term is defined under the Investment Company Act of 1940, as amended (the "1940
Act")) of the Master Investment Advisory Agreement between the Trust and AIM.
Under the 1940 Act and the Master Investment Advisory Agreement, an assignment
results in the automatic termination of the Master Investment Advisory
Agreement.
On December 11, 1996, the Board of Trustees of the Trust approved a new
investment advisory agreement, subject to shareholder approval, between AIM and
the Trust with respect to the Portfolio. Shareholders will be asked to approve
the proposed advisory agreement at an annual meeting of shareholders to be held
on February 7, 1997 (the "Annual Meeting"). The Board of Trustees has also
approved a new administrative services agreement with AIM and a new distribution
agreement with Fund Management
3
<PAGE> 66
Company ("FMC"). There are no material changes to the terms of the new
agreements, including the fees payable by the Portfolio. No change is
anticipated in the investment advisory or other personnel responsible for the
Portfolio as a result of these new agreements.
The Board of Trustees has approved these new agreements because the
Portfolio's corresponding existing agreements will terminate upon the
consummation of the proposed merger of AIM Management into a subsidiary of
INVESCO plc. Provided that the Portfolio's shareholders approve the new
investment advisory agreement at the Annual Meeting and the merger is
consummated, the new investment advisory agreement with respect to the
Portfolio, as well as the new administrative services and distribution
agreements, will automatically become effective as of the closing date of the
merger.
DISTRIBUTOR AND DISTRIBUTION PLAN
Fund Management Company ("FMC") acts as the exclusive distributor of the
shares of the Class. Pursuant to a plan of distribution adopted by the Trust's
Board of Trustees, the Trust may pay up to 0.50% of the average daily net asset
value of the Portfolio attributable to the Class to FMC as well as to certain
broker-dealers or other financial institutions. Of this amount, up to 0.25% may
be for continuing personal services to shareholders provided by broker-dealers
or institutions and the balance would be deemed an asset-based sales charge. See
"Purchase of Shares" and "Distribution Plan."
SPECIAL RISK CONSIDERATIONS
The Portfolio may borrow money and enter into reverse repurchase
agreements. 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 and La Familia AIM de Fondos and La Familia AIM de Fondos and
Design are service marks of A I M Management Group Inc.
4
<PAGE> 67
TABLE OF FEES AND EXPENSES
<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES*
Maximum sales load imposed on purchases
(as a percentage of offering price)................................. None
Maximum sales load on reinvested dividends
(as a percentage of offering price)................................. None
Deferred sales load (as a percentage of original purchase price or
redemption proceeds, as applicable)................................. None
Redemption fees (as a percentage of amount redeemed,
if applicable)...................................................... None
Exchange fee........................................................... None
ANNUAL PORTFOLIO OPERATING EXPENSES -- PRIVATE INVESTMENT CLASS
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management fees........................................................ 0.06%
12b-1 fees (after fee waivers)**....................................... 0.30%***
Other expenses:
Custodian fees...................................................... 0.01%
Other............................................................... 0.02%
----
Total other expenses........................................... 0.03%
-----
Total portfolio operating expenses --
Private Investment Class............................................ 0.39%
=====
</TABLE>
- ---------------
* Beneficial owners of shares of the Class should consider the effect of any
changes imposed by their bank, broker-dealer or other financial institution for
various services.
** Had there been no fee waivers, 12b-1 fees would have been 0.50% and Total
portfolio operating expenses would have been 0.59%.
*** It is possible that as a result of Rule 12b-1 fees, long-term shareholders
may pay more than the economic equivalent of the maximum front-end sales charges
permitted under rules of the National Association of Securities Dealers, Inc.
Given the Rule 12b-1 fee of the Class, however, it is estimated that it would
take a substantial number of years for a shareholder to exceed such maximum
front-end sales charges.
EXAMPLE
An investor in the Class would pay the following expenses on a $1,000
investment, assuming (1) a 5% annual return and (2) redemption at the end of
each time period.
<TABLE>
<S> <C>
1 year............................................................... $ 4
3 years.............................................................. $13
5 years.............................................................. $22
10 years.............................................................. $49
</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 Trust" below.) The expense figures
are based upon actual
5
<PAGE> 68
costs and fees charged to the Class for the fiscal year ended August 31, 1996.
The Table of Fees and Expenses reflects a voluntary waiver of 12b-1 fees for the
Class. Future waivers of fees (if any) may vary from the figures reflected in
the Table of Fees and Expenses. To the extent any service providers assume
additional expenses of the Class, such assumption of additional expenses will
have the effect of lowering the Class's overall expense ratio and increasing its
yield to investors. Beneficial owners of shares of the Class should also
consider the effect of any charges imposed by the institution maintaining their
accounts.
The example in the Table of Fees and Expenses assumes that all dividends
and distributions are reinvested and that the amounts listed under "Annual
Portfolio Operating Expenses -- Private Investment Class" remain the same in the
years shown.
The example shown in the above table is based on the amounts listed under
"Annual Portfolio Expenses." THE EXAMPLE SHOULD NOT BE CONSIDERED TO BE AN
ACCURATE REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE
GREATER OR LESSER THAN THOSE SHOWN.
FINANCIAL HIGHLIGHTS
Shown below are the per share data, ratios and supplemental data for the
four-year period ended August 31, 1996 and the period November 25, 1991 (date
operations commenced) through August 31, 1992. The data has been audited by KPMG
Peat Marwick LLP, independent auditors, whose unqualified report thereon appears
in the Statement of Additional Information.
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
<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 0.05 0.03 0.03 0.03
-------- -------- -------- -------- --------
Total from investment operations.......... 0.05 0.05 0.03 0.03 0.03
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income...... (0.05) (0.05) (0.03) (0.03) (0.03)
-------- -------- -------- -------- --------
Net asset value, end of period.............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total return................................ 5.25% 5.34% 3.22% 2.91% 3.92%(a)
======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s
omitted)................................ $352,537 $394,585 $412,716 $204,281 $ 525
======== ======== ======== ======== ========
Ratio of expenses to average net
assets(c)............................... 0.39%(b) 0.40% 0.38% 0.38% 0.40%(a)
======== ======== ======== ======== ========
Ratio of net investment income to average
net assets(d)........................... 5.14%(b) 5.23% 3.26% 2.81% 3.68%(a)
======== ======== ======== ======== ========
</TABLE>
- ---------------
(a) Annualized.
(b) Ratios are based on average net assets of $407,231,329.
(c) Ratios of expenses to average net assets prior to waiver of distribution
fees and/or expense reimbursements were 0.59%, 0.60%, 0.60%, 0.67% and 4.54%
for the periods 1996-1992, respectively.
(d) Ratios of net investment income to average net assets prior to waiver of
distribution fees and/or expense reimbursements were 4.94%, 5.03%, 3.05%,
2.52% and (0.47%) for the periods 1996-1992, respectively.
6
<PAGE> 69
SUITABILITY FOR INVESTORS
The Class is intended for use primarily by customers of banks, certain
broker-dealers and other financial institutions who seek a convenient vehicle in
which to invest in an open-end diversified money market fund. The minimum
initial investment is $10,000.
Investors in the Class have the opportunity to receive a somewhat higher
yield than might be obtainable through direct investment in money market
instruments, and enjoy the benefits of diversification, economies of scale and
same-day liquidity. Generally, higher interest rates can be obtained on the
purchase of very large blocks of money market instruments. Of course, any such
relative increase in interest rates may be offset to some extent by the
operating expenses of the Class.
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 certain
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 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 AIM (under the
supervision of and pursuant to guidelines established by the Trust'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 Trust'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, including: (a) a possible decline in the value of the underlying
security during the period while the Portfolio
7
<PAGE> 70
seeks to enforce its rights thereto, (b) possible subnormal levels of income and
lack of access to income during this period, and (c) expenses of enforcing its
rights. Repurchase agreements are considered to be loans by the Portfolio 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 by the Portfolios under the 1940 Act.
LENDING OF PORTFOLIO SECURITIES. 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.
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 investment leverage, the amount of delayed delivery
securities involved may not exceed the estimated amount
8
<PAGE> 71
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 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.
The Board of Trustees has unanimously approved the elimination of or
changes to certain fundamental investment policies of the Trust, subject to
shareholder approval. Shareholders will be asked to approve these changes at the
Annual Meeting. If approved, they will become effective on March 1, 1997.
The Trust is currently generally prohibited from investing in other
investment companies. The Board of Trustees has approved the elimination of this
prohibition, and the amendment to another fundamental investment policy that
corresponds to the proposed elimination. The elimination of the fundamental
investment policy that prohibits the Trust from investing in other investment
companies and the proposed amendment to the corresponding fundamental investment
policy would permit investment in other investment
9
<PAGE> 72
companies to the extent permitted by the 1940 Act, and rules and regulations
thereunder, and, if applicable, exemptive orders granted by the SEC.
The Board of Trustees has approved the amendment of Investment No. (1) of
the Trust indicated above. In the event shareholders approve the proposed
change, Investment Restriction No. (1) will read in full as follows:
(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, and
except that the Portfolio may purchase securities of other investment
companies to the extent permitted by applicable law or exemptive order.
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 SEC has
proposed certain changes to Rule 2a-7. While such proposed changes may have a
prospective impact on the investments of the Portfolio, the Portfolio
anticipates no difficulty in complying with any proposed change if adopted by
the SEC. A description of further investment restrictions applicable to the
Portfolio is contained in the Statement of Additional Information.
PURCHASE OF SHARES
Shares of the Class are sold on a continuing basis at their net asset value
next determined after an order has been received by the Portfolio. As discussed
below, the Trust reserves the right to reject any purchase order. Although there
is no sales charge imposed on the purchase of shares of the Class, banks or
other institutions may charge a recordkeeping, account maintenance or other fee
to their customers, and beneficial holders of the shares of the Class should
consult with the institutions maintaining their accounts to obtain a schedule of
applicable fees. To facilitate the investment of proceeds of purchase orders,
investors are urged to place their orders as early in the day as possible.
Purchase orders will be accepted for execution on the day the order is placed,
provided that the order is properly submitted and received by the Portfolio
prior to 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 Trust's custodian bank,
are open for business. It is expected that The Bank of New York and the Federal
Reserve Bank of New York will be closed during the next twelve months on
Saturdays and Sundays, and on the observed holidays of New Year's Day, Martin
Luther King Jr.'s Birthday, Presidents' Day, Memorial Day, Independence Day,
Labor Day, Columbus Day, Veterans' Day, Thanksgiving Day and Christmas Day.
Shares of the Class are sold to customers of banks, certain broker-dealers
and other financial institutions (each, an Institution, and collectively,
"Institutions"). Individuals, corporations, partnerships and other businesses
that maintain qualified accounts at an Institution may invest in the shares of
the Class. Each Institution will render administrative support services to its
customers who are the beneficial owners of the shares of the Class. Such
services may include, among other things, establishment and maintenance of
shareholder accounts and records; assistance in processing purchase and
redemption transactions in shares of
10
<PAGE> 73
the Class; providing periodic statements showing a customer's account balance in
shares of the Class; distribution of Trust proxy statements, annual reports and
other communications to shareholders whose accounts are serviced by the
Institution; and such other services as the Trust may reasonably request.
Institutions will be required to certify to the Trust that they comply with
applicable state law regarding registration as broker-dealers, or that they are
exempt from such registration.
Prior to the initial purchase of shares of the Class, an Account
Application, which can be obtained from A I M Institutional Fund Services, Inc.
("AIFS"), must be completed and sent to AIFS at 11 Greenway Plaza, Suite 1919,
Houston, Texas 77046-1173. Any changes made to the information provided in the
Account Application must be made in writing or by completing a new form and
providing it to AIFS. An investor must open an account in the shares of the
Class through an Institution in accordance with procedures established by such
Institution. Each Institution separately determines the rules applicable to
accounts in the shares of the Class opened with it, including minimum initial
and subsequent investment requirements and the procedures to be followed by
investors to effect purchases of shares of the Class. The minimum initial
investment is $10,000, and there is no minimum amount of subsequent purchases of
shares of the Class by an Institution on behalf of its customers. An investor
who proposes to open a Portfolio account with an Institution should consult with
a representative of such Institution to obtain a description of the rules
governing such an account. The Institution holds shares of the Class registered
in its name, as agent for the customer, on the books of the Institution. A
statement with regard to the customer's shares of the Class is supplied to the
customer periodically, and confirmations of all transactions for the account of
the customer are provided by the Institution to the customer promptly upon
request. In addition, the Institution sends to each customer proxies, periodic
reports and other information with regard to the customer's shares of the Class.
The customer's shares of the Class are fully assignable and subject to
encumbrance by the customer.
All agreements which relate to a customer's account with an Institution are
with the Institution. An investor may terminate his relationship with an
Institution at any time, in which case an account in the investor's name will be
established directly with the Portfolio and the investor will become a
shareholder of record. In such case, however, the investor will not be able to
purchase additional shares of the Class directly, except through reinvestment of
dividends and distributions.
Orders for the purchase of shares of the Class are placed by the investor
with the Institution. The Institution is responsible for the prompt transmission
of the order to the Trust. The Portfolio will normally be required to make
immediate settlement in federal funds (member bank deposits with a Federal
Reserve Bank) for portfolio securities purchased. Accordingly, payment for
shares of the Class purchased by Institutions on behalf of their customers must
be in federal funds. If an investor's order to purchase shares of the Class is
paid for other than in federal funds, the Institution, acting on behalf of the
investor, completes the conversion into federal funds (which may take two
business days), or itself advances federal funds prior to conversion, and
promptly transmits the order and payment in the form of federal funds to AIFS.
Subject to the conditions stated above and to the Trust's right to reject
any purchase order, orders will be accepted (i) when payment for the shares of
the Class purchased is received by The Bank of New York, the Trust's custodian
bank, in the form described above and notice of such order is provided to AIFS
or (ii) at the time the order is placed, if the Portfolio is assured of payment.
Shares of the Class purchased by orders which are accepted prior to 4:00 p.m.
Eastern Time will earn the dividend declared on the date of purchase.
Federal Reserve wires should be sent as early as possible in order to
facilitate crediting to the shareholder's account. Any funds received with
respect to an order which is not accepted by the Trust and any funds received
for which an order has not been received will be returned to the sending
Institution. An order
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<PAGE> 74
must specify that it is for the purchase of Shares of the "Private Investment
Class of the Treasury Portfolio," otherwise any funds received will be returned
to the sending Institution.
The Trust 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 Trust. Redemption requests with respect to the Class may also be
made via AIM LINK(R), a personal computer application software product.
Normally, the net asset value per share of the Portfolio will remain constant at
$1.00. See "Net Asset Value." Redemption requests with respect to shares of the
Class are normally made through a customer's Institution.
Payment for redeemed shares of the Class is normally made by Federal
Reserve wire to the commercial bank account designated in the Institution's
Account Application, but may be remitted by check upon request by a shareholder.
If a redemption request is received by 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 Trust. 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 Trust or AIFS, the
Trust'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 if they do not follow reasonable procedures for verification of
telephone transactions. Such reasonable procedures for verification 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 Trust may
make payment for telephone redemptions in excess of $1,000 by check when it is
considered to be in the Portfolio's best interest to do so.
In certain cases, the Trust may call for the redemption of, or refuse to
transfer or issue, shares of the Class in order to comply with law or to further
the purposes for which the Trust is formed. If a transfer or redemption of
shares of the Class causes the value of shares of the Class in an account to be
less than $500, the Trust may cause the remaining shares to be redeemed.
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<PAGE> 75
DIVIDENDS
Dividends from the net income of the Portfolio are declared daily to
shareholders of record of each class of the Portfolio as of immediately after
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) Portfolio
expenses, such as custodian fees, trustees' fees, accounting and legal expenses,
based upon such class' pro rata share of the net assets of the Portfolio, less
(c) expenses directly attributable to such class, such as distribution expenses,
if any, and transfer agency fees. Although realized gains and losses on the
assets of the Portfolio are reflected in its net asset value, they are not
expected to be of an amount which would affect its $1.00 per share net asset
value for purposes of purchases and redemptions. See "Net Asset Value."
Distributions from net realized short-term gains may be declared and paid yearly
or more frequently. See "Taxes." The Portfolio does not expect to realize any
long-term capital gains or losses.
All dividends declared during a month will normally be paid by wire
transfer. Payment will normally be made on the first business day of the
following month. A shareholder may elect to have all dividends automatically
reinvested in additional full and fractional shares of the Class at the net
asset value as of 4:00 p.m. Eastern Time on the last business day of the month.
Such election, or any revocation thereof, must be made in writing by the
Institution to AIFS at 11 Greenway Plaza, Suite 1919, Houston, TX 77046-1173 and
will become effective with dividends paid after its receipt by AIFS. If a
shareholder redeems all the shares of the Class in its account at any time
during the month, all dividends declared through the date of redemption are paid
to the shareholder along with the proceeds of the redemption.
The Portfolio uses its best efforts to maintain the net asset value per
share at $1.00 for purposes of sales and redemptions. See "Net Asset Value."
Should the Trust incur or anticipate any unusual expense, loss or depreciation
which could adversely affect the income or net asset value of the Portfolio, the
Trust'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.
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<PAGE> 76
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 Trust and each portfolio of the Trust 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 herein. Shareholders
are advised to consult with their own tax advisors concerning the application of
state, local or foreign taxes.
Foreign persons who file a United States tax return after December 31, 1996
for a U.S. tax refund and who are not eligible to obtain a social security
number must apply to the Internal Revenue Service ("IRS") for an individual
taxpayer identification number, using IRS Form W-7. For a copy of the IRS Form
W-7 and accompanying instructions, please contact your tax advisor or AIFS.
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 Portfolio. Net asset value
per share is determined by dividing the value of the Portfolio's securities,
cash and other assets (including interest accrued but not collected) less all of
its liabilities (including accrued expenses and dividends payable), by the
number of shares outstanding of the Portfolio and rounding the resulting per
share net asset value to the nearest one cent.
The securities of the Portfolio are valued on the basis of amortized cost
pursuant to rules promulgated by the SEC 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 Trust at
(800) 877-7748. Yields will fluctuate from time to time and are not necessarily
indicative of future results. Accordingly, the yield information may not provide
a basis for comparison with investments which pay a fixed rate of interest for a
14
<PAGE> 77
stated period of time. Yield is a function of the type and quality of a
Portfolio's investments, the Portfolio's maturity and the operating expense
ratio of the Class. A SHAREHOLDER'S INVESTMENT IN THE PORTFOLIO IS NOT INSURED
OR GUARANTEED BY THE U.S. GOVERNMENT OR BY ANY INSTITUTION. These factors should
be carefully considered by the investor before making an investment in the
Portfolio.
For the seven-day period ended August 31, 1996, the current yield and the
effective yield (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) of the Class were 4.93% and 5.05%, 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 subaccounting,
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.
From time to time and in its discretion, AIM or its affiliates 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 Trust furnishes shareholders with semi-annual reports containing
information about the Portfolio and its operations, including a list of the
investments held in the Portfolio and financial statements. The annual financial
statements are audited by the Trust's independent auditors.
Unless otherwise requested by the shareholder, each shareholder will be
provided with a written confirmation for each transaction by its Institution.
Institutions establishing sub-accounts will receive a written confirmation for
each transaction in a sub-account. Duplicate confirmations may be transmitted to
the beneficial owner of the sub-account if requested by the Institution. The
Institution will receive a periodic statement setting forth, for each
sub-account, the share balance, income earned for the month, income earned for
the year to date and the total current value of the account.
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES
The overall management of the business and affairs of the Trust is vested
with its Board of Trustees. The Board of Trustees approves all significant
agreements between the Trust and persons or companies furnishing services to the
Trust, including agreements with the Trust's investment advisor, distributor,
custodian and transfer agent. The day-to-day operations of the Trust are
delegated to the Trust's officers and to AIM, subject always to the objectives
and policies of the Trust and to the general supervision of the Trust'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 41 investment company portfolios. As of November 14, 1996,
the total assets of the
15
<PAGE> 78
investment company portfolios managed or advised by AIM and its affiliates were
approximately $61.1 billion. All of the directors and certain of the officers of
AIM are also trustees or executive officers of the Trust. AIM is a wholly owned
subsidiary of AIM Management. 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, 1996, AIM received fees from the Trust
under an advisory agreement previously in effect, which provided for the same
level of compensation to AIM as the Advisory Agreement, with respect to the
Portfolio which represented 0.06% of such Portfolio's average daily net assets.
During such fiscal year, the expenses of the Class, including AIM's fees,
amounted to 0.39% of the Class' average daily net assets.
ADMINISTRATIVE SERVICES
The Trust has entered into a Master Administrative Services Agreement
effective 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 Trust 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.
FEE WAIVERS
AIM or its affiliates 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 for such
fee or expenses 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 each fiscal year. AIM voluntarily
reimbursed expenses of $113,500 on the Portfolio during the year ended August
31, 1996.
DISTRIBUTOR
The Trust 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
Trust are affiliated with FMC and AIM. The Distribution Agreement provides that
FMC has the exclusive right to distribute shares of the Class either directly or
through other broker-dealers. FMC is the distributor of several of the mutual
funds managed or advised by AIM.
FMC may, from time to time, at its expense, pay a bonus or other
consideration or incentive to dealers or banks who sell a minimum dollar amount
of the shares of the Class during a specific period of time. In some instances,
these incentives may be offered only to certain dealers or institutions who have
sold or may sell significant amounts of shares. The total amount of such
additional bonus payments or other consideration shall not exceed 0.05% of the
net asset value of the shares of the Class sold. Any such bonus or incentive
programs
16
<PAGE> 79
will not change the price paid by investors for the purchase of shares of the
Class or the amount received as proceeds from such sales. Dealers or
institutions may not use sales of the shares of the Class to qualify for any
incentives to the extent that such incentives may be prohibited by the laws of
any jurisdiction.
DISTRIBUTION PLAN
The Trust has adopted a Master Distribution Plan (the "Plan") pursuant to
Rule 12b-1 under the 1940 Act. The Plan provides that the Trust may compensate
FMC in connection with the distribution of shares of the Class in an amount
equal to 0.50% on an annualized basis of the average daily net assets of the
Portfolio attributable to the Class. Such amounts may be expended when and if
authorized by the Board of Trustees and may be used to finance such
distribution-related services as expenses of organizing and conducting sales
seminars, printing of prospectuses and statements of additional information (and
supplements thereto) and reports for other than existing shareholders,
preparation and distribution of advertising material and sales literature and
costs of administering the Plan.
Of the compensation paid to FMC under the Plan, a service fee may be paid
to dealers and other financial institutions that provide continuing personal
shareholder services to their customers who purchase and own shares of the
Class, in amounts of up to 0.25% of the average net assets of the Portfolio
attributable to the Class which are attributable to the customers of such
dealers or financial institutions. Payments to dealers and other financial
institutions in excess of such amount and payments retained by FMC would be
characterized as an asset-based sales charge pursuant to the Plan. The Plan also
imposes a cap on the total amount of sales charges, including asset-based sales
charges, that may be paid by the Portfolio with respect to the Class. The Plan
does not obligate the Trust 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 Trust 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 Trust to provide the Board of
Trustees at least quarterly with a written report of the amounts expended
pursuant to each Plan and the purposes for which such expenditures were made.
The Board of Trustees shall review these reports in connection with their
decisions with respect to the Plan.
As required by Rule 12b-1 under the 1940 Act, the Plan was initially
approved by the Board of Trustees, including a majority of the trustees who are
not "interested persons" (as defined in the 1940 Act) of the Fund and who have
no direct or indirect financial interest in the operation of the Plan or in any
agreements related to the Plan ("Qualified Trustees") on July 19, 1993. In
approving the continuance of the Plan in accordance with the requirements of
Rule 12b-1, the trustees considered various factors and determined that there is
a reasonable likelihood that the Plan will benefit the Trust and the
shareholders of the Class.
The Plan may be terminated by a vote of a majority of the Qualified
Trustees, or by a vote of a majority of the holders of the outstanding voting
securities of the shares of the Class. Any change in the Plan that would
increase materially the distribution expenses paid by the Class requires
shareholder approval; otherwise the Plan may be amended by the trustees,
including a majority of the Qualified Trustees, by vote cast in person at a
meeting called for the purpose of voting upon such amendment. As long as the
Plan is in effect, the selection or nomination of the Qualified Trustees is
committed to the discretion of the Qualified Trustees.
17
<PAGE> 80
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 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 Trust is a Delaware business trust. The Trust was originally
incorporated in Maryland on January 24, 1977, but had no operations prior to
November 10, 1980. Effective December 31, 1986, the Trust was reorganized as a
Massachusetts business trust; and effective October 15, 1993, the Trust 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 Trust 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 Trust 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 Trust may have different sales charges and other
expenses which may affect performance. An investor may obtain information
concerning the Trust's other classes by contacting FMC.
All shares of the Trust have equal rights with respect to voting, except
that the holders of shares of a particular portfolio or class will have the
exclusive right to vote on matters pertaining solely to that portfolio or class.
For example, holders of shares of a particular portfolio will have the exclusive
right to vote on any investment advisory agreement or investment restriction
that relates only to such portfolio. In addition, if a portfolio is divided into
various classes, holders of shares of a particular class will have the exclusive
right to vote on any matter, such as distribution arrangements, which relates
solely to such class. The shareholders of the Class have distinctive rights with
respect to dividends and redemption which are more fully described in this
Prospectus. In the event of liquidation or termination of the Trust, 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 Trust
attributable to the respective portfolio or allocated to the respective
portfolio based on the liquidation value of such portfolio.
18
<PAGE> 81
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 Trust's outstanding shares. As of December
1, 1996, Liberty Bank & Trust Company of Tulsa, N.A. was the owner of record of
45.06% of the outstanding shares of the Class. As long as Liberty Bank & Trust
Company of Tulsa, N.A. owns over 25% of such shares, it may be presumed to be in
"control" of the Private Investment Class of the Treasury Portfolio, as defined
in the 1940 Act.
There are no preemptive or conversion rights applicable to any of the
Trust's shares. The Trust's shares, when issued, will be fully paid and
non-assessable. The Board of Trustees may create additional portfolios and
classes of the Trust without shareholder approval.
TRANSFER AGENT AND CUSTODIAN
The Bank of New York, 90 Washington Street, 11th Floor, New York, New York
10286, acts as custodian for the portfolio securities and cash of the Portfolio.
A I M Institutional Fund Services, Inc., 11 Greenway Plaza, Suite 1919, Houston,
Texas 77046-1173, acts as transfer agent for the shares of the Class.
LEGAL COUNSEL
The law firm of Ballard Spahr Andrews & Ingersoll, Philadelphia,
Pennsylvania, serves as counsel to the Trust and has passed upon the legality of
the shares of the Portfolio.
SHAREHOLDER INQUIRIES
Shareholder inquiries concerning the status of an account should be
directed to an investor's Institution, or to the Trust at 11 Greenway Plaza,
Suite 1919, Houston, Texas 77046-1173, or may be made by calling (800) 877-7748.
OTHER INFORMATION
This Prospectus sets forth basic information that investors should know
about the Trust 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 Trust 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.
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<PAGE> 82
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 83
<TABLE>
<S> <C>
SHORT-TERM INVESTMENTS TRUST SHORT-TERM
11 Greenway Plaza, Suite 1919 INVESTMENTS TRUST
Houston, Texas 77046-1173
(800) 877-7748 PRIVATE
INVESTMENT CLASS
INVESTMENT ADVISOR OF THE
A I M ADVISORS, INC. --------------------------------------------
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173 TREASURY PORTFOLIO PROSPECTUS
(713) 626-1919
DISTRIBUTOR DECEMBER 30, 1996
FUND MANAGEMENT COMPANY
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173 [LOGO APPEARS HERE]
(800) 877-7748 Fund Management Company
AUDITORS
KPMG PEAT MARWICK LLP
NationsBank Building
700 Louisiana
Houston, Texas 77002
CUSTODIAN
THE BANK OF NEW YORK
90 Washington Street
11th 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 TRUST
OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY
JURISDICTION TO ANY PERSON TO WHOM SUCH OFFERING MAY NOT LAWFULLY BE MADE.
</TABLE>
<PAGE> 84
SHORT-TERM
INVESTMENTS TRUST
Prospectus
- --------------------------------------------------------------------------------
TREASURY
PORTFOLIO The Treasury Portfolio is a money market fund
whose investment objective is the maximization of
RESOURCE current income to the extent consistent with the
CLASS preservation of capital and the maintenance of
liquidity. The Treasury Portfolio seeks to achieve its
objective by investing in direct obligations of the
DECEMBER 30, 1996 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 "Trust"), an open-
end, diversified, series management investment company.
This Prospectus relates solely to the Resource Class of
the Treasury Portfolio, a class of shares designed to
be a convenient vehicle in which institutional
customers of banks, certain broker-dealers and other
financial institutions can invest in a diversified
money market fund.
The Trust also offers shares of other classes of
the Treasury Portfolio pursuant to separate
prospectuses: the Institutional Class, Private
Investment Class, Personal Investment Class and Cash
Management Class, as well as shares of classes of
another portfolio of the Trust, the Treasury
TaxAdvantage Portfolio.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS SETS FORTH BASIC INFORMATION THAT
A PROSPECTIVE INVESTOR SHOULD KNOW BEFORE INVESTING IN
SHARES OF THE RESOURCE CLASS OF THE TREASURY PORTFOLIO
AND SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE. A
STATEMENT OF ADDITIONAL INFORMATION, DATED DECEMBER 30,
1996, HAS BEEN FILED WITH THE UNITED STATES SECURITIES
AND EXCHANGE COMMISSION (THE "SEC") AND IS HEREBY
INCORPORATED BY REFERENCE. FOR A COPY OF THE STATEMENT
OF ADDITIONAL INFORMATION WITHOUT CHARGE, WRITE TO THE
ADDRESS BELOW OR CALL (800) 825-6858.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR GUARANTEED OR ENDORSED BY, ANY BANK, AND THE
TRUST'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 TRUST INVOLVE
INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
[LOGO APPEARS HERE]
Fund Management Company
11 Greenway Plaza
Suite 1919
Houston, Texas 77046-1173
(800) 825-6858
<PAGE> 85
SUMMARY
THE PORTFOLIO AND ITS INVESTMENT OBJECTIVE
The Trust is an open-end diversified series management investment company.
This Prospectus relates to the Resource 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 Trust also offers shares of other
classes of shares of beneficial interest of the Portfolio representing an
interest in the Portfolio. Such classes have different distribution arrangements
and are designed for institutional and other categories of investors. The Trust
also offers shares of two classes of another portfolio, the Treasury
TaxAdvantage Portfolio, each pursuant to separate prospectuses. Such classes
have different distribution arrangements and are designed for institutional and
other categories of investors. The portfolios of the Trust are referred to
collectively as the "Portfolios."
Because the Trust 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 institutional
customers of banks, certain broker-dealers and other financial institutions can
invest in a diversified open-end money market fund.
PURCHASE OF SHARES
Shares of the Class that are offered hereby are sold at net asset value. The
minimum initial investment in the Class is $10,000. There is no minimum amount
for subsequent investments. Payment for shares of the Class purchased must be in
funds immediately available to the Portfolio. See "Purchase of Shares."
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 Trust uses the amortized cost method of valuing the securities of the
Portfolio and rounds the per share net asset value to the nearest whole cent.
Accordingly, the net asset value per share of the Portfolio will normally remain
constant at $1.00. AN INVESTMENT IN THE PORTFOLIO IS NOT INSURED OR GUARANTEED
BY THE U.S. GOVERNMENT, AND THERE IS NO ASSURANCE THAT THE PORTFOLIO WILL BE
ABLE TO MAINTAIN A STABLE NET ASSET VALUE. See "Net Asset Value."
INVESTMENT ADVISOR
A I M Advisors, Inc. ("AIM") serves as the Portfolio's investment advisor and
receives a fee based on the Portfolio's average daily net assets. During the
fiscal year ended August 31, 1996, the Trust paid AIM 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 Trust for its costs of performing
certain accounting and other administrative services for the Fund. See
"Management of the Trust -- Investment Advisor" and "-- Administrative
Services."
2
<PAGE> 86
On November 4, 1996, A I M Management Group Inc. ("AIM Management"), announced
that it had entered into an Agreement and Plan of Merger among INVESCO plc,
INVESCO Group Services, Inc. and AIM Management, pursuant to which AIM
Management will be merged with INVESCO Group Services, Inc. INVESCO plc and its
subsidiaries are an independent investment management group engaged in
institutional investment management and retail mutual fund businesses in the
United States, Europe and the Pacific region. It is contemplated that the merger
will occur on February 28, 1997. The Trust's investment advisor, AIM, is a
wholly-owned subsidiary of AIM Management.
The proposed transaction may be deemed to cause an "assignment" (as that term
is defined under the Investment Company Act of 1940, as amended (the "1940
Act")) of the Master Investment Advisory Agreement between the Trust and AIM.
Under the 1940 Act and the Master Investment Advisory Agreement, an assignment
results in the automatic termination of the Master Investment Advisory
Agreement.
On December 11, 1996, the Board of Trustees of the Trust approved a new
investment advisory agreement, subject to shareholder approval, between AIM and
the Trust with respect to the Portfolio. Shareholders will be asked to approve
the proposed advisory agreement at an annual meeting of shareholders to be held
on February 7, 1997 (the "Annual Meeting"). The Board of Trustees has also
approved a new administrative services agreement with AIM and a new distribution
agreement with Fund Management Company ("FMC"). There are no material changes to
the terms of the new agreements, including the fees payable by the Portfolio. No
change is anticipated in the investment advisory or other personnel responsible
for the Portfolio as a result of these new agreements.
The Board of Trustees has approved these new agreements because the
Portfolio's corresponding existing agreements will terminate upon the
consummation of the proposed merger of AIM Management into a subsidiary of
INVESCO plc. Provided that the Portfolio's shareholders approve the new
investment advisory agreement at the Annual Meeting and the merger is
consummated, the new investment advisory agreement with respect to the
Portfolio, as well as the new administrative services and distribution
agreements, will automatically become effective as of the closing date of the
merger.
DISTRIBUTOR AND DISTRIBUTION PLAN
Fund Management Company ("FMC") acts as the exclusive distributor of the
shares of the Class. Pursuant to a plan of distribution adopted by the Trust's
Board of Trustees, FMC receives a fee from the Trust of up to 0.20% of the
average daily net assets of the Portfolio attributable to the shares of the
Class as compensation for distribution-related services pursuant to plans of
distribution adopted by the Trust's Board of Trustees. The Trust may also make
payments pursuant to such distribution plans to certain broker-dealers or other
financial institutions for distribution-related services. 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 and La Familia AIM de Fondos and La Familia AIM de Fondos and
Design are service marks of A I M Management Group Inc.
3
<PAGE> 87
TABLE OF FEES AND EXPENSES
<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES*
Maximum sales load imposed on purchases
(as a percentage of offering price)................................... None
Maximum sales load on reinvested dividends
(as a percentage of offering price)................................... None
Deferred sales load (as a percentage of original purchase price or
redemption proceeds, as applicable)................................... None
Redemption fees (as a percentage of amount
redeemed, if applicable).............................................. None
Exchange fee............................................................. None
ANNUAL PORTFOLIO OPERATING EXPENSES -- RESOURCE CLASS
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management fees.......................................................... 0.06%
12b-1 fees (after fee waivers)**......................................... 0.16%
Other expenses (estimated):
Custodian fees........................................................ 0.01%
Other................................................................. 0.02%
----
Total other expenses............................................. 0.03%
----
Total portfolio operating expenses -- Resource Class..................... 0.25%
====
</TABLE>
- ---------------
* Beneficial owners of shares of the Class should consider the effect of any
charges imposed by their bank, broker-dealer or other financial institution
for various services.
** Had there been no fee waivers, 12b-1 fees and Total portfolio operating
expenses would have been 0.20% and 0.29%, respectively.
EXAMPLE
An investor in the Class would pay the following expenses on a $1,000
investment, assuming (1) a 5% annual return and (2) redemption at the end of
each time period.
<TABLE>
<S> <C>
1 year................................................................ $ 3
3 years............................................................... $ 8
</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 Trust" below.) The Other Expenses and
12b-1 fees figure is based upon estimated costs and the estimated size of the
Class and the Portfolio and estimated fees to be charged for the current fiscal
year. Thus, actual expenses may be greater or less than such estimates. Future
waivers of fees (if any) may vary from the figures reflected in the Table of
Fees and Expenses. To the extent any service providers assume expenses of the
Class, such assumption of expenses will have the effect of lowering the Class's
overall expense ratio and increasing its yield to investors. Beneficial owners
of shares of the Class should also consider the effect of any charges imposed by
the institution maintaining their accounts.
The example in the Table of Fees and Expenses assumes that all dividends and
distributions are reinvested and that the amounts listed under "Annual Portfolio
Operating Expenses -- Resource Class" remain the same in the years shown.
The example shown in the above table is based on the amounts listed under
"Annual Portfolio Operating Expenses." THE EXAMPLE SHOULD NOT BE CONSIDERED TO
BE AN ACCURATE REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY
BE GREATER OR LESSER THAN THOSE SHOWN.
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<PAGE> 88
FINANCIAL HIGHLIGHTS
Shown below are the per share data, ratios and supplemental data for the
period March 12, 1996 (date operations commenced) through August 31, 1996. The
data has been audited by KPMG Peat Marwick LLP, independent auditors, whose
unqualified report thereon appears in the Statement of Additional Information.
<TABLE>
<CAPTION>
1996
-------
<S> <C>
Net asset value, beginning of period......................................... $ 1.00
Income from investment operations:
Net investment income...................................................... 0.03
-------
Total from investment operations........................................... 0.03
-------
Less distributions:
Dividends from net investment income....................................... (0.03)
-------
Net asset value, end of period............................................. $ 1.00
=======
Total return............................................................... 5.09%(a)
=======
Ratios/supplemental data:
Net assets, end of period (000s omitted)................................... $33,339
=======
Ratios of expenses to average net assets(c)................................ 0.25%(a)(b)
=======
Ratio of net investment income to average net assets(d).................... 5.07%(a)(b)
=======
</TABLE>
- ---------------
(a) Annualized.
(b) Ratios are annualized and based on average net assets of $41,695,963.
(c) Ratio of expenses to average net assets prior to waiver of distribution fees
was 0.29% for the period 1996.
(d) Ratio of net investment income to average net assets prior to waiver of
distribution fees was 5.03% for the period 1996.
SUITABILITY FOR INVESTORS
The shares of the Class are intended for use primarily by institutional
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. It is expected that the shares of the Class may be particularly
suitable investments for corporate cash managers, municipalities or other public
entities. The minimum initial investment is $10,000.
Investors in the shares of 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 shares 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).
5
<PAGE> 89
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 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 AIM (under the
supervision of and pursuant to guidelines established by the Trust'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 Trust'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, 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) expenses 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 by the Portfolio under the 1940 Act.
LENDING OF PORTFOLIO SECURITIES. 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.
PURCHASING DELAYED DELIVERY SECURITIES. In managing the Portfolio's
investments, AIM may indicate to dealers or issuers its interest in acquiring
certain securities for the Portfolio for settlement beyond a customary
settlement date. In some cases, the Portfolio may agree to purchase such
securities at stated prices and yields. In such cases, such securities are
considered "delayed delivery" securities when traded in the secondary market.
Since this is done to facilitate the acquisition of portfolio securities and is
not for the purpose of investment leverage, the amount of delayed delivery
securities involved may not exceed the estimated amount of funds available for
investment on the settlement date. Until the settlement date, assets of the
Portfolio with a dollar value sufficient at all times to make payment for the
delayed delivery securities will be segregated. The total amount of segregated
assets may not exceed 25% of the Portfolio's total assets. The delayed delivery
securities, which will not begin to accrue interest until the settlement date,
will be recorded as an asset of the Portfolio and will be subject to the risks
of market value fluctuations. The purchase price of the delayed delivery
securities will be recorded as a liability of the Portfolio until settlement.
Absent extraordinary circumstances, the Portfolio's right to acquire delayed
delivery securities will not be divested prior to the settlement date.
ILLIQUID SECURITIES. The Portfolio will invest no more than 10% of its net
assets in illiquid securities.
6
<PAGE> 90
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 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.
The Board of Trustees has unanimously approved the elimination of or changes
to certain fundamental investment policies of the Trust, subject to shareholder
approval. Shareholders will be asked to approve these changes at the Annual
Meeting. If approved, they will become effective on March 1, 1997.
The Trust is currently generally prohibited from investing in other investment
companies. The Board of Trustees has approved the elimination of this
prohibition, and the amendment to another fundamental investment policy that
corresponds to the proposed elimination. The elimination of the fundamental
investment policy that prohibits the Trust from investing in other investment
companies and the proposed amendment to the corresponding fundamental investment
policy would permit investment in other investment companies to the extent
permitted by the 1940 Act, and rules and regulations thereunder, and, if
applicable, exemptive orders granted by the SEC.
The Board of Trustees has approved the amendment of Investment No. (1) of the
Trust indicated above. In the event shareholders approve the proposed change,
Investment Restriction No. (1) will read in full as follows:
(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, and
except that the Portfolio may purchase securities of other investment
companies to the extent permitted by applicable law or exemptive order.
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 SEC has
proposed certain changes to Rule 2a-7. While such proposed changes may have a
prospective impact on the investments of the Portfolio, the Portfolio
anticipates no difficulty in complying
7
<PAGE> 91
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 Trust reserves the right to reject any purchase order. Although there
is no sales charge imposed on the purchase of shares of the Class, banks or
other institutions may charge a recordkeeping, account maintenance or other fee
to their customers, and beneficial holders of the shares of the Class should
consult with the institutions maintaining their accounts to obtain a schedule of
applicable fees. To facilitate the investment of proceeds of purchase orders,
the 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 Trust's custodian bank, 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 institutional 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 shares of the Class. Each Institution will render administrative support
services to its customers who are the beneficial owners of the shares of the
Class. Such services may include, among other things, establishment and
maintenance of shareholder accounts and records; assistance in processing
purchase and redemption transactions in shares of the Class; providing periodic
statements showing a customer's account balance in shares of the Class;
distribution of Trust proxy statements, annual reports and other communications
to shareholders whose accounts are serviced by the Institution; and such other
services as the Trust may reasonably request. Institutions will be required to
certify to the Trust 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 shares of the Class through an
Institution in accordance with procedures established by such Institution. Each
Institution separately determines the rules applicable to accounts in the shares
of the Class opened with it, including minimum initial and subsequent investment
requirements and the procedures to be followed by investors to effect purchases
of shares of the Class. The minimum initial investment is $10,000, and there is
no minimum amount of subsequent purchases of shares of the Class by an
Institution on behalf of its customers. An investor who proposes to open a
Portfolio account with an Institution should consult with a representative of
such Institution to obtain a description of the rules governing such an account.
The Institution holds shares of the Class registered in its name, as agent for
the customer, on the books of the Institution. A statement with regard to the
customer's shares of the Class is supplied to the customer periodically, and
confirmations of all transactions for the account of the customer are provided
by the Institution to the customer promptly upon request. In addition, the
Institution sends to each customer proxies, periodic reports and other
information with regard to the customer's shares of the Class. The customer's
shares of the Class are fully assignable and subject to encumbrance by the
customer.
All agreements which relate to a customer's account with an Institution are
with the Institution. An investor may terminate his relationship with an
Institution at any time, in which case an account in the investor's name will be
established directly with the Portfolio and the investor will become a
shareholder of record. In such case, however, the investor will not be able to
purchase additional shares of the Class directly, except through reinvestment of
dividends and distributions.
Orders for the purchase of shares of the Class are placed by the investor with
the Institution. The Institution is responsible for the prompt transmission of
the order to the Trust. The Portfolio will normally be required to make
immediate settlement in federal funds (member bank deposits with a Federal
Reserve Bank) for portfolio securities purchased. Accordingly, payment for
shares of the Class purchased by Institutions on behalf of their customers must
be in federal funds. If an investor's order to purchase shares of the Class is
paid for other than in federal funds, the Institution, acting on behalf of the
investor, completes the conversion into federal funds (which may take two
business days), or itself advances federal funds prior to conversion, and
promptly transmits the order and payment in the form of federal funds to AIFS.
8
<PAGE> 92
Subject to the conditions stated above and to the Trust's right to reject any
purchase order, orders will be accepted (i) when payment for the shares of the
Class purchased is received by The Bank of New York, the Trust's custodian bank,
in the form described above and notice of such order is provided to AIFS or (ii)
at the time the order is placed, if the Portfolio is assured of payment. Shares
of the Class purchased by orders which are accepted prior to 3:00 p.m. Eastern
Time will earn the dividend declared on the date of purchase.
Federal Reserve wires should be sent as early as possible in order to
facilitate crediting to the shareholder's account. Any funds received with
respect to an order which is not accepted by the Trust 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
"Resource Class of the Treasury Portfolio," otherwise any funds received will be
returned to the sending Institution.
The Trust 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 Trust. Redemption requests with respect to the Class may also be
made via AIM LINK(R), a personal computer application software product.
Normally, the net asset value per share of the Portfolio will remain constant at
$1.00. See "Net Asset Value." Redemption requests with respect to shares of the
Class are normally made through a customer's Institution.
Payment for redeemed shares of the Class is normally made by Federal Reserve
wire to the commercial bank account designated in the Institution's Account
Application, but may be remitted by check upon request by a shareholder. If a
redemption request is received by 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 Trust. 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 Trust or AIFS, the
Trust'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 if they do not follow reasonable procedures for verification of
telephone transactions. Such reasonable procedures for verification 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 Trust 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.
The shares of the Class are not redeemable at the option of the Trust unless
the Board of Trustees of the Trust determines in its sole discretion that
failure to so redeem may have materially adverse consequences to the
shareholders of the Trust.
DIVIDENDS
Dividends from the net income of the Portfolio are declared daily to
shareholders of record of each class of the Portfolio as of immediately after
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) Portfolio
expenses, such as custodian fees, trustees' fees, accounting and legal expenses,
based upon such class' pro rata share of the net assets of the Portfolio, less
(c) expenses directly attributable to such class, such as distribution expenses,
if any, and transfer agency fees. 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
9
<PAGE> 93
and redemptions. See "Net Asset Value." Distributions from net realized
short-term gains may be declared and paid yearly or more frequently. See
"Taxes." The Portfolio does not expect to realize any long-term capital gains or
losses.
All dividends declared during a month will normally be paid by wire transfer.
Payment will normally be made on the first business day of the following month.
A shareholder may elect to have all dividends automatically reinvested in
additional full and fractional Shares 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 in writing by the Institution to AIFS at 11
Greenway Plaza, Suite 1919, Houston, TX 77046-1173 and will become effective
with dividends paid after its receipt by AIFS. If a shareholder redeems all the
Shares in its account at any time during the month, all dividends declared
through the date of redemption are paid to the shareholder along with the
proceeds of the redemption.
The Portfolio uses its best efforts to maintain its net asset value per share
at $1.00 for purposes of sales and redemptions. See "Net Asset Value." Should
the Trust incur or anticipate any unusual expense, loss or depreciation which
could adversely affect the income or net asset value of the Portfolio, the
Trust'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 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 Trust and each portfolio of the Trust 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 herein. Shareholders are
advised to consult with their own tax advisors concerning the application of
state, local or foreign taxes.
Foreign persons who file a United States tax return after December 31, 1996
for a U.S. tax refund and who are not eligible to obtain a social security
number must apply to the Internal Revenue Service ("IRS") for an individual
taxpayer identification number, using IRS Form W-7. For a copy of the IRS Form
W-7 and accompanying instructions, please contact your tax advisor or AIFS.
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 Portfolio. Net asset value per
share is determined by dividing the value of the Portfolio's securities, cash
and other assets (including interest accrued but not collected) less all of its
liabilities (including accrued expenses and dividends payable), by the number of
shares outstanding of the Portfolio and rounding the resulting per share net
asset value to the nearest one cent.
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<PAGE> 94
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 Trust at (800)
825-6858. 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 INSTITUTION. These factors should
be carefully considered by an investor before making an investment in the
Portfolio.
For the seven day period ended August 31, 1996 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 5.07% and 5.20%, respectively.
To assist banks and other institutions performing their own subaccounting,
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.
From time to time and in its discretion, AIM or its affiliates 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 Trust 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 Trust's independent auditors.
Unless otherwise requested by the shareholder, each shareholder will be
provided by its Institution with a written confirmation for each transaction.
Institutions establishing sub-accounts will receive a written confirmation for
each transaction in a sub-account. Duplicate confirmations may be transmitted to
the beneficial owner of the sub-account if requested by the Institution. The
Institution will receive a periodic statement setting forth, for each
sub-account, the share balance, income earned for the month, income earned for
the year to date and the total current value of the account.
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES
The overall management of the business and affairs of the Trust is vested with
its Board of Trustees. The Board of Trustees approves all significant agreements
between the Trust and persons or companies furnishing services to the Trust,
including agreements with the Trust's investment advisor, distributor, custodian
and transfer agent. The day-to-day operations of the Trust are delegated to the
Trust's officers and to AIM, subject always to the objective and policies of the
Trust and to the general supervision of the Trust'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 41 investment company portfolios. As of November 14, 1996,
the total assets of the investment company portfolios managed or advised by AIM
and its affiliates were approximately $61.1 billion. All of the directors and
certain of the officers of AIM are also trustees or executive officers of the
Trust. AIM is a wholly-owned subsidiary of AIM Management. AIM Management is a
holding company engaged in the financial services business.
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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, 1996, AIM received fees from the Trust,
with respect to the Portfolio under the Advisory Agreement which represented
0.06% of the Portfolio's average daily net assets.
ADMINISTRATIVE SERVICES
The Trust 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 Trust 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.
EXPENSES
In addition to fees paid to AIM pursuant to the Advisory Agreement and the
expenses reimbursed to AIM under the Administrative Services Agreement, the
Trust also pays or causes to be paid all other expenses of the Trust, including,
without limitation: the charges and expenses of any registrar, any custodian or
depository appointed by the Trust for the safekeeping of its cash, portfolio
securities and other property, and any transfer, dividend or accounting agent or
agents appointed by the Trust; brokers' commissions chargeable to the Trust in
connection with portfolio securities transactions to which the Trust is a party;
all taxes, including securities issuance and transfer taxes, and fees payable by
the Trust to federal, state or other governmental agencies; the costs and
expenses of engraving or printing of certificates representing shares of the
Trust; all costs and expenses in connection with the registration and
maintenance of registration of the Trust 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 Trust and supplements thereto to the Trust'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 Trust's shares; charges and expenses
of legal counsel, including counsel to the trustees of the Trust who are not
"interested persons" (as defined in the 1940 Act) of the Trust or AIM, and of
independent accountants in connection with any matter relating to the Trust;
membership dues of industry associations; interest payable on Trust borrowings;
postage; insurance premiums on property or personnel (including officers and
trustees) of the Trust 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 Trust) 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 Trust's shares.
Expenses of the Trust which are not directly attributable to the operations of
any class of shares or portfolio of the Trust are prorated among all classes of
the Trust based upon the relative net assets of each class. Expenses of the
Trust except those listed in the next sentence are prorated among all classes of
such portfolio based upon the relative net assets of each such class.
Distribution and service fees, transfer agency fees and shareholder record
keeping fees 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.
FEE WAIVERS
AIM or its affiliates 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 for such
fee or expenses prior to the end of each fiscal year. FMC may in its discretion
from time to time agree to waive voluntarily its 12b-1 fee but will retain its
ability to be reimbursed prior to the end of the fiscal year. AIM voluntarily
reimbursed expenses of $113,500 on the Portfolio during the year ended August
31, 1996.
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DISTRIBUTOR
The Trust 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 Trust are
affiliated with FMC and AIM. The Distribution Agreement provides that FMC has
the exclusive right to distribute shares of the Trust 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 financial institutions 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 financial
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 the 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 Trust has adopted a Master Distribution Plan (the "Plan") pursuant to Rule
12b-1 under the 1940 Act. The Plan provides that the Trust may compensate FMC in
connection with the distribution of the shares of the Class an amount equal to
0.20% on an annualized basis of the average daily net assets of the Portfolio
attributable to the Class. Such amount may be expended when and if authorized by
the Board of Trustees and may be used to finance such distribution-related
services as expenses of organizing and conducting sales seminars, printing of
prospectuses and statements of additional information (and supplements thereto)
and reports for other than existing shareholders, preparation and distribution
of advertising material and sales literature and costs of administering the
Plan.
Of the compensation paid to FMC under the Plan, a service fee may be paid to
dealers and other financial institutions that provide continuing personal
shareholder services to their customers who purchase and own shares of the
Class, in amounts of up to 0.20% 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. 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 Trust
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 Trust 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 Trust 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 Board of Trustees, including a majority of the trustees who are not
"interested persons" (as defined in the 1940 Act) of the Trust 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 the Plan in accordance with the requirements of
Rule 12b-1, the trustees considered various factors and determined that there is
a reasonable likelihood that the Plan will benefit the Trust and the holders 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 to which the Plan relates. Any change in the Plan that would
increase materially the distribution expenses paid by the Class requires
shareholder approval; otherwise the Plan may be amended by the trustees,
including a majority of the Qualified Trustees, by vote cast in person at a
meeting called for the purpose of voting upon such amendment. As long as the
Plan is in effect, the selection or nomination of the Qualified Trustees is
committed to the discretion of the Qualified Trustees.
PORTFOLIO TRANSACTIONS AND BROKERAGE
AIM is responsible for decisions to buy and sell securities for the Portfolio,
broker-dealer selection and negotiation of commission rates. Since purchases and
sales of portfolio securities by the Portfolio are usually principal
transactions, the Portfolio incurs little or no brokerage commissions. Portfolio
securities are normally purchased directly from the issuer or from a market
maker for the securities. The purchase price paid to dealers serving as market
makers may include a spread between the bid
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and asked prices. The Portfolio may 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 Trust is a Delaware business trust. The Trust was originally incorporated
in Maryland on January 24, 1977, but had no operations prior to November 10,
1980. Effective December 31, 1986, the Trust was reorganized as a Massachusetts
business trust; and effective October 15, 1993, the Trust 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 Trust
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 Trust 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
Trust may have different sales charges and other expenses which may affect
performance. An investor may obtain information concerning the Trust's other
classes by contacting FMC.
All shares of the Trust 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 Trust,
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 Trust
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 Trust's outstanding shares. As of December
1, 1996, Corestates Capital Markets was the owner of record of 63.59%, and
Mellon Bank was the owner of record of 35.27%, of the outstanding shares of the
Class. As long as each of Corestates Capital Markets and Mellon Bank owns over
25% of such shares, it may be presumed to be in "control" of the Resource Class
of the Treasury Portfolio, as defined in the 1940 Act.
There are no preemptive or conversion rights applicable to any of the Trust's
shares. The Trust's shares, when issued, will be fully paid and non-assessable.
The Board of Trustees may create additional portfolios of the Trust without
shareholder approval.
TRANSFER AGENT AND CUSTODIAN
The Bank of New York, 90 Washington Street, 11th Floor, New York, New York
10286, acts as custodian for the portfolio securities and cash of the Portfolio.
A I M Institutional Fund Services, Inc., 11 Greenway Plaza, Suite 1919, Houston,
Texas 77046-1173, acts as transfer agent for the shares of the Class.
LEGAL COUNSEL
The law firm of Ballard Spahr Andrews & Ingersoll, Philadelphia, Pennsylvania,
serves as counsel to the Trust and has passed upon the legality of the shares of
the Portfolio.
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SHAREHOLDER INQUIRIES
Shareholder inquiries concerning the status of an account should be directed
to an investor's Institution, or to the Trust at 11 Greenway Plaza, Suite 1919,
Houston, Texas 77046-1173, or may be made by calling (800) 825-6858.
OTHER INFORMATION
This Prospectus sets forth basic information that investors should know about
the Trust 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 Trust 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.
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<PAGE> 100
<TABLE>
<S> <C>
============================================================================================
SHORT-TERM INVESTMENTS TRUST PROSPECTUS
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173 December 30, 1996
(800) 825-6858
SHORT-TERM
INVESTMENT ADVISOR INVESTMENTS TRUST
A I M ADVISORS, INC.
11 Greenway Plaza, Suite 1919 ---------------------
Houston, Texas 77046-1173
(713) 626-1919 TREASURY PORTFOLIO
DISTRIBUTOR ---------------------
FUND MANAGEMENT COMPANY
11 Greenway Plaza, Suite 1919 RESOURCE CLASS
Houston, Texas 77046-1173
(800) 877-7745 TABLE OF CONTENTS
PAGE
AUDITORS <S> <C>
KPMG PEAT MARWICK LLP Summary........................................... 2
NationsBank Building Table of Fees and Expenses........................ 4
700 Louisiana Financial Highlights.............................. 5
Houston, Texas 77002 Suitability for Investors......................... 5
Investment Program................................ 5
CUSTODIAN Purchase of Shares................................ 8
THE BANK OF NEW YORK Redemption of Shares.............................. 9
90 Washington Street Dividends......................................... 9
11th Floor Taxes............................................. 10
New York, New York 10286 Net Asset Value................................... 10
Yield Information................................. 11
TRANSFER AGENT Reports to Shareholders........................... 11
A I M INSTITUTIONAL FUND SERVICES, INC. Management of the Trust........................... 11
11 Greenway Plaza, Suite 1919 General Information............................... 14
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 TRUST
OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY
JURISDICTION TO ANY PERSON TO WHOM SUCH OFFERING MAY NOT LAWFULLY BE MADE.
===============================================================================
</TABLE>
<PAGE> 101
STATEMENT OF
ADDITIONAL INFORMATION
SHORT-TERM INVESTMENTS TRUST
TREASURY PORTFOLIO
(CASH MANAGEMENT CLASS)
(INSTITUTIONAL CLASS)
(PERSONAL INVESTMENT CLASS)
(PRIVATE INVESTMENT CLASS)
(RESOURCE CLASS)
11 GREENWAY PLAZA
SUITE 1919
HOUSTON, TEXAS 77046-1173
(800) 659-1005
---------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS.
IT SHOULD BE READ IN CONJUNCTION WITH A PROSPECTUS OF EACH OF THE ABOVE NAMED
FUNDS,
COPIES OF WHICH MAY BE OBTAINED BY WRITING
FUND MANAGEMENT COMPANY, 11 GREENWAY PLAZA,
SUITE 1919, HOUSTON, TEXAS 77046-1173
OR CALLING (800) 659-1005
---------------------
STATEMENT OF ADDITIONAL INFORMATION DATED DECEMBER 30, 1996
RELATING TO THE PROSPECTUS OF EACH OF THE FOLLOWING CLASSES OF THE TREASURY
PORTFOLIO:
CASH MANAGEMENT CLASS PROSPECTUS DATED DECEMBER 30, 1996,
INSTITUTIONAL CLASS PROSPECTUS DATED DECEMBER 30, 1996,
PERSONAL INVESTMENT CLASS PROSPECTUS DATED DECEMBER 30, 1996,
PRIVATE INVESTMENT CLASS PROSPECTUS DATED DECEMBER 30, 1996
AND RESOURCE CLASS PROSPECTUS DATED DECEMBER 30, 1996
<PAGE> 102
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Introduction....................................................... 3
General Information about the Trust................................ 3
The Trust and Its Shares...................................... 3
Trustees and Officers......................................... 4
Remuneration of Trustees...................................... 7
Investment Advisor............................................ 8
Administrative Services....................................... 9
Expenses...................................................... 9
Banking Regulations........................................... 10
Transfer Agent and Custodian.................................. 10
Reports....................................................... 10
Principal Holders of Securities............................... 11
Purchases and Redemptions.......................................... 13
Net Asset Value Determination................................. 13
Distribution Agreement........................................ 14
Distribution Plan............................................. 14
Performance Information....................................... 15
Suspension of Redemption Rights............................... 15
Investment Program and Restrictions................................ 16
Investment Program............................................ 16
Eligible Securities........................................... 16
Investment Restrictions....................................... 16
Other Investment Policies..................................... 17
Portfolio Transactions............................................. 17
Tax Matters........................................................ 19
Qualification as a Regulated Investment Company............... 19
Excise Tax on Regulated Investment Companies.................. 20
Portfolio Distributions....................................... 20
Sale or Redemption of Shares.................................. 20
Foreign Shareholders.......................................... 20
Effect of Future Legislation; Local Tax Considerations........ 20
Financial Statements............................................... FS-1
</TABLE>
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INTRODUCTION
The Treasury Portfolio (the "Portfolio") is an investment portfolio of
Short-Term Investments Trust (the "Trust"), 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 the Cash Management Class Prospectus dated December
30, 1996, the Institutional Class Prospectus dated December 30, 1996, the
Personal Investment Class Prospectus dated December 30, 1996, the Private
Investment Class Prospectus dated December 30, 1996 and the Resource Class
Prospectus dated December 30, 1996 (each a "Prospectus"). Additional copies of
each Prospectus and this Statement of Additional Information may be obtained
without charge by writing the principal distributor of the Trust's shares, Fund
Management Company ("FMC"), 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173, or by calling (800) 659-1005. Investors must receive a Prospectus
before they invest.
This Statement of Additional Information is intended to furnish prospective
investors with additional information concerning each class of the Portfolio.
Some of the information required to be in this Statement of Additional
Information is also included in each Prospectus; and, in order to avoid
repetition, reference will be made to sections of the applicable Prospectus.
Additionally, each 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 each
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 TRUST
THE TRUST AND ITS SHARES
The Trust is an open-end diversified management series 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 Trust was reorganized as a business trust under the laws of the
Commonwealth of Massachusetts on December 31, 1986. The Trust was again
reorganized as a business trust under the laws of the State of Delaware on
October 15, 1993. A copy of the Agreement and Declaration of Trust (the
"Declaration of Trust") establishing the Trust is on file with the SEC. 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 Trust and STIC. All
historical financial and other information contained in this Statement of
Additional Information for periods prior to October 15, 1993 relating to the
Portfolio (or a class thereof) is that of the Predecessor Portfolio (or the
corresponding class thereof). Shares of beneficial interest of the Trust are
redeemable at the net asset value thereof at the option of the shareholder or at
the option of the Trust in certain circumstances. For information concerning the
methods of redemption and the rights of share ownership, investors should
consult each Prospectus under the captions "General Information" and "Redemption
of Shares."
The Trust 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: Cash Management Class, Institutional Class, Personal
Investment Class, Private Investment Class and Resource Class. Each class of
shares is sold pursuant to a separate Prospectus and this joint Statement of
Additional Information. Each such class has different shareholder qualifications
and bears expenses differently. This Statement of Additional Information relates
to each class of the Portfolio. The classes of the Treasury TaxAdvantage
Portfolio are offered pursuant to separate prospectuses and a separate statement
of additional information.
Shares of beneficial interest of the Trust will be redeemable at the net asset
value thereof at the option of the shareholder or at the option of the Trust in
certain circumstances. For information concerning the methods of redemption and
the rights of share ownership, investors should consult the Prospectus under the
captions "Redemption of Shares."
As used in the Prospectus, the term "majority of the outstanding shares" of
the Trust, a particular portfolio or a particular class means, respectively, the
vote of the lesser of (i) 67% or more of the shares of the Trust, such portfolio
or such class present at a meeting of the Trust's shareholders, if the holders
of more than 50% of the outstanding shares of the Trust, such portfolio or such
class are present or represented by proxy, or (ii) more than 50% of the
outstanding shares of the Trust, such portfolio or such class.
Shareholders of the Trust 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.
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The Declaration of Trust provides for the perpetual existence of the Trust.
The Trust, 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 Trust, such Portfolio and such class,
respectively; provided, however, that the Board of Trustees may terminate,
without such shareholder approval, the Trust, 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 Trust. 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 Trust.
The assets received by the Trust 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 Trust. While certain expenses of the Trust 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 Trust.
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, however, there is a remote possibility that
shareholders could, under certain circumstances, be held liable for the
obligations of the Trust 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 Trust and
requires that notice of such disclaimer be given in each agreement, obligation
or instrument entered into or executed by the Trust or the trustees to all
parties, and each party thereto must expressly waive all rights of action
directly against shareholders of the Trust. The Declaration of Trust provides
for indemnification out of the Trust's property for all losses and expenses of
any shareholder of the Trust 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 Trust 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 Trust of
the trustees and the officers of the Trust 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 Trust. Such person
may not be indemnified against any liability to the Trust or to the Trust's
shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office. The Declaration of Trust also authorizes
the purchase of liability insurance on behalf of trustees and officers.
As described in the Prospectus, the Trust 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 Trust and filed with the Trust's custodian or by a
vote of the holders of two-thirds of the outstanding shares at a meeting duly
called for that purpose, which meeting shall be held upon written request of the
holders of not less than 10% of the outstanding shares of the Trust.
TRUSTEES AND OFFICERS
The trustees and officers of the Trust 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 (77)
Director, Chairman and Chief Executive Officer, A I M Management Group
Inc.; and Chairman of the Board of Directors, A I M Advisors, Inc., A I M
Capital Management, Inc., A I M Distributors, Inc., A I M Fund Services,
Inc., A I M Institutional Fund Services, Inc. and Fund Management Company.
- ---------------
* A trustee who is an "interested person" of the Trust and A I M Advisors, Inc.,
as defined in the Investment Company Act of 1940, as amended (the "1940 Act").
4
<PAGE> 105
BRUCE L. CROCKETT, Trustee (52)
906 Frome Lane
McLean, VA 22102
Formerly, 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 (72)
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.
*CARL FRISCHLING, Trustee (59)
919 Third Avenue
New York, NY 10022
Partner, Kramer, Levin, Naftalis & 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 (50)
Director, President and Chief Operating Officer, A I M Management
Group Inc.; Director and President, A I M Advisors, Inc.; and Director and
Senior Vice President, 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.
JOHN F. KROEGER, Trustee (72)
37 Pippins Way
Morristown, NJ 07960
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 (54)
6363 Woodway, Suite 825
Houston, TX 77057
Attorney in private practice in Houston, Texas.
IAN W. ROBINSON, Trustee (73)
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 Trust, as defined in the 1940
Act.
**A trustee who is an "interested person" of the Trust and A I M Advisors, Inc.,
as defined in the 1940 Act.
5
<PAGE> 106
LOUIS S. SKLAR, Trustee (57)
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 (52)
Senior Vice President and Treasurer, A I M Advisors, Inc.; and Vice
President and Treasurer, A I M Management Group Inc., A I M Capital
Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc.,
A I M Institutional Fund Services Inc. and Fund Management Company.
GARY T. CRUM, Senior Vice President (49)
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.;
and Director, A I M Distributors, Inc.
*CAROL F. RELIHAN, Senior Vice President and Secretary (42)
Senior Vice President, General Counsel and Secretary, A I M Advisors,
Inc.; Vice President, General Counsel and Secretary, A I M Management Group
Inc.; Vice President and General Counsel, Fund Management Company; and Vice
President, A I M Capital Management, Inc., A I M Distributors, Inc., A I M
Fund Services, Inc. and A I M Institutional Fund Services, Inc.
DANA R. SUTTON, Vice President and Assistant Treasurer (37)
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 (53)
Vice President and Chief Compliance Officer, A I M Advisors, Inc.,
A I M Capital Management, Inc., A I M Distributors, Inc., A I M Fund
Services, Inc., A I M Institutional Fund Services, Inc. and Fund Management
Company. Formerly, Vice President, Charles Schwab & Co., Inc.; Assistant
Secretary, Charles Schwab Family of Funds and Schwab Investments; Chief
Compliance Officer, Charles Schwab Investment Management, Inc.; and Vice
President, Integrated Resources Life Insurance Co. and Capitol Life
Insurance Co.
KAREN DUNN KELLEY, Vice President (36)
Senior Vice President, A I M Capital Management, Inc.; and Vice
President, A I M Advisors, Inc.
J. ABBOTT SPRAGUE, Vice President (41)
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 Management Group Inc.
The standing committees of the Board of Trustees are the Audit Committee, the
Investments Committee and the 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
Trust'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 Trust's fund accounting or its internal accounting
controls, or for considering such matters as may from time to time be set forth
in a charter adopted by the Board of Trustees and such committee.
The members of the Investments Committee are Messrs. Bauer, Crockett, Daly
(Chairman), Kroeger and Pennock. The Investments Committee is responsible for
reviewing portfolio compliance, brokerage allocation, portfolio investment
pricing issues, interim dividend and distribution issues, or considering such
matters as may from time to time be set forth in a charter adopted by the Board
of Trustees and such committee.
- ---------------
*Mr. Arthur and Ms. Relihan are married to each other.
6
<PAGE> 107
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 Trust
maintains a distribution plan pursuant to Rule 12b-1 under the 1940 Act,
reviewing from time to time the compensation payable to the disinterested
trustees, or considering such matters as may from time to time be set forth in a
charter adopted by the Board of Trustees and such committee.
All of the Trust's trustees also serve as directors or trustees of some or all
of the other investment companies managed or advised by A I M Advisors, Inc.
("AIM") or distributed and administered by FMC. All of the Fund's executive
officers hold similar offices with some or all of such investment companies.
REMUNERATION OF TRUSTEES
Each trustee is reimbursed for expenses incurred in connection with each
meeting of the Board of Trustees or any committee thereof. Each trustee who is
not an officer of the Trust is compensated for his services according to a fee
schedule which recognizes the fact that such trustee also serves as a director
or trustee of other regulated investment companies managed, administered or
distributed by AIM or its affiliates (the "AIM Funds"). Each such trustee
receives a fee, allocated among the AIM Funds for which he serves as a director
or trustee, which consists of an annual retainer component and a meeting fee
component.
Set forth below is information regarding compensation paid or accrued for each
trustee of the Trust:
<TABLE>
<CAPTION>
RETIREMENT TOTAL
BENEFITS COMPENSATION
AGGREGATE ACCRUED FROM
COMPENSATION BY ALL ALL
FROM AIM AIM
TRUSTEE TRUST(1) FUNDS(2) FUNDS(3)
------- ------ ------- -------
<S> <C> <C> <C>
Charles T. Bauer.................................. $ 0 $ 0 $ 0
Bruce L. Crockett................................. 4,823 3,655 57,750
Owen Daly II...................................... 5,708 18,662 58,125
Carl Frischling................................... 5,560 11,323 57,250(4)
Robert H. Graham.................................. 0 0 0
John F. Kroeger................................... 5,345 22,313 58,125
Lewis F. Pennock.................................. 4,705 5,067 58,125
Ian W. Robinson................................... 4,841 15,381 56,750
Louis S. Sklar.................................... 5,613 6,632 57,250
</TABLE>
- ---------------
(1) The total amount of compensation deferred by all Trustees of the Trust
during the fiscal year ended August 31, 1996, including interest earned
thereon, was $20,310.
(2) During the fiscal year ended August 31, 1996, the total amount of expenses
allocated to the Trust in respect of such retirement benefits was $25,775.
Data reflects compensation for the calendar year ended December 31, 1995.
(3) Each serves as a Director or Trustee of a total of 10 AIM Funds. Data
reflects total compensation for the calendar year ended December 31, 1995.
(4) See also page 8 regarding fees earned by Mr. Frischling's law firm.
AIM Funds Retirement Plan for Eligible Directors/Trustees
Under the terms of the AIM Funds Retirement Plan for Eligible
Directors/Trustees (the "Plan"), each trustee (who is not an 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 Trustees.
Pursuant to the Plan, the normal retirement date is the date on which the
eligible trustee has attained age 65 and has completed at least five years of
continuous service with one or more of the AIM Funds. Each eligible trustee 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 75% of the retainer paid or accrued by the AIM Funds for such trustee
during the twelve-month period immediately preceding the trustee's retirement
(including amounts deferred under a separate agreement between the AIM Funds and
the trustee) for 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. 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 ten years beginning the first
day of the calendar quarter following the date of the trustee's death. Payments
under the Plan are not secured or funded by any AIM Fund.
7
<PAGE> 108
Set forth below is a table that shows the estimated annual benefits payable to
an eligible trustee upon retirement assuming various compensation and years of
service classifications. The estimated credited years of service for Messrs.
Crockett, Daly, Frischling, Kroeger, Pennock, Robinson and Sklar are 9, 9, 19,
18, 14, 9 and 6 years, respectively.
ESTIMATED BENEFITS UPON RETIREMENT
<TABLE>
<CAPTION>
ANNUAL COMPENSATION PAID
BY ALL AIM FUNDS
NUMBER OF YEARS OF SERVICE -----------------------------------
WITH THE AIM FUNDS $55,000 $60,000 $65,000
--------------------------- ------- ------- -------
<S> <C> <C> <C>
10........................... $41,250 $45,000 $48,750
9........................... $37,125 $40,500 $43,875
8........................... $33,000 $36,000 $39,000
7........................... $28,875 $31,500 $34,125
6........................... $24,750 $27,000 $29,250
5........................... $20,625 $22,500 $24,375
</TABLE>
Deferred Compensation Agreements
Messrs. Daly, Frischling, Kroeger, Robinson and Sklar (for purposes of this
paragraph only, the "deferring trustees") have each executed a Deferred
Compensation Agreement (collectively, the "Agreements"). Pursuant to the
Agreements, the deferring trustees may elect to defer receipt of up to 100% of
their compensation payable by the Trust, and such amounts are placed into a
deferral account. Currently, the deferring trustees may select various AIM Funds
in which all or part of their deferral accounts shall be deemed to be invested.
Distributions from the deferring trustees' deferral accounts will be paid in
cash, generally in equal quarterly installments over a period of five years
beginning on the date the deferring trustee's retirement benefits commence under
the Plan. The Trust's Board of Trustees, in its sole discretion, may accelerate
or extend the distribution of such deferral accounts after the deferring
trustee's termination of service as a trustee of the Trust. If a deferring
trustee 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 trustee's death. The Agreements are not funded and, with respect to
the payments of amounts held in the deferral accounts, the deferring trustees
have the status of unsecured creditors of the Trust and of each other AIM Fund
from which they are deferring compensation.
The Portfolio paid legal fees of $12,753 for the year ended August 31, 1996
for services rendered by Kramer, Levin, Naftalis & Frankel as counsel to the
Board of Trustees. Carl Frischling, a trustee of the Trust, is a member of that
firm.
INVESTMENT ADVISOR
A I M Advisors, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173, acts as the investment advisor of the Portfolio pursuant to a Master
Investment Advisory Agreement dated as of October 18, 1993 (the "Advisory
Agreement"). AIM was organized in 1976, and together with its affiliates advises
or manages 41 investment company portfolios. As of November 14, 1996, total
assets of the investment company portfolios managed or advised by AIM and its
affiliates were approximately $61.1 billion.
Pursuant to the terms of the Advisory Agreement, AIM manages the investment of
the assets of the Portfolio. AIM obtains and evaluates economic, statistical and
financial information to formulate and implement investment policies for the
Portfolio. Any investment program undertaken by AIM will at all times be subject
to the policies and control of the Trust's Board of Trustees. AIM shall not be
liable to the Trust or to its shareholders for any act or omission by AIM or for
any loss sustained by the Trust or its shareholders except in the case of
willful misfeasance, bad faith, gross negligence or reckless disregard of duty.
AIM and the Trust 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.
8
<PAGE> 109
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............................................ .15%
Over $300 million to $1.5 billion............................. .06%
Over $1.5 billion............................................. .05%
</TABLE>
The Advisory Agreement requires AIM to reduce its fee to the extent required to
satisfy any expense limitations imposed by the securities laws or regulations
thereunder of any state in which the Trust's shares are qualified for sale.
The Advisory Agreement provides that, upon the request of the Board of
Trustees, AIM may perform or arrange for the performance of certain additional
services on behalf of the Portfolio which are not required by the Advisory
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
a Master Administrative Services Agreement under which AIM will provide the
additional services described below under the caption "Administrative Services."
Pursuant to the Advisory Agreement between the Trust and AIM, currently in
effect, AIM received fees from the Trust for the fiscal years ended August 31,
1996, 1995 and 1994 with respect to the Portfolio in the amounts of $2,227,788,
$1,925,198 and $2,337,627, respectively.
The Advisory Agreement was approved for its initial term by the Board of
Trustees on July 19, 1993. The Advisory Agreement will continue in effect until
June 30, 1997, and from year to year thereafter, provided that it is
specifically approved at least annually by the Trust's Board of Trustees and the
affirmative vote of a majority of the trustees who are not parties to the
Advisory Agreement or "interested persons" of any such party by votes cast in
person at a meeting called for such purpose. The Trust or AIM may terminate the
Advisory Agreement on 60 days' notice without penalty. The Advisory 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 Trust and their affiliations are shown under "Trustees and Officers." The
address of each director and officer of AIM is 11 Greenway Plaza, Suite 1919,
Houston, Texas 77046-1173.
FMC is a registered broker-dealer and wholly-owned subsidiary of AIM. FMC acts
as distributor of the Shares.
ADMINISTRATIVE SERVICES
AIM also acts as the Portfolio's administrator pursuant to a Master
Administrative Services Agreement dated as of October 18, 1993 between AIM and
the Trust (the "Administrative Services Agreement").
Under the Administrative Services Agreement, AIM performs 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 Trust and of
persons working under his supervision for maintaining the financial accounts and
books and records of the Trust, 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 Trust's
Board of Trustees.
Under the Administrative Services Agreement, AIM was reimbursed for the fiscal
years ended August 31, 1996, 1995 and 1994, $86,796, $135,387 and $97,055,
respectively, for fund accounting services for the Portfolio.
Under the terms of a Transfer Agency and Service Agreement, dated September
16, 1994, as amended, July 1, 1995, between the Trust and A I M Institutional
Fund Services, Inc. ("AIFS"), a registered transfer agent and wholly-owned
subsidiary of AIM, as well as under previous agreements, AIFS received $256,535,
$114,179 and $13,752, for the fiscal years ended August 31, 1996, 1995 and 1994
respectively, for the provision of certain shareholder services for the
Portfolio.
EXPENSES
In addition to fees paid to AIM pursuant to the Agreement and the expenses
reimbursed to AIM under the Administrative Services Agreement, the Trust also
pays or causes to be paid all other expenses of the Trust, including, without
limitation: the
9
<PAGE> 110
charges and expenses of any registrar, any custodian or depository appointed by
the Trust for the safekeeping of its cash, portfolio securities and other
property, and any transfer, dividend or accounting agent or agents appointed by
the Trust; brokers' commissions chargeable to the Trust in connection with
portfolio securities transactions to which the Trust is a party; all taxes,
including securities issuance and transfer taxes, and fees payable by the Trust
to federal, state or other governmental agencies; the costs and expenses of
engraving or printing of certificates representing shares of the Trust; all
costs and expenses in connection with the registration and maintenance of
registration of the Trust 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 Trust
and supplements thereto to the Trust'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 Trust's shares; charges and expenses of legal
counsel, including counsel to the trustees of the Trust who are not "interested
persons" (as defined in the 1940 Act) of the Trust or AIM, and of independent
accountants in connection with any matter relating to the Trust; membership dues
of industry associations; interest payable on Trust borrowings; postage;
insurance premiums on property or personnel (including officers and trustees) of
the Trust 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). 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 Trust) 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 Trust's shares.
Expenses of the Trust which are not directly attributable to the operations of
any class of shares or portfolio of the Trust are prorated among all classes of
the Trust. Expenses of the Trust except those listed in the next sentence are
prorated among all classes of such Portfolio. Expenses of the Trust 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 Trust and alternate means for continuing
the servicing of such shareholders would be sought. In such event, changes in
the operation of the Trust might occur and shareholders serviced by such bank
might no longer be able to avail themselves of any automatic investment or other
services then being provided by such bank. It is not expected that shareholders
would suffer any adverse financial consequences as a result of any of these
occurrences. In addition, state securities laws on this issue may differ from
the interpretations of federal law expressed herein and certain banks and
financial institutions may be required to register as dealers pursuant to state
law.
TRANSFER AGENT AND CUSTODIAN
The Bank of New York ("BONY") acts as custodian for the portfolio securities
and cash of the Portfolio. BONY receives such compensation from the Trust for
its services in such capacity as is agreed to from time to time by BONY and the
Trust. The address of BONY is 90 Washington Street, 11th Floor, New York, New
York 10286.
A I M Institutional Fund Services, Inc., 11 Greenway Plaza, Suite 1919,
Houston, Texas 77046-1173, acts as transfer agent for the shares of each class
of the Portfolio and receives an annual fee from the Trust for its services in
such capacity in the amount of .007% of average daily net assets of the Trust,
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 Trust.
REPORTS
The Trust furnishes shareholders with semi-annual reports containing
information about the Trust and its operations, including a schedule of
investments held in the Portfolio and its financial statements. The annual
financial statements are audited by the Trust'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.
10
<PAGE> 111
PRINCIPAL HOLDERS OF SECURITIES
TREASURY PORTFOLIO
To the best of the knowledge of the Trust, the names and addresses of the
holders of 5% or more of the outstanding shares of any class of the Portfolio as
of December 1, 1996, and the percentage of such shares owned by such
shareholders as of such date are as follows:
CASH MANAGEMENT CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED
OF
NAME AND ADDRESS RECORD
OF RECORD OWNER ONLY (a)
---------------- --------
<S> <C>
The Bank of New York........................................................... 68.64% (b)
4 Fisher lane
White Plains, NY 10603
Fund Services Associates....................................................... 22.85%
11835 West Olympic Boulevard
Suite 205
Los Angeles, CA 90064
</TABLE>
INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED
OF
NAME AND ADDRESS RECORD
OF RECORD OWNER ONLY (a)
---------------- --------
<S> <C>
Trust Company Bank............................................................. 10.66%
P.O. Box 105504
Atlanta, GA 30348
Victoria Bank & Trust.......................................................... 8.76%
One O'Connor Plaza 6th Fl.
Victoria, TX 77902
Liberty Registration Co. of Oklahoma........................................... 7.46%
P.O. Box 25848
Oklahoma City, OK 73125
U.S. Bank of Washington....................................................... 7.31%
P.O. Box 3168
Portland, OR 97208
NationsBank Texas.............................................................. 6.32%
P.O. Box 831000
Dallas, TX 75283-1000
Wachovia Bank and Trust........................................................ 5.85%
P.O. Box 3075
Winston-Salem, NC 27150
SunTrust Bank.................................................................. 5.67%
P.O. Box 105504
Atlanta, GA 30308
FRNCO.......................................................................... 5.47%
P.O. Box 939
Rogers, AR 72757-0939
Key Trust Company.............................................................. 5.02%
4900 Tiedman
Cleveland, OH 44101-5971
</TABLE>
- ---------------
(a) The Trust 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.
11
<PAGE> 112
PERSONAL INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF
NAME AND ADDRESS RECORD
OF RECORD OWNER ONLY (a)
---------------- ----------
<S> <C>
Cullen/Frost Discount Brokers............................................ 64.64% (b)
P.O. Box 2358
San Antonio, TX 78299
The Bank of New York..................................................... 26.55% (b)
4 Fisher Lane
White Plains, NY 10603
Kinco & Co............................................................... 6.88%
c/o RNB Securities
1 Hanson Pl., Lower Level
Brooklyn, NY 11243
</TABLE>
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF
NAME AND ADDRESS RECORD
OF RECORD OWNER ONLY (a)
---------------- ---------
<S> <C>
Liberty Bank and Trust Co. of Tulsa, N.A. ............................... 45.06% (b)
P.O. Box 25848
Oklahoma City, OK 73125
First Trust/VAR & Co..................................................... 19.67%
180 E. 5th Street
St. Paul, MN 55101
Huntington Capital Corp.................................................. 17.05%
41 S. High St., 9th Floor
Columbus, Ohio 43287
The Bank of New York..................................................... 6.25%
4 Fisher Lane
White Plains, NY 10603
</TABLE>
RESOURCE CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF
NAME AND ADDRESS RECORD
OF RECORD OWNER ONLY (a)
---------------- ---------
<S> <C>
Corestates Capital Markets............................................... 63.59% (b)
1345 Chestnut Street
Philadelphia, PA 19101
Mellon Bank.............................................................. 35.27% (b)
Three Mellon Center, Room 3840
Pittsburgh, PA 15259-0001
</TABLE>
- ---------------
(a) The Trust 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.
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<PAGE> 113
TREASURY TAXADVANTAGE PORTFOLIO
To the best of the knowledge of the Trust, 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 December 1, 1996, and the percentage of such shares
owned by such shareholders as of such date are as follows:
INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED
OF
NAME AND ADDRESS RECORD
OF RECORD OWNER ONLY(a)
---------------- --------
<S> <C>
First Trust/VAR & Co. ............................................. 33.57% (b)
180 East 5th Street
St. Paul, MN 55101
Peoples Two Ten Company............................................ 19.12%
c/o Summit Bank
Trust Operations, 7th Floor
P.O. Box 821
Hackensack, NJ 07602
Boatmen's Trust Company............................................ 11.22%
100 North Broadway
St. Louis, MO 63178
Liberty Registration Co. of Oklahoma............................... 10.02%
P.O. Box 25848
Oklahoma City, OK 73125
</TABLE>
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED
OF
NAME AND ADDRESS RECORD
OF RECORD OWNER ONLY(a)
---------------- --------
<S> <C>
First National Bank of Chicago..................................... 61.27% (b)
Mail Suite 0126
Chicago, IL 60670-0126
The Bank of New York............................................... 19.76%
4 Fisher Lane
White Plains, NY 10603
Huntington Capital Corp............................................ 18.82%
41 S. High St., 9th Floor
Columbus, OH 43287
</TABLE>
- ---------------
(a) The Trust 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.
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 Trust, as of December 1, 1996, the
trustees and officers of the Trust beneficially owned less than 1% of each class
of the Trust's outstanding shares.
PURCHASES AND REDEMPTIONS
NET ASSET VALUE DETERMINATION
Shares of the Portfolio are sold at net asset value. 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, which require the Trust to adhere to certain
conditions. These rules require that the Trust 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 Trust's Board of Trustees to be of high quality
with minimal credit risk.
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<PAGE> 114
The Board of Trustees is required to establish procedures designed to
stabilize, to the extent reasonably practicable, the Trust'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 Trust 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 each class of the Portfolio. The address of FMC is 11 Greenway Plaza,
Suite 1919, Houston, Texas 77046-1173. See "General Information About the Trust
- -- Trustees and Officers" and "-- Investment Advisor" for information as to the
affiliation of certain trustees and officers of the Trust with FMC, AIM and AIM
Management.
The Distribution Agreement provides that FMC has the exclusive right to
distribute shares of each class of the Portfolio 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 Trust and
the costs of preparing and distributing any other supplemental sales literature.
FMC has not undertaken to sell any specified number of shares of the Portfolio.
The Distribution Agreement will remain in effect until June 30, 1997, and it
will continue in effect from year to year thereafter only if such continuation
is specifically approved at least annually by the Trust'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
Trust and FMC, with terms substantially the same as those of the Distribution
Agreement was in effect through October 15, 1993. The Trust 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 Trust has adopted a Master Distribution Plan (the "Plan") pursuant to Rule
12b-1 under the 1940 Act. Pursuant to the Plan, the Trust 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 Cash Management Class, Personal
Investment Class, Private Investment Class and Resource Class of the Portfolio.
These services may include among other things: (i) answering customer inquiries
regarding the shares of the class and the Portfolio; (ii) assisting customers in
changing dividend options, account designations and addresses; (iii) performing
sub-accounting; (iv) establishing and maintaining shareholder accounts and
records; (v) processing purchase and redemption transactions; (vi) automatic
investment in the shares of the class of customer cash account balances; (vii)
providing periodic statements showing a customer's account balance and
integrating such statements with those of other transactions and balances in the
customer's other accounts serviced by such firm; (viii) arranging for bank
wires; and (ix) such other services as the Trust may request on behalf of the
shares of the class, to the extent such firms are permitted to engage in such
services by applicable statute, rule or regulation. The Plan may only be used
for the purposes specified above and as stated in the Plan. Expenses may not be
carried over from year to year.
For the fiscal year ended August 31, 1996, FMC received compensation pursuant
to the Plan in the amount of $437,891, or an amount equal to 0.08% of the
average daily net assets of the Cash Management Class, $712,960, or an amount
equal to 0.50% of the average daily net assets of the Personal Investment Class,
$1,221,692, or an amount equal to 0.30% of the average daily net assets of the
Private Investment Class, and $31,534, or an amount equal to 0.16% of the
average daily net assets of the Resource Class. With respect to the Cash
Management Class, $436,895 of such amount (or an amount equal to 0.08% of the
average daily net assets of the class) was paid to dealers and financial
institutions and $996 (or an amount equal to 0% of the average daily net assets
of the class) was retained by FMC. With respect to the Personal Investment
Class, $588,562 of such amount (or an amount equal to 0.41% of the average daily
net assets of the class) was paid to dealers and financial institutions and
$124,398 (or an amount equal to 0.09% of the average daily net assets of the
class) was retained by FMC. With respect to the Private Investment Class,
$1,039,267 of such amount (or an amount equal to 0.26% of the average daily net
assets of the class) was paid to dealers and financial institutions and $182,425
(or an amount equal to 0.04% of the average daily net assets of the class) was
retained by FMC. With respect to the Resource Class, $31,534 of such amount (or
an amount equal to 0.16%
14
<PAGE> 115
of the average daily net assets of the class) was paid to dealers and financial
institutions and none of such compensation 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 Trust, owns shares
of AIM Management and Robert H. Graham, a Trustee and President of the Trust,
also owns shares of AIM Management.
PERFORMANCE INFORMATION
As stated under the caption "Yield Information" in the Prospectus, yield
information for the shares of each class of the Portfolio may be obtained by
calling the Trust at (800) 659-1005. The current yield quoted will be the net
average annualized yield for an identified period, such as seven days or a
month. Current yield will be computed by assuming that an account was
established with a single share (the "Single Share Account") on the first day of
the period. To arrive at the quoted yield, the net change in the value of that
Single Share Account for the period (which would include dividends accrued with
respect to the share, and dividends declared on shares purchased with dividends
accrued and paid, if any, but would not include realized gains and losses or
unrealized appreciation or depreciation) will be multiplied by 365 and then
divided by the number of days in the period, with the resulting figure carried
to the nearest hundredth of one percent. The Trust 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, 1996, the current yield and the
effective yield (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 5.15% and 5.28%, for the Cash Management Class, were 5.23% and
5.36%, for the Institutional Class, were 4.73% and 4.84%, for the Personal
Investment Class, were 4.93% and 5.05%, for the Private Investment Class and
were 5.07% and 5.20%, for the Resource Class respectively. These yields are
quoted for illustration purposes only. The yields for any other seven-day period
may be substantially different from the yields quoted above.
The Trust may compare the performance of a class or the performance of
securities in which it may invest to:
- IBC/Donoghue's Money Fund Averages, which are average yields of
various types of money market funds that include the effect of compounding
distributions;
- 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;
- yields on other money market securities or averages of other money
market securities as reported by the Federal Reserve Bulletin, by TeleRate,
a financial information network, or by Bloomberg, a financial information
firm; and
- other fixed-income investments such as Certificates of Deposit
("CDs").
The principal value and interest rate of CDs and money market securities are
fixed at the time of purchase whereas a 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 Trust 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.
15
<PAGE> 116
INVESTMENT PROGRAM AND RESTRICTIONS
INVESTMENT PROGRAM
The Portfolio seeks to achieve its objective by investing in high grade money
market instruments. The money market instruments in which the Portfolio invests
are considered to carry very little risk and accordingly may not have as high a
yield as that available on money market instruments of lesser quality. The
Portfolio invests exclusively in direct obligations of the U.S. Treasury, which
include Treasury bills, notes and bonds and repurchase agreements relating to
such securities. The Portfolio may enter into repurchase agreements with respect
to U.S. Treasury securities. The Portfolio may also 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 repurchase agreement. The Portfolio will only borrow money or
enter into reverse repurchase agreements for temporary or emergency purposes to
facilitate the orderly sale of portfolio securities to accommodate abnormally
heavy redemption requests should they occur.
ELIGIBLE SECURITIES
Rule 2a-7 under the 1940 Act, which governs the operations of money market
funds, defines an "Eligible Security" as follows:
(i) a security with a remaining maturity of 397 calendar days
or less that has received a short-term rating (or that has been
issued by an issuer that is rated with respect to a class of
short-term debt obligations, or any debt obligation within that
class, that is comparable in priority and security with the
security) by the Requisite NRSROs(1) in one of the two highest
rating categories for short-term debt obligations (within which
there may be sub-categories or gradations indicating relative
standing); or
(ii) a security:
(A) that at the time of issuance had a remaining maturity of
more than 397 calendar days 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 debt obligations (or any debt
obligation within that class) that is now comparable in priority
and security with the security, in one of the two highest rating
categories (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)(9)(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 that is not a Demand Feature 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 had a remaining
maturity of more than 397 calendar days but that has a remaining
maturity of 397 calendar days or less and that is an unrated
security is not an Eligible Security if the security has received
a long-term rating from any NRSRO that is not within the NRSRO's
three highest long-term rating 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 Trust -- The Trust and its Shares"), the Portfolio may
not:
(1) concentrate more than 25% of the value of its total assets in the
securities of one or more issuers conducting their principal business
activities in the same industry, provided that there is no limitation with
respect to investments in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and bank instruments, such as
CDs, bankers' acceptances, time deposits and bank repurchase agreements;
- ---------------
(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 class of debt obligations of an
issuer at the time the fund purchases or rolls over the security, that
NRSRO. At present the NRSROs are: Standard & Poor's Corp., Moody's
Investors Service, Inc., Duff and Phelps, Inc., Fitch Investors Services,
Inc. and, with respect to certain types of securities, IBCA Limited and its
affiliate, IBCA Inc. Subcategories or gradations in ratings (such as a "+"
or "-") do not count as rating categories.
16
<PAGE> 117
(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 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.
On December 11, 1996, the Board of Trustees of the Trust approved, subject to
shareholder approval, the elimination of or changes to certain fundamental
investment policies of the Trust. Shareholders of the Trust will be asked to
approve these changes at an annual meeting of shareholders to be held on
February 7, 1997. If approved, these changes will become effective as of March
1, 1997.
The Board of Trustees has approved the elimination of Investment Restriction
No. (10), indicated above, and a change to Investment Restriction No. (2),
indicated above, of the Trust. In the event shareholders approve the proposed
changes, Investment Restriction No. (10) will no longer apply and Investment
Restriction No. (2) will read in full as follows:
(2) 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 amended from time to time, and except that the
Portfolio may purchase securities of other investment companies to the
extent permitted by applicable law or exemptive order.
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.
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<PAGE> 118
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 markets. For example,
market conditions frequently result in similar securities trading at different
prices. AIM may dispose of any portfolio security prior to its maturity if such
disposition and reinvestment of proceeds are expected to enhance yield
consistent with AIM's judgment as to desirable portfolio maturity structure or
if such disposition is believed to be advisable due to other circumstances or
conditions. The amortized cost method of valuing portfolio securities requires
that the Portfolio maintain an average weighted portfolio maturity of ninety
days or less. Thus, there is likely to be relatively high portfolio turnover,
but since brokerage commissions are not normally paid on money market
instruments, the high rate of portfolio turnover is not expected to have a
material effect on the net income or expenses of the Portfolio.
AIM's primary consideration in effecting a security transaction is to obtain
the best net price and the most favorable execution of the order. To the extent
that the execution and prices offered by more than one dealer are comparable,
AIM may, in its discretion, effect transactions with dealers that furnish
statistical, research or other information or services which are deemed by AIM
to be beneficial to the Portfolio's investment program. Certain research
services furnished by dealers may be useful to AIM with respect to clients other
than the Portfolio. Similarly, any research services received by AIM through
placement of portfolio transactions of other clients may be of value to AIM in
fulfilling its obligations to the Portfolio. AIM is of the opinion that the
material received is beneficial in supplementing AIM's research and analysis;
and, therefore, it may benefit the Portfolio by improving the quality of AIM's
investment advice. The advisory fees paid by the Portfolio are not reduced
because AIM receives such services.
From time to time, the Trust 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 AIM Capital have been adopted by
the Boards of Directors/Trustees of the various AIM Funds, including the Trust.
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 been
construed to prohibit the Trust 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 Trust has
obtained an order of exemption from the SEC which permits the Trust to engage in
certain transactions with such 5% holder, if the Trust complies with conditions
and procedures designed to ensure that such transactions are executed at fair
market value and present no conflicts of interest.
AIM and its affiliates manage several other investment accounts, some of which
may have objectives similar to the Portfolio's. It is possible that at times
identical securities will be acceptable for one or more of such investment
accounts. However, the position of each account in the securities of the same
issue may vary and the length of time that each account may choose to hold its
investment in the securities of the same issue may likewise vary. The timing and
amount of purchase by each account will also be determined by its cash position.
If the purchase or sale of securities is consistent with the investment policies
of the Portfolio and one or more of these accounts and is considered at or about
the same time, transactions in such securities will be allocated in good faith
among such accounts, in accordance with applicable laws and regulations, in
order to obtain the best net price and most favorable execution. The allocation
and combination of simultaneous securities purchases on behalf of the Portfolio
will be made in the same way that such purchases are allocated among or combined
with those of other AIM accounts. Simultaneous transactions could adversely
affect the ability of the Portfolio to obtain or dispose of the full amount of a
security which it seeks to purchase or sell.
Under the 1940 Act, persons affiliated with the Trust 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 Trust from purchasing a security being
publicly underwritten by a syndicate of which persons affiliated with the Trust
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 Trust may, from time to
time, serve as place-
18
<PAGE> 119
ment 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 Trust's Board of Trustees and any such
purchases are reviewed at least quarterly by the Trust'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 Trust was fair
and reasonable in relation to the fees charged by others performing similar
services. During the fiscal year ended August 31, 1996, 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.
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 forwards 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.
19
<PAGE> 120
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 Trust 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 a 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 a class will be considered capital gain or loss and
will be long-term capital gain or loss if the shares were held for longer than
one year. However, any capital loss arising from the sale or redemption of
shares held for six months or less will be treated as a long-term capital loss
to the extent of the amount of capital gain dividends received on such shares.
For this purpose, the special holding period rules of Code Section 246(c)(3) and
(4) generally will apply in determining the holding period of shares.
FOREIGN SHAREHOLDERS
Taxation of a shareholder who, as to the United States, is a nonresident alien
individual, foreign trust or estate, foreign corporation, or foreign partnership
("foreign shareholder"), depends on whether the income from the Portfolio is
"effectively connected" with a U.S. trade or business carried on by such
shareholder.
If the income from the Portfolio is not effectively connected with a U.S.
trade or business carried on by a foreign shareholder, dividends and
distributions (other than capital gains dividends) will be subject to U.S.
withholding tax at the rate of 30% (or lower treaty rate) upon the gross amount
of the dividend or distribution. Such a foreign shareholder would generally be
exempt from U.S. federal income tax on gains realized on the sale of shares of a
class, capital gain dividends and amounts retained by the Portfolio that are
designated as undistributed capital gains.
If the income from the Portfolio is effectively connected with a U.S. trade or
business carried on by a foreign shareholder, then ordinary income dividends,
capital gain dividends and any gains realized upon the sale of shares of the
Portfolio will be subject to U.S. federal income tax at the rates applicable to
U.S. citizens or domestic corporations.
20
<PAGE> 121
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 December
30, 1996. 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 Trust.
21
<PAGE> 122
FINANCIAL STATEMENTS
FS-1
<PAGE> 123
TREASURY PORTFOLIO
CASH MANAGEMENT CLASS
SCHEDULE OF INVESTMENTS
August 31, 1996
<TABLE>
<CAPTION>
MATURITY PAR (000) VALUE
<S> <C> <C> <C>
U.S. TREASURY SECURITIES - 27.96%
U.S. TREASURY BILLS(a) - 16.97%
5.20% 09/17/96 $175,000 $ 174,646,111
- ------------------------------------------------------------------------------
5.02% 10/24/96 50,000 49,630,472
- ------------------------------------------------------------------------------
5.16% 12/05/96 50,000 49,319,167
- ------------------------------------------------------------------------------
5.115% 12/12/96 50,000 49,275,374
- ------------------------------------------------------------------------------
5.22% 12/26/96 25,000 24,579,500
- ------------------------------------------------------------------------------
5.215% 01/02/97 25,000 24,554,552
- ------------------------------------------------------------------------------
5.33% 01/30/97 50,000 48,882,181
- ------------------------------------------------------------------------------
5.095% 02/13/97 25,000 24,416,198
- ------------------------------------------------------------------------------
5.10% 02/13/97 25,000 24,415,625
- ------------------------------------------------------------------------------
5.09% 03/06/97 25,000 24,342,541
- ------------------------------------------------------------------------------
5.248% 05/01/97 25,000 24,118,129
- ------------------------------------------------------------------------------
5.28% 05/01/97 25,000 24,112,667
- ------------------------------------------------------------------------------
5.318% 05/29/97 40,000 38,404,750
- ------------------------------------------------------------------------------
5.505% 06/26/97 25,000 23,860,771
- ------------------------------------------------------------------------------
5.39% 07/24/97 25,000 23,779,764
- ------------------------------------------------------------------------------
628,337,802
- ------------------------------------------------------------------------------
U.S. TREASURY NOTES - 10.99%
6.50% 09/30/96 50,000 50,052,967
- ------------------------------------------------------------------------------
7.00% 09/30/96 75,000 75,104,646
- ------------------------------------------------------------------------------
8.00% 10/15/96 55,000 55,174,050
- ------------------------------------------------------------------------------
7.50% 12/31/96 100,000 100,785,704
- ------------------------------------------------------------------------------
8.00% 01/15/97 75,000 75,763,373
- ------------------------------------------------------------------------------
6.625% 03/31/97 25,000 25,132,339
- ------------------------------------------------------------------------------
6.875% 03/31/97 25,000 25,188,361
- ------------------------------------------------------------------------------
407,201,440
- ------------------------------------------------------------------------------
Total U.S. Treasury Securities 1,035,539,242
- ------------------------------------------------------------------------------
Total Investments (excluding Repurchase
Agreements) 1,035,539,242
- ------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 76.94%(b)
BA Securities, Inc. 5.25%(c) 09/03/96 175,000 175,000,000
- ------------------------------------------------------------------------------
BZW Securities, Inc. 5.25%(d) -- 175,000 175,000,000
- ------------------------------------------------------------------------------
Bear, Stearns & Co. 5.23%(e) -- 200,000 200,000,000
- ------------------------------------------------------------------------------
Daiwa Securities America, Inc. 5.24%(f) 09/03/96 93,693 93,692,696
- ------------------------------------------------------------------------------
Deutsche Morgan Grenfell/C.J. Lawrence, Inc.
5.25%(g) -- 560,000 560,000,000
- ------------------------------------------------------------------------------
CS First Boston Corp. (The) 5.25%(h) 09/03/96 175,000 175,000,000
- ------------------------------------------------------------------------------
Goldman, Sachs & Co. 5.28%(i) 09/03/96 500,000 500,000,000
- ------------------------------------------------------------------------------
HSBC Securities, Inc. 5.25%(j) 09/03/96 175,000 175,000,000
- ------------------------------------------------------------------------------
</TABLE>
F-2
<PAGE> 124
<TABLE>
<CAPTION>
MATURITY PAR (000) VALUE
<S> <C> <C> <C>
REPURCHASE AGREEMENTS - continued
Morgan (J.P.) Securities, Inc.
5.23%(k) 09/03/96 $175,000 $ 175,000,000
- ------------------------------------------------------------------------
Nesbitt Burns Securities, Inc.
5.26%(l) -- 96,000 96,000,000
- ------------------------------------------------------------------------
Nikko Securities Co. International
(The), Inc. 5.22%(m) -- 175,000 175,000,000
- ------------------------------------------------------------------------
Nomura Securities International, Inc.
5.25%(n) -- 175,000 175,000,000
- ------------------------------------------------------------------------
UBS Securities LLC 5.23%(o) -- 175,000 175,000,000
- ------------------------------------------------------------------------
Total Repurchase Agreements 2,849,692,696
- ------------------------------------------------------------------------
TOTAL INVESTMENTS - 104.90% 3,885,231,938 (p)
- ------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - (4.90)% (181,340,798)
- ------------------------------------------------------------------------
NET ASSETS - 100.00% $3,703,891,140
========================================================================
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
(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, including the Portfolio's pro-rata
interest in joint repurchase agreements, is taken into possession by the
Portfolio 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, private accounts and certain non-registered investment companies
managed by the investment advisor or its affiliates.
(c) Entered into 08/30/96 with a maturing value of $175,102,083. Collateralized
by $179,050,000 U.S. Treasury obligations, 4.75% to 5.75% due 02/15/97 to
01/31/98.
(d) Open repurchase agreement entered into 07/15/96; however, either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $164,934,000 U.S. Treasury
obligations, 4.75% to 14.00% due 10/31/96 to 08/15/26.
(e) Open repurchase agreement entered into 07/01/96; however, either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $325,225,000 U.S. Treasury STRIPS,
due 02/15/98 to 02/15/19.
(f) Joint repurchase agreement entered into 08/30/96 with a maturing value of
$148,238,724. Collateralized by $147,480,000 U.S. Treasury obligations,
5.375% to 7.875% due 11/30/97 to 11/15/07.
(g) Open repurchase agreement entered into 03/20/96; however, either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $603,991,000 U.S. Treasury Bills, 0%
due 08/21/97.
(h) Entered into 08/30/96 with a maturing value of $175,102,083. Collateralized
by $183,339,000 U.S. Treasury Bills, 0% due 09/19/96 to 07/24/97.
(i) Joint repurchase agreement entered into 08/30/96 with a maturing value of
$834,779,144. Collateralized by $823,484,000 U.S. Treasury obligations, 0%
to 10.75% due 10/10/96 to 08/15/05.
(j) Entered into 08/30/96 with a maturing value of $175,102,083. Collateralized
by $154,810,000 U.S. Treasury obligations, 7.25% to 13.875% due 02/15/07 to
11/15/16.
(k) Entered into 08/30/96 with a maturing value of $175,101,694. Collateralized
by $174,972,000 U.S. Treasury obligations, 7.125% to 7.875% due 02/15/21 to
02/15/23.
(l) Open joint repurchase agreement entered into 04/16/96; however, either
party may terminate the agreement upon demand. Interest rates, par and
collateral are redetermined daily. Collateralized by $638,599,000 U.S.
Treasury obligations, 0% to 10.75% due 10/31/96 to 02/15/25.
(m) Open repurchase agreement entered into 07/15/96; however, either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $177,003,000 U.S. Treasury
obligations, 0% to 7.50% due 11/30/96 to 11/15/16.
(n) Open repurchase agreement entered into 07/16/96; however, either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $171,615,000 U.S. Treasury
obligations, 0% to 12.75% due 09/12/96 to 11/15/24.
(o) Open repurchase agreement entered into 07/15/96; however, either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $172,532,000 U.S. Treasury
obligations, 4.375% to 7.50% due 08/31/96 to 12/31/96.
(p) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
F-3
<PAGE> 125
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase agreements, at value
(amortized cost) $1,035,539,242
- ------------------------------------------------------------------------
Repurchase agreements 2,849,692,696
- ------------------------------------------------------------------------
Interest receivable 9,950,056
- ------------------------------------------------------------------------
Investment for deferred compensation plan 46,313
- ------------------------------------------------------------------------
Other assets 152,808
- ------------------------------------------------------------------------
Total assets 3,895,381,115
- ------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 174,646,111
- ------------------------------------------------------------------------
Dividends 16,137,308
- ------------------------------------------------------------------------
Deferred compensation 46,313
- ------------------------------------------------------------------------
Accrued advisory fees 195,369
- ------------------------------------------------------------------------
Accrued distribution fees 228,007
- ------------------------------------------------------------------------
Accrued transfer agent fees 12,984
- ------------------------------------------------------------------------
Accrued trustees' fees 3,575
- ------------------------------------------------------------------------
Accrued administrative services fees 7,904
- ------------------------------------------------------------------------
Accrued operating expenses 212,404
- ------------------------------------------------------------------------
Total liabilities 191,489,975
- ------------------------------------------------------------------------
NET ASSETS $3,703,891,140
========================================================================
NET ASSETS:
Institutional Class $2,335,440,965
========================================================================
Private Investment Class $ 352,537,425
========================================================================
Personal Investment Class $ 192,946,526
========================================================================
Cash Management Class $ 789,626,991
========================================================================
Resource Class $ 33,339,233
========================================================================
SHARES OF BENEFICIAL INTEREST, $.01 PAR VALUE PER SHARE:
Institutional Class 2,335,032,174
========================================================================
Private Investment Class 352,475,718
========================================================================
Personal Investment Class 192,912,753
========================================================================
Cash Management Class 789,488,776
========================================================================
Resource Class 33,333,398
========================================================================
NET ASSET VALUE PER SHARE:
Net asset value, offering and redemption price per share $ 1.00
========================================================================
</TABLE>
See Notes to Financial Statements.
F-4
<PAGE> 126
STATEMENT OF OPERATIONS
For the year ended August 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $ 198,959,801
- ---------------------------------------------------------------------
EXPENSES:
Advisory fees 2,227,788
- ---------------------------------------------------------------------
Custodian fees 186,211
- ---------------------------------------------------------------------
Administrative services fees 86,796
- ---------------------------------------------------------------------
Trustees' fees and expenses 26,562
- ---------------------------------------------------------------------
Registration and filing fees 301,601
- ---------------------------------------------------------------------
Transfer agent fees 256,535
- ---------------------------------------------------------------------
Distribution fees (Note 2) 2,404,078
- ---------------------------------------------------------------------
Other 235,516
- ---------------------------------------------------------------------
Total expenses 5,725,087
- ---------------------------------------------------------------------
Less expenses assumed by advisor (113,500)
- ---------------------------------------------------------------------
Net expenses 5,611,587
- ---------------------------------------------------------------------
Net investment income 193,348,214
- ---------------------------------------------------------------------
Net realized gain on sales of investments 490,127
- ---------------------------------------------------------------------
Net increase in net assets resulting from operations $ 193,838,341
=====================================================================
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
For the years ended August 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 193,348,214 $ 164,659,385
- ----------------------------------------------------------------------------
Net realized gain on sales of investments 490,127 67,230
- ----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 193,838,341 164,726,615
- ----------------------------------------------------------------------------
Distributions to shareholders from net
investment income (193,348,214) (164,659,385)
- ----------------------------------------------------------------------------
Distributions to shareholders from net
realized gain on investments -- (63,547)
- ----------------------------------------------------------------------------
Share transactions-net 443,432,341 232,658,749
- ----------------------------------------------------------------------------
Net increase in net assets 443,922,468 232,662,432
- ----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 3,259,968,672 3,027,306,240
- ----------------------------------------------------------------------------
End of period $3,703,891,140 $3,259,968,672
============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $3,703,242,819 $3,259,810,478
- ----------------------------------------------------------------------------
Undistributed net realized gain on sales of
investments 648,321 158,194
- ----------------------------------------------------------------------------
$3,703,891,140 $3,259,968,672
=============================================================================
</TABLE>
See Notes to Financial Statements.
F-5
<PAGE> 127
NOTES TO FINANCIAL STATEMENTS
August 31, 1996
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
five different classes of shares: the Institutional Class, the Private
Investment Class, the Personal Investment Class, the Cash Management Class and
the Resource Class. Matters affecting each class are voted on exclusively by
the shareholders of each class. The Portfolio's investment objective is the
maximization of current income to the extent consistent with the preservation
of capital and the maintenance of liquidity.
The following is a summary of significant accounting policies followed by the
Portfolio in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
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 $113,500 during the year ended August 31, 1996.
F-6
<PAGE> 128
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, 1996,
the Portfolio reimbursed AIM $86,796 for such services.
The Portfolio, pursuant to a transfer agent and service agreement, has agreed
to pay A I M Institutional Fund Services, Inc. ("AIFS") a fee for providing
transfer agent and shareholder services to the Portfolio. During the year ended
August 31, 1996, the Portfolio paid AIFS $256,535 for such services.
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 Rule 12b-1 under the 1940 Act with respect to the Private
Investment Class, the Personal Investment Class, the Cash Management Class and
the Resource Class of the Portfolio. The Plan provides that the Private
Investment Class, the Personal Investment Class, the Cash Management Class and
the Resource Class pay up to a 0.50%, 0.75%, 0.10%, and 0.20%, 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, (b) 0.10% of
the average daily net assets of the Cash Management Class and (c) 0.20% of the
average daily net assets of the Resource 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, the Cash Management
Class or the Resource 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, 1996, the Private Investment Class, the Personal Investment Class, the Cash
Management Class and the Resource Class accrued for compensation to FMC amounts
of $1,221,693, $712,960, $437,891, and $31,534, respectively, under the Plan.
Certain officers and trustees of the Trust are officers of AIM, FMC and AIFS.
During the year ended August 31, 1996, the Portfolio paid legal fees of
$12,753 for services provided by Kramer, Levin, Naftalis & Frankel. A member of
that firm is a trustee of the Fund.
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.
F-7
<PAGE> 129
NOTE 4-SHARE INFORMATION
Changes in shares outstanding during the years ended August 31, 1996 and 1995
were as follows:
<TABLE>
<CAPTION>
1996 1995
-------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
Sold:
Institutional Class 15,527,980,642 $15,527,980,642 13,265,129,336 $ 13,265,129,336
- -------------------------------------------------------------------------------------------
Private Investment
Class 2,472,141,697 2,472,141,697 3,483,722,415 3,483,722,415
- -------------------------------------------------------------------------------------------
Personal Investment
Class 1,088,591,830 1,088,591,830 628,065,796 628,065,796
- -------------------------------------------------------------------------------------------
Cash Management Class 4,232,083,227 4,232,083,227 97,195,296 97,195,296
- -------------------------------------------------------------------------------------------
Resource Class* 157,958,663 157,958,663 -- --
- -------------------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Institutional Class 9,763,491 9,763,491 11,558,277 11,558,277
- -------------------------------------------------------------------------------------------
Private Investment
Class 3,211,766 3,211,766 2,167,906 2,167,906
- -------------------------------------------------------------------------------------------
Personal Investment
Class 4,455,140 4,455,140 2,719,512 2,719,512
- -------------------------------------------------------------------------------------------
Cash Management Class 8,200,664 8,200,664 2,671,137 2,671,137
- -------------------------------------------------------------------------------------------
Resource Class* 789,507 789,507 -- --
- -------------------------------------------------------------------------------------------
Reacquired:
Institutional Class (15,872,219,385) (15,872,219,385) (13,059,443,790) (13,059,443,790)
- -------------------------------------------------------------------------------------------
Private Investment
Class (2,517,444,015) (2,517,444,015) (3,504,019,234) (3,504,019,234)
- -------------------------------------------------------------------------------------------
Personal Investment
Class (1,014,656,105) (1,014,656,105) (604,841,208) (604,841,208)
- -------------------------------------------------------------------------------------------
Cash Management Class (3,532,010,008) (3,532,010,008) (92,266,694) (92,266,694)
- -------------------------------------------------------------------------------------------
Resource Class* (125,414,773) (125,414,773) -- --
- -------------------------------------------------------------------------------------------
Net increase 443,432,341 $ 443,432,341 232,658,749 $ 232,658,749
===========================================================================================
</TABLE>
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share outstanding of
the Treasury Portfolio Cash Management Class during each of the years in the
three year period ended August 31, 1996 and the period August 17, 1993 (date
operations commenced) through August 31, 1993.
<TABLE>
<CAPTION>
1996 1995 1994 1993
-------- ------- ------- ------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------- -------- ------- ------- ------
Income from investment
operations:
Net investment income 0.05 0.05 0.03 0.001
- ----------------------- -------- ------- ------- ------
Total from investment
operations 0.05 0.05 0.03 0.001
- ----------------------- -------- ------- ------- ------
Less distributions:
Dividends from net
investment income (0.05) (0.05) (0.03) (0.001)
- ----------------------- -------- ------- ------- ------
Net asset value, end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00
======================= ======== ======= ======= ======
Total return 5.48% 5.57% 3.44% 2.91%(a)
======================= ======== ======= ======= ======
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $789,627 $81,219 $73,619 $8,681
======================= ======== ======= ======= ======
Ratio of expenses to
average net assets 0.17%(b)(c) 0.18%(c) 0.16%(c) 0.16%(a)(c)
======================= ======== ======= ======= ======
Ratio of net investment
income to average net
assets 5.25%(b)(d) 5.42%(d) 3.48%(d) 3.00%(a)(d)
======================= ======== ======= ======= ======
</TABLE>
(a) Annualized.
(b) Ratios are based on average net assets of $547,363,692.
(c) Ratios of expenses to average net assets prior to waiver of distribution
fees and/or expense reimbursements were 0.19%, 0.20%, 0.21% and 0.18% for
the periods 1996-1993, respectively. Ratios are annualized for periods less
than one year.
(d) Ratios of net investment income to average net assets prior to waiver of
distribution fees and/or expense reimbursements were 5.23%, 5.40%, 3.43%
and 2.98% for the periods 1996-1993, respectively. Ratios are annualized
for periods less than one year.
F-8
<PAGE> 130
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, 1996, 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 three-year period then ended
and the period August 17, 1993 (date operations commenced) through August 31,
1993. 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, 1996 by correspondence with the custodian and brokers. 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, 1996, 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 three-year period then ended and the period August 17, 1993 (date
operations commenced) through August 31, 1993, in conformity with generally
accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Houston, Texas
October 4, 1996
F-9
<PAGE> 131
TREASURY PORTFOLIO
INSTITUTIONAL CLASS
SCHEDULE OF INVESTMENTS
August 31, 1996
<TABLE>
<CAPTION>
MATURITY PAR (000) VALUE
<S> <C> <C> <C>
U.S. TREASURY SECURITIES - 27.96%
U.S. TREASURY BILLS(a) - 16.97%
5.20% 09/17/96 $175,000 $ 174,646,111
- ------------------------------------------------------------------------------
5.02% 10/24/96 50,000 49,630,472
- ------------------------------------------------------------------------------
5.16% 12/05/96 50,000 49,319,167
- ------------------------------------------------------------------------------
5.115% 12/12/96 50,000 49,275,374
- ------------------------------------------------------------------------------
5.22% 12/26/96 25,000 24,579,500
- ------------------------------------------------------------------------------
5.215% 01/02/97 25,000 24,554,552
- ------------------------------------------------------------------------------
5.33% 01/30/97 50,000 48,882,181
- ------------------------------------------------------------------------------
5.095% 02/13/97 25,000 24,416,198
- ------------------------------------------------------------------------------
5.10% 02/13/97 25,000 24,415,625
- ------------------------------------------------------------------------------
5.09% 03/06/97 25,000 24,342,541
- ------------------------------------------------------------------------------
5.248% 05/01/97 25,000 24,118,129
- ------------------------------------------------------------------------------
5.28% 05/01/97 25,000 24,112,667
- ------------------------------------------------------------------------------
5.318% 05/29/97 40,000 38,404,750
- ------------------------------------------------------------------------------
5.505% 06/26/97 25,000 23,860,771
- ------------------------------------------------------------------------------
5.39% 07/24/97 25,000 23,779,764
- ------------------------------------------------------------------------------
628,337,802
- ------------------------------------------------------------------------------
U.S. TREASURY NOTES - 10.99%
6.50% 09/30/96 50,000 50,052,967
- ------------------------------------------------------------------------------
7.00% 09/30/96 75,000 75,104,646
- ------------------------------------------------------------------------------
8.00% 10/15/96 55,000 55,174,050
- ------------------------------------------------------------------------------
7.50% 12/31/96 100,000 100,785,704
- ------------------------------------------------------------------------------
8.00% 01/15/97 75,000 75,763,373
- ------------------------------------------------------------------------------
6.625% 03/31/97 25,000 25,132,339
- ------------------------------------------------------------------------------
6.875% 03/31/97 25,000 25,188,361
- ------------------------------------------------------------------------------
407,201,440
- ------------------------------------------------------------------------------
Total U.S. Treasury Securities 1,035,539,242
- ------------------------------------------------------------------------------
Total Investments (excluding Repurchase
Agreements) 1,035,539,242
- ------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 76.94%(b)
BA Securities, Inc. 5.25%(c) 09/03/96 175,000 175,000,000
- ------------------------------------------------------------------------------
BZW Securities, Inc. 5.25%(d) -- 175,000 175,000,000
- ------------------------------------------------------------------------------
Bear, Stearns & Co. 5.23%(e) -- 200,000 200,000,000
- ------------------------------------------------------------------------------
Daiwa Securities America, Inc. 5.24%(f) 09/03/96 93,693 93,692,696
- ------------------------------------------------------------------------------
Deutsche Morgan Grenfell/C.J. Lawrence, Inc.
5.25%(g) -- 560,000 560,000,000
- ------------------------------------------------------------------------------
CS First Boston Corp. (The) 5.25%(h) 09/03/96 175,000 175,000,000
- ------------------------------------------------------------------------------
Goldman, Sachs & Co. 5.28%(i) 09/03/96 500,000 500,000,000
- ------------------------------------------------------------------------------
HSBC Securities, Inc. 5.25%(j) 09/03/96 175,000 175,000,000
- ------------------------------------------------------------------------------
</TABLE>
F-10
<PAGE> 132
<TABLE>
<CAPTION>
MATURITY PAR (000) VALUE
<S> <C> <C> <C>
REPURCHASE AGREEMENTS - continued
Morgan (J.P.) Securities, Inc.
5.23%(k) 09/03/96 $175,000 $ 175,000,000
- ----------------------------------------------------------------------------
Nesbitt Burns Securities, Inc.
5.26%(l) -- 96,000 96,000,000
- ----------------------------------------------------------------------------
Nikko Securities Co. International
(The), Inc. 5.22%(m) -- 175,000 175,000,000
- ----------------------------------------------------------------------------
Nomura Securities International, Inc.
5.25%(n) -- 175,000 175,000,000
- ----------------------------------------------------------------------------
UBS Securities LLC 5.23%(o) -- 175,000 175,000,000
- ----------------------------------------------------------------------------
Total Repurchase Agreements 2,849,692,696
- ----------------------------------------------------------------------------
TOTAL INVESTMENTS - 104.90% 3,885,231,938 (p)
- ----------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES -
(4.90)% (181,340,798)
- ----------------------------------------------------------------------------
NET ASSETS - 100.00% $3,703,891,140
============================================================================
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
(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, including the Portfolio's pro-rata
interest in joint repurchase agreements, is taken into possession by the
Portfolio 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, private accounts and certain non-registered investment companies
managed by the investment advisor or its affiliates.
(c) Entered into 08/30/96 with a maturing value of $175,102,083. Collateralized
by $179,050,000 U.S. Treasury obligations, 4.75% to 5.75% due 02/15/97 to
01/31/98.
(d) Open repurchase agreement entered into 07/15/96; however, either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $164,934,000 U.S. Treasury
obligations, 4.75% to 14.00% due 10/31/96 to 08/15/26.
(e) Open repurchase agreement entered into 07/01/96; however, either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $325,225,000 U.S. Treasury STRIPS,
due 02/15/98 to 02/15/19.
(f) Joint repurchase agreement entered into 08/30/96 with a maturing value of
$148,238,724. Collateralized by $147,480,000 U.S. Treasury obligations,
5.375% to 7.875% due 11/30/97 to 11/15/07.
(g) Open repurchase agreement entered into 03/20/96; however, either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $603,991,000 U.S. Treasury Bills, 0%
due 08/21/97.
(h) Entered into 08/30/96 with a maturing value of $175,102,083. Collateralized
by $183,339,000 U.S. Treasury Bills, 0% due 09/19/96 to 07/24/97.
(i) Joint repurchase agreement entered into 08/30/96 with a maturing value of
$834,779,144. Collateralized by $823,484,000 U.S. Treasury obligations, 0%
to 10.75% due 10/10/96 to 08/15/05.
(j) Entered into 08/30/96 with a maturing value of $175,102,083. Collateralized
by $154,810,000 U.S. Treasury obligations, 7.25% to 13.875% due 02/15/07 to
11/15/16.
(k) Entered into 08/30/96 with a maturing value of $175,101,694. Collateralized
by $174,972,000 U.S. Treasury obligations, 7.125% to 7.875% due 02/15/21 to
02/15/23.
(l) Open joint repurchase agreement entered into 04/16/96; however, either
party may terminate the agreement upon demand. Interest rates, par and
collateral are redetermined daily. Collateralized by $638,599,000 U.S.
Treasury obligations, 0% to 10.75% due 10/31/96 to 02/15/25.
(m) Open repurchase agreement entered into 07/15/96; however, either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $177,003,000 U.S. Treasury
obligations, 0% to 7.50% due 11/30/96 to 11/15/16.
(n) Open repurchase agreement entered into 07/16/96; however, either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $171,615,000 U.S. Treasury
obligations, 0% to 12.75% due 09/12/96 to 11/15/24.
(o) Open repurchase agreement entered into 07/15/96; however, either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $172,532,000 U.S. Treasury
obligations, 4.375% to 7.50% due 08/31/96 to 12/31/96.
(p) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
F-11
<PAGE> 133
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase agreements, at value
(amortized cost) $1,035,539,242
- ------------------------------------------------------------------------
Repurchase agreements 2,849,692,696
- ------------------------------------------------------------------------
Interest receivable 9,950,056
- ------------------------------------------------------------------------
Investment for deferred compensation plan 46,313
- ------------------------------------------------------------------------
Other assets 152,808
- ------------------------------------------------------------------------
Total assets 3,895,381,115
- ------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 174,646,111
- ------------------------------------------------------------------------
Dividends 16,137,308
- ------------------------------------------------------------------------
Deferred compensation 46,313
- ------------------------------------------------------------------------
Accrued advisory fees 195,369
- ------------------------------------------------------------------------
Accrued distribution fees 228,007
- ------------------------------------------------------------------------
Accrued transfer agent fees 12,984
- ------------------------------------------------------------------------
Accrued trustees' fees 3,575
- ------------------------------------------------------------------------
Accrued administrative services fees 7,904
- ------------------------------------------------------------------------
Accrued operating expenses 212,404
- ------------------------------------------------------------------------
Total liabilities 191,489,975
- ------------------------------------------------------------------------
NET ASSETS $3,703,891,140
========================================================================
NET ASSETS:
Institutional Class $2,335,440,965
========================================================================
Private Investment Class $ 352,537,425
========================================================================
Personal Investment Class $ 192,946,526
========================================================================
Cash Management Class $ 789,626,991
========================================================================
Resource Class $ 33,339,233
========================================================================
SHARES OF BENEFICIAL INTEREST, $.01 PAR VALUE PER SHARE:
Institutional Class 2,335,032,174
========================================================================
Private Investment Class 352,475,718
========================================================================
Personal Investment Class 192,912,753
========================================================================
Cash Management Class 789,488,776
========================================================================
Resource Class 33,333,398
========================================================================
NET ASSET VALUE PER SHARE:
Net asset value, offering and redemption price per share $ 1.00
========================================================================
</TABLE>
See Notes to Financial Statements.
F-12
<PAGE> 134
STATEMENT OF OPERATIONS
For the year ended August 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $ 198,959,801
- ---------------------------------------------------------------------
EXPENSES:
Advisory fees 2,227,788
- ---------------------------------------------------------------------
Custodian fees 186,211
- ---------------------------------------------------------------------
Administrative services fees 86,796
- ---------------------------------------------------------------------
Trustees' fees and expenses 26,562
- ---------------------------------------------------------------------
Registration and filing fees 301,601
- ---------------------------------------------------------------------
Transfer agent fees 256,535
- ---------------------------------------------------------------------
Distribution fees (Note 2) 2,404,078
- ---------------------------------------------------------------------
Other 235,516
- ---------------------------------------------------------------------
Total expenses 5,725,087
- ---------------------------------------------------------------------
Less expenses assumed by advisor (113,500)
- ---------------------------------------------------------------------
Net expenses 5,611,587
- ---------------------------------------------------------------------
Net investment income 193,348,214
- ---------------------------------------------------------------------
Net realized gain on sales of investments 490,127
- ---------------------------------------------------------------------
Net increase in net assets resulting from operations $ 193,838,341
=====================================================================
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
For the years ended August 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 193,348,214 $ 164,659,385
- -----------------------------------------------------------------------------
Net realized gain on sales of investments 490,127 67,230
- -----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 193,838,341 164,726,615
- -----------------------------------------------------------------------------
Distributions to shareholders from net
investment income (193,348,214) (164,659,385)
- -----------------------------------------------------------------------------
Distributions to shareholders from net
realized gain on investments -- (63,547)
- -----------------------------------------------------------------------------
Share transactions-net 443,432,341 232,658,749
- -----------------------------------------------------------------------------
Net increase in net assets 443,922,468 232,662,432
- -----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 3,259,968,672 3,027,306,240
- -----------------------------------------------------------------------------
End of period $3,703,891,140 $3,259,968,672
=============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $3,703,242,819 $3,259,810,478
- -----------------------------------------------------------------------------
Undistributed net realized gain on sales of
investments 648,321 158,194
- -----------------------------------------------------------------------------
$3,703,891,140 $3,259,968,672
=============================================================================
</TABLE>
See Notes to Financial Statements.
F-13
<PAGE> 135
NOTES TO FINANCIAL STATEMENTS
August 31, 1996
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
five different classes of shares: the Institutional Class, the Private
Investment Class, the Personal Investment Class, the Cash Management Class and
the Resource Class. Matters affecting each class are voted on exclusively by
the shareholders of each class. The Portfolio's investment objective is the
maximization of current income to the extent consistent with the preservation
of capital and the maintenance of liquidity.
The following is a summary of significant accounting policies followed by the
Portfolio in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
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 $113,500 during the year ended August 31, 1996.
F-14
<PAGE> 136
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, 1996,
the Portfolio reimbursed AIM $86,796 for such services.
The Portfolio, pursuant to a transfer agent and service agreement, has agreed
to pay A I M Institutional Fund Services, Inc. ("AIFS") a fee for providing
transfer agent and shareholder services to the Portfolio. During the year ended
August 31, 1996, the Portfolio paid AIFS $256,535 for such services.
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 Rule 12b-1 under the 1940 Act with respect to the Private
Investment Class, the Personal Investment Class, the Cash Management Class and
the Resource Class of the Portfolio. The Plan provides that the Private
Investment Class, the Personal Investment Class, the Cash Management Class and
the Resource Class pay up to a 0.50%, 0.75%, 0.10%, and 0.20%, 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, (b) 0.10% of
the average daily net assets of the Cash Management Class and (c) 0.20% of the
average daily net assets of the Resource 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, the Cash Management
Class or the Resource 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, 1996, the Private Investment Class, the Personal Investment Class, the Cash
Management Class and the Resource Class accrued for compensation to FMC amounts
of $1,221,693, $712,960, $437,891, and $31,534, respectively, under the Plan.
Certain officers and trustees of the Trust are officers of AIM, FMC and AIFS.
During the year ended August 31, 1996, the Portfolio paid legal fees of
$12,753 for services provided by Kramer, Levin, Naftalis & Frankel. A member of
that firm is a trustee of the Fund.
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.
F-15
<PAGE> 137
NOTE 4-SHARE INFORMATION
Changes in shares outstanding during the years ended August 31, 1996 and 1995
were as follows:
<TABLE>
<CAPTION>
1996 1995
-------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
Sold:
Institutional Class 15,527,980,642 $15,527,980,642 13,265,129,336 $ 13,265,129,336
- -------------------------------------------------------------------------------------------
Private Investment
Class 2,472,141,697 2,472,141,697 3,483,722,415 3,483,722,415
- -------------------------------------------------------------------------------------------
Personal Investment
Class 1,088,591,830 1,088,591,830 628,065,796 628,065,796
- -------------------------------------------------------------------------------------------
Cash Management Class 4,232,083,227 4,232,083,227 97,195,296 97,195,296
- -------------------------------------------------------------------------------------------
Resource Class* 157,958,663 157,958,663 -- --
- -------------------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Institutional Class 9,763,491 9,763,491 11,558,277 11,558,277
- -------------------------------------------------------------------------------------------
Private Investment
Class 3,211,766 3,211,766 2,167,906 2,167,906
- -------------------------------------------------------------------------------------------
Personal Investment
Class 4,455,140 4,455,140 2,719,512 2,719,512
- -------------------------------------------------------------------------------------------
Cash Management Class 8,200,664 8,200,664 2,671,137 2,671,137
- -------------------------------------------------------------------------------------------
Resource Class* 789,507 789,507 -- --
- -------------------------------------------------------------------------------------------
Reacquired:
Institutional Class (15,872,219,385) (15,872,219,385) (13,059,443,790) (13,059,443,790)
- -------------------------------------------------------------------------------------------
Private Investment
Class (2,517,444,015) (2,517,444,015) (3,504,019,234) (3,504,019,234)
- -------------------------------------------------------------------------------------------
Personal Investment
Class (1,014,656,105) (1,014,656,105) (604,841,208) (604,841,208)
- -------------------------------------------------------------------------------------------
Cash Management Class (3,532,010,008) (3,532,010,008) (92,266,694) (92,266,694)
- -------------------------------------------------------------------------------------------
Resource Class* (125,414,773) (125,414,773) -- --
- -------------------------------------------------------------------------------------------
Net increase 443,432,341 $ 443,432,341 232,658,749 $ 232,658,749
===========================================================================================
</TABLE>
* The Resource Class commenced operations on March 12, 1996.
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share outstanding of
the Institutional Class during each of the years in the ten-year period ended
August 31, 1996.
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Income from
investment
operations:
Net investment
income 0.05 0.06 0.04 0.03 0.05 0.07 0.08 0.09
- ---------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Less
distributions:
Dividends from
net
investment
income (0.05) (0.06) (0.04) (0.03) (0.05) (0.07) (0.08) (0.09)
- ---------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net asset value,
end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
================ ========== ========== ========== ========== ========== ========== ========== ==========
Total return 5.57% 5.66% 3.53% 3.22% 4.56% 7.04% 8.52% 9.03%
================ ========== ========== ========== ========== ========== ========== ========== ==========
Ratios/supplemental
data:
Net assets, end
of period (000s
omitted) $2,335,441 $2,669,637 $2,452,389 $3,652,672 $3,835,387 $2,437,902 $1,703,460 $1,189,822
================ ========== ========== ========== ========== ========== ========== ========== ==========
Ratio of
expenses to
average net
assets 0.09%(a) 0.10% 0.08% 0.08% 0.09% 0.10% 0.12% 0.11%
================ ========== ========== ========== ========== ========== ========== ========== ==========
Ratio of net
investment
income to
average net
assets 5.43%(a) 5.53% 3.39% 3.17% 4.38% 6.73% 8.19% 8.69%
================ ========== ========== ========== ========== ========== ========== ========== ==========
<CAPTION>
1988 1987
--------- ---------
<S> <C> <C>
Net asset value,
beginning of
period 1.00 1.00
- -------------------- --------- ---------
Income from
investment
operations:
Net investment
income 0.07 0.06
- -------------------- --------- ---------
Less
distributions:
Dividends from
net
investment
income (0.07) ( 0.06)
- -------------------- --------- ---------
Net asset value,
end of period 1.00 1.00
==================== ========= =========
Total return 6.98% 6.17%
==================== ========= =========
Ratios/supplemental
data:
Net assets, end
of period (000s
omitted) 1,121,144 $ 650,547
==================== ========= =========
Ratio of
expenses to
average net
assets 0.13% 0.14%
==================== ========= =========
Ratio of net
investment
income to
average net
assets 6.76% 6.01%
==================== ========= =========
</TABLE>
(a) Ratios are based on average net assets of $2,499,257,005.
F-16
<PAGE> 138
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, 1996, 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, 1996 by correspondence with the custodian and brokers. 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, 1996, 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.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Houston, Texas
October 4, 1996
F-17
<PAGE> 139
TREASURY PORTFOLIO
PERSONAL INVESTMENT CLASS
SCHEDULE OF INVESTMENTS
August 31, 1996
<TABLE>
<CAPTION>
MATURITY PAR (000) VALUE
<S> <C> <C> <C>
U.S. TREASURY SECURITIES - 27.96%
U.S. TREASURY BILLS(a) - 16.97%
5.20% 09/17/96 $175,000 $ 174,646,111
- ------------------------------------------------------------------------------
5.02% 10/24/96 50,000 49,630,472
- ------------------------------------------------------------------------------
5.16% 12/05/96 50,000 49,319,167
- ------------------------------------------------------------------------------
5.115% 12/12/96 50,000 49,275,374
- ------------------------------------------------------------------------------
5.22% 12/26/96 25,000 24,579,500
- ------------------------------------------------------------------------------
5.215% 01/02/97 25,000 24,554,552
- ------------------------------------------------------------------------------
5.33% 01/30/97 50,000 48,882,181
- ------------------------------------------------------------------------------
5.095% 02/13/97 25,000 24,416,198
- ------------------------------------------------------------------------------
5.10% 02/13/97 25,000 24,415,625
- ------------------------------------------------------------------------------
5.09% 03/06/97 25,000 24,342,541
- ------------------------------------------------------------------------------
5.248% 05/01/97 25,000 24,118,129
- ------------------------------------------------------------------------------
5.28% 05/01/97 25,000 24,112,667
- ------------------------------------------------------------------------------
5.318% 05/29/97 40,000 38,404,750
- ------------------------------------------------------------------------------
5.505% 06/26/97 25,000 23,860,771
- ------------------------------------------------------------------------------
5.39% 07/24/97 25,000 23,779,764
- ------------------------------------------------------------------------------
628,337,802
- ------------------------------------------------------------------------------
U.S. TREASURY NOTES - 10.99%
6.50% 09/30/96 50,000 50,052,967
- ------------------------------------------------------------------------------
7.00% 09/30/96 75,000 75,104,646
- ------------------------------------------------------------------------------
8.00% 10/15/96 55,000 55,174,050
- ------------------------------------------------------------------------------
7.50% 12/31/96 100,000 100,785,704
- ------------------------------------------------------------------------------
8.00% 01/15/97 75,000 75,763,373
- ------------------------------------------------------------------------------
6.625% 03/31/97 25,000 25,132,339
- ------------------------------------------------------------------------------
6.875% 03/31/97 25,000 25,188,361
- ------------------------------------------------------------------------------
407,201,440
- ------------------------------------------------------------------------------
Total U.S. Treasury Securities 1,035,539,242
- ------------------------------------------------------------------------------
Total Investments (excluding Repurchase
Agreements) 1,035,539,242
- ------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 76.94%(b)
BA Securities, Inc. 5.25%(c) 09/03/96 175,000 175,000,000
- ------------------------------------------------------------------------------
BZW Securities, Inc. 5.25%(d) -- 175,000 175,000,000
- ------------------------------------------------------------------------------
Bear, Stearns & Co. 5.23%(e) -- 200,000 200,000,000
- ------------------------------------------------------------------------------
Daiwa Securities America, Inc. 5.24%(f) 09/03/96 93,693 93,692,696
- ------------------------------------------------------------------------------
Deutsche Morgan Grenfell/C.J. Lawrence, Inc.
5.25%(g) -- 560,000 560,000,000
- ------------------------------------------------------------------------------
CS First Boston Corp. (The) 5.25%(h) 09/03/96 175,000 175,000,000
- ------------------------------------------------------------------------------
Goldman, Sachs & Co. 5.28%(i) 09/03/96 500,000 500,000,000
- ------------------------------------------------------------------------------
HSBC Securities, Inc. 5.25%(j) 09/03/96 175,000 175,000,000
- ------------------------------------------------------------------------------
</TABLE>
F-18
<PAGE> 140
<TABLE>
<CAPTION>
MATURITY PAR (000) VALUE
<S> <C> <C> <C>
REPURCHASE AGREEMENTS - continued
Morgan (J.P.) Securities, Inc.
5.23%(k) 09/03/96 $175,000 $ 175,000,000
- ----------------------------------------------------------------------------
Nesbitt Burns Securities, Inc.
5.26%(l) -- 96,000 96,000,000
- ----------------------------------------------------------------------------
Nikko Securities Co. International
(The), Inc. 5.22%(m) -- 175,000 175,000,000
- ----------------------------------------------------------------------------
Nomura Securities International, Inc.
5.25%(n) -- 175,000 175,000,000
- ----------------------------------------------------------------------------
UBS Securities LLC 5.23%(o) -- 175,000 175,000,000
- ----------------------------------------------------------------------------
Total Repurchase Agreements 2,849,692,696
- ----------------------------------------------------------------------------
TOTAL INVESTMENTS - 104.90% 3,885,231,938 (p)
- ----------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES -
(4.90)% (181,340,798)
- ----------------------------------------------------------------------------
NET ASSETS - 100.00% $3,703,891,140
============================================================================
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
(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, including the Portfolio's pro-rata
interest in joint repurchase agreements, is taken into possession by the
Portfolio 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, private accounts and certain non-registered investment companies
managed by the investment advisor or its affiliates.
(c) Entered into 08/30/96 with a maturing value of $175,102,083. Collateralized
by $179,050,000 U.S. Treasury obligations, 4.75% to 5.75% due 02/15/97 to
01/31/98.
(d) Open repurchase agreement entered into 07/15/96; however, either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $164,934,000 U.S. Treasury
obligations, 4.75% to 14.00% due 10/31/96 to 08/15/26.
(e) Open repurchase agreement entered into 07/01/96; however, either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $325,225,000 U.S. Treasury STRIPS,
due 02/15/98 to 02/15/19.
(f) Joint repurchase agreement entered into 08/30/96 with a maturing value of
$148,238,724. Collateralized by $147,480,000 U.S. Treasury obligations,
5.375% to 7.875% due 11/30/97 to 11/15/07.
(g) Open repurchase agreement entered into 03/20/96; however, either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $603,991,000 U.S. Treasury Bills, 0%
due 08/21/97.
(h) Entered into 08/30/96 with a maturing value of $175,102,083. Collateralized
by $183,339,000 U.S. Treasury Bills, 0% due 09/19/96 to 07/24/97.
(i) Joint repurchase agreement entered into 08/30/96 with a maturing value of
$834,779,144. Collateralized by $823,484,000 U.S. Treasury obligations, 0%
to 10.75% due 10/10/96 to 08/15/05.
(j) Entered into 08/30/96 with a maturing value of $175,102,083. Collateralized
by $154,810,000 U.S. Treasury obligations, 7.25% to 13.875% due 02/15/07 to
11/15/16.
(k) Entered into 08/30/96 with a maturing value of $175,101,694. Collateralized
by $174,972,000 U.S. Treasury obligations, 7.125% to 7.875% due 02/15/21 to
02/15/23.
(l) Open joint repurchase agreement entered into 04/16/96; however, either
party may terminate the agreement upon demand. Interest rates, par and
collateral are redetermined daily. Collateralized by $638,599,000 U.S.
Treasury obligations, 0% to 10.75% due 10/31/96 to 02/15/25.
(m) Open repurchase agreement entered into 07/15/96; however, either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $177,003,000 U.S. Treasury
obligations, 0% to 7.50% due 11/30/96 to 11/15/16.
(n) Open repurchase agreement entered into 07/16/96; however, either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $171,615,000 U.S. Treasury
obligations, 0% to 12.75% due 09/12/96 to 11/15/24.
(o) Open repurchase agreement entered into 07/15/96; however, either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $172,532,000 U.S. Treasury
obligations, 4.375% to 7.50% due 08/31/96 to 12/31/96.
(p) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
F-19
<PAGE> 141
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase agreements, at value
(amortized cost) $1,035,539,242
- ------------------------------------------------------------------------
Repurchase agreements 2,849,692,696
- ------------------------------------------------------------------------
Interest receivable 9,950,056
- ------------------------------------------------------------------------
Investment for deferred compensation plan 46,313
- ------------------------------------------------------------------------
Other assets 152,808
- ------------------------------------------------------------------------
Total assets 3,895,381,115
- ------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 174,646,111
- ------------------------------------------------------------------------
Dividends 16,137,308
- ------------------------------------------------------------------------
Deferred compensation 46,313
- ------------------------------------------------------------------------
Accrued advisory fees 195,369
- ------------------------------------------------------------------------
Accrued distribution fees 228,007
- ------------------------------------------------------------------------
Accrued transfer agent fees 12,984
- ------------------------------------------------------------------------
Accrued trustees' fees 3,575
- ------------------------------------------------------------------------
Accrued administrative services fees 7,904
- ------------------------------------------------------------------------
Accrued operating expenses 212,404
- ------------------------------------------------------------------------
Total liabilities 191,489,975
- ------------------------------------------------------------------------
NET ASSETS $3,703,891,140
========================================================================
NET ASSETS:
Institutional Class $2,335,440,965
========================================================================
Private Investment Class $ 352,537,425
========================================================================
Personal Investment Class $ 192,946,526
========================================================================
Cash Management Class $ 789,626,991
========================================================================
Resource Class $ 33,339,233
========================================================================
SHARES OF BENEFICIAL INTEREST, $.01 PAR VALUE PER SHARE:
Institutional Class 2,335,032,174
========================================================================
Private Investment Class 352,475,718
========================================================================
Personal Investment Class 192,912,753
========================================================================
Cash Management Class 789,488,776
========================================================================
Resource Class 33,333,398
========================================================================
NET ASSET VALUE PER SHARE:
Net asset value, offering and redemption price per share $ 1.00
========================================================================
</TABLE>
See Notes to Financial Statements.
F-20
<PAGE> 142
STATEMENT OF OPERATIONS
For the year ended August 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $ 198,959,801
- ---------------------------------------------------------------------
EXPENSES:
Advisory fees 2,227,788
- ---------------------------------------------------------------------
Custodian fees 186,211
- ---------------------------------------------------------------------
Administrative services fees 86,796
- ---------------------------------------------------------------------
Trustees' fees and expenses 26,562
- ---------------------------------------------------------------------
Registration and filing fees 301,601
- ---------------------------------------------------------------------
Transfer agent fees 256,535
- ---------------------------------------------------------------------
Distribution fees (Note 2) 2,404,078
- ---------------------------------------------------------------------
Other 235,516
- ---------------------------------------------------------------------
Total expenses 5,725,087
- ---------------------------------------------------------------------
Less expenses assumed by advisor (113,500)
- ---------------------------------------------------------------------
Net expenses 5,611,587
- ---------------------------------------------------------------------
Net investment income 193,348,214
- ---------------------------------------------------------------------
Net realized gain on sales of investments 490,127
- ---------------------------------------------------------------------
Net increase in net assets resulting from operations $ 193,838,341
=====================================================================
</TABLE>
See Notes to Financial Statements.
F-21
<PAGE> 143
STATEMENT OF CHANGES IN NET ASSETS
For the years ended August 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 193,348,214 $ 164,659,385
- -----------------------------------------------------------------------------
Net realized gain on sales of investments 490,127 67,230
- -----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 193,838,341 164,726,615
- -----------------------------------------------------------------------------
Distributions to shareholders from net
investment income (193,348,214) (164,659,385)
- -----------------------------------------------------------------------------
Distributions to shareholders from net
realized gain on investments -- (63,547)
- -----------------------------------------------------------------------------
Share transactions-net 443,432,341 232,658,749
- -----------------------------------------------------------------------------
Net increase in net assets 443,922,468 232,662,432
- -----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 3,259,968,672 3,027,306,240
- -----------------------------------------------------------------------------
End of period $3,703,891,140 $3,259,968,672
=============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $3,703,242,819 $3,259,810,478
- -----------------------------------------------------------------------------
Undistributed net realized gain on sales of
investments 648,321 158,194
- -----------------------------------------------------------------------------
$3,703,891,140 $3,259,968,672
=============================================================================
</TABLE>
See Notes to Financial Statements.
F-22
<PAGE> 144
NOTES TO FINANCIAL STATEMENTS
August 31, 1996
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
five different classes of shares: the Institutional Class, the Private
Investment Class, the Personal Investment Class, the Cash Management Class and
the Resource Class. Matters affecting each class are voted on exclusively by
the shareholders of each class. The Portfolio's investment objective is the
maximization of current income to the extent consistent with the preservation
of capital and the maintenance of liquidity.
The following is a summary of significant accounting policies followed by the
Portfolio in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
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 $113,500 during the year ended August 31, 1996.
F-23
<PAGE> 145
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, 1996,
the Portfolio reimbursed AIM $86,796 for such services.
The Portfolio, pursuant to a transfer agent and service agreement, has agreed
to pay A I M Institutional Fund Services, Inc. ("AIFS") a fee for providing
transfer agent and shareholder services to the Portfolio. During the year ended
August 31, 1996, the Portfolio paid AIFS $256,535 for such services.
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 Rule 12b-1 under the 1940 Act with respect to the Private
Investment Class, the Personal Investment Class, the Cash Management Class and
the Resource Class of the Portfolio. The Plan provides that the Private
Investment Class, the Personal Investment Class, the Cash Management Class and
the Resource Class pay up to a 0.50%, 0.75%, 0.10%, and 0.20%, 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, (b) 0.10% of
the average daily net assets of the Cash Management Class and (c) 0.20% of the
average daily net assets of the Resource 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, the Cash Management
Class or the Resource 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, 1996, the Private Investment Class, the Personal Investment Class, the Cash
Management Class and the Resource Class accrued for compensation to FMC amounts
of $1,221,693, $712,960, $437,891, and $31,534, respectively, under the Plan.
Certain officers and trustees of the Trust are officers of AIM, FMC and AIFS.
During the year ended August 31, 1996, the Portfolio paid legal fees of
$12,753 for services provided by Kramer, Levin, Naftalis & Frankel. A member of
that firm is a trustee of the Fund.
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.
F-24
<PAGE> 146
NOTE 4-SHARE INFORMATION
Changes in shares outstanding during the years ended August 31, 1996 and 1995
were as follows:
<TABLE>
<CAPTION>
1996 1995
--------------------------------- ----------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- -----------------
<S> <C> <C> <C> <C>
Sold:
Institutional Class 15,527,980,642 $ 15,527,980,642 13,265,129,336 $ 13,265,129,336
- ---------------------------------------------------------------------------------------------
Private Investment
Class 2,472,141,697 2,472,141,697 3,483,722,415 3,483,722,415
- ---------------------------------------------------------------------------------------------
Personal Investment
Class 1,088,591,830 1,088,591,830 628,065,796 628,065,796
- ---------------------------------------------------------------------------------------------
Cash Management Class 4,232,083,227 4,232,083,227 97,195,296 97,195,296
- ---------------------------------------------------------------------------------------------
Resource Class* 157,958,663 157,958,663 -- --
- ---------------------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Institutional Class 9,763,491 9,763,491 11,558,277 11,558,277
- ---------------------------------------------------------------------------------------------
Private Investment
Class 3,211,766 3,211,766 2,167,906 2,167,906
- ---------------------------------------------------------------------------------------------
Personal Investment
Class 4,455,140 4,455,140 2,719,512 2,719,512
- ---------------------------------------------------------------------------------------------
Cash Management Class 8,200,664 8,200,664 2,671,137 2,671,137
- ---------------------------------------------------------------------------------------------
Resource Class* 789,507 789,507 -- --
- ---------------------------------------------------------------------------------------------
Reacquired:
Institutional Class (15,872,219,385) (15,872,219,385) (13,059,443,790) (13,059,443,790)
- ---------------------------------------------------------------------------------------------
Private Investment
Class (2,517,444,015) (2,517,444,015) (3,504,019,234) (3,504,019,234)
- ---------------------------------------------------------------------------------------------
Personal Investment
Class (1,014,656,105) (1,014,656,105) (604,841,208) (604,841,208)
- ---------------------------------------------------------------------------------------------
Cash Management Class (3,532,010,008) (3,532,010,008) (92,266,694) (92,266,694)
- ---------------------------------------------------------------------------------------------
Resource Class* (125,414,773) (125,414,773) -- --
- ---------------------------------------------------------------------------------------------
Net increase 443,432,341 $ 443,432,341 232,658,749 $ 232,658,749
=============================================================================================
</TABLE>
* The Resource Class commenced operations on March 12, 1996.
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 five-year period ended August 31, 1996 and the period August 8, 1991 (date
operation commenced) through August 31, 1991.
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992 1991
-------- -------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------- -------- -------- ------- ------- ------- ------
Income from investment
operations:
Net investment income 0.05 0.05 0.03 0.03 0.04 0.003
- ----------------------- -------- -------- ------- ------- ------- ------
Total from investment
operations 0.05 0.05 0.03 0.03 0.04 0.003
- ----------------------- -------- -------- ------- ------- ------- ------
Less distributions:
Dividends from net
investment income (0.05) (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 $ 1.00
======================= ======== ======== ======= ======= ======= ======
Total return 5.04% 5.13% 3.02% 2.77% 4.07% 5.04%(a)
======================= ======== ======== ======= ======= ======= ======
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $192,947 $114,527 $88,582 $69,867 $23,853 $ 330
======================= ======== ======== ======= ======= ======= ======
Ratio of expenses to
average net assets 0.59%(b)(c) 0.60%(c) 0.58%(c) 0.53%(c) 0.49%(c) 0.81%(a)(c)
======================= ======== ======== ======= ======= ======= ======
Ratio of net investment
income to average net
assets 4.91%(b)(d) 5.03%(d) 2.99%(d) 2.70%(d) 3.55%(d) 5.03%(a)(d)
======================= ======== ======== ======= ======= ======= ======
</TABLE>
(a) Annualized.
(b) Ratios are based on average net assets of $142,591,904.
(c) Ratios of expenses to average net assets prior to waiver of distribution
fees and/or expense reimbursements were 0.92%, 0.90%, 0.91%, 0.93%, 1.03%
and 12.68% for the periods 1996-1991, respectively. Ratios are annualized
for periods less than one year.
(d) Ratios of net investment income to average net assets prior to waiver of
distribution fees and/or expense reimbursements were 4.58%, 4.73%, 2.66%,
2.29%, 3.01% and (6.84%) for the periods 1996-1991, respectively. Ratios
are annualized for periods less than one year.
F-25
<PAGE> 147
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, 1996, and the related
statement of operations for the year then ended, the statement of changes in
net assets for each of the years in the two-year period then ended, and the
financial highlights for each of the years in the five-year period then ended
and the period August 8, 1991 (date operations commenced) through August 31,
1991. 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, 1996 by correspondence with the custodian and brokers. 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, 1996, the results of its operations for the
year then ended, the changes in its net assets for each of the years in the
two-year period then ended, and the financial highlights for each of the years
in the five-year period then ended and the period August 8, 1991 (date
operations commenced) through August 31, 1991, in conformity with generally
accepted accounting principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Houston, Texas
October 4, 1996
F-26
<PAGE> 148
TREASURY PORTFOLIO
PRIVATE PLACEMENT CLASS
SCHEDULE OF INVESTMENTS
August 31, 1996
<TABLE>
<CAPTION>
MATURITY PAR (000) VALUE
<S> <C> <C> <C>
U.S. TREASURY SECURITIES - 27.96%
U.S. TREASURY BILLS(a) - 16.97%
5.20% 09/17/96 $175,000 $ 174,646,111
- ------------------------------------------------------------------------------
5.02% 10/24/96 50,000 49,630,472
- ------------------------------------------------------------------------------
5.16% 12/05/96 50,000 49,319,167
- ------------------------------------------------------------------------------
5.115% 12/12/96 50,000 49,275,374
- ------------------------------------------------------------------------------
5.22% 12/26/96 25,000 24,579,500
- ------------------------------------------------------------------------------
5.215% 01/02/97 25,000 24,554,552
- ------------------------------------------------------------------------------
5.33% 01/30/97 50,000 48,882,181
- ------------------------------------------------------------------------------
5.095% 02/13/97 25,000 24,416,198
- ------------------------------------------------------------------------------
5.10% 02/13/97 25,000 24,415,625
- ------------------------------------------------------------------------------
5.09% 03/06/97 25,000 24,342,541
- ------------------------------------------------------------------------------
5.248% 05/01/97 25,000 24,118,129
- ------------------------------------------------------------------------------
5.28% 05/01/97 25,000 24,112,667
- ------------------------------------------------------------------------------
5.318% 05/29/97 40,000 38,404,750
- ------------------------------------------------------------------------------
5.505% 06/26/97 25,000 23,860,771
- ------------------------------------------------------------------------------
5.39% 07/24/97 25,000 23,779,764
- ------------------------------------------------------------------------------
628,337,802
- ------------------------------------------------------------------------------
U.S. TREASURY NOTES - 10.99%
6.50% 09/30/96 50,000 50,052,967
- ------------------------------------------------------------------------------
7.00% 09/30/96 75,000 75,104,646
- ------------------------------------------------------------------------------
8.00% 10/15/96 55,000 55,174,050
- ------------------------------------------------------------------------------
7.50% 12/31/96 100,000 100,785,704
- ------------------------------------------------------------------------------
8.00% 01/15/97 75,000 75,763,373
- ------------------------------------------------------------------------------
6.625% 03/31/97 25,000 25,132,339
- ------------------------------------------------------------------------------
6.875% 03/31/97 25,000 25,188,361
- ------------------------------------------------------------------------------
407,201,440
- ------------------------------------------------------------------------------
Total U.S. Treasury Securities 1,035,539,242
- ------------------------------------------------------------------------------
Total Investments (excluding Repurchase
Agreements) 1,035,539,242
- ------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 76.94%(b)
BA Securities, Inc. 5.25%(c) 09/03/96 175,000 175,000,000
- ------------------------------------------------------------------------------
BZW Securities, Inc. 5.25%(d) -- 175,000 175,000,000
- ------------------------------------------------------------------------------
Bear, Stearns & Co. 5.23%(e) -- 200,000 200,000,000
- ------------------------------------------------------------------------------
Daiwa Securities America, Inc. 5.24%(f) 09/03/96 93,693 93,692,696
- ------------------------------------------------------------------------------
Deutsche Morgan Grenfell/C.J. Lawrence, Inc.
5.25%(g) -- 560,000 560,000,000
- ------------------------------------------------------------------------------
CS First Boston Corp. (The) 5.25%(h) 09/03/96 175,000 175,000,000
- ------------------------------------------------------------------------------
Goldman, Sachs & Co. 5.28%(i) 09/03/96 500,000 500,000,000
- ------------------------------------------------------------------------------
HSBC Securities, Inc. 5.25%(j) 09/03/96 175,000 175,000,000
- ------------------------------------------------------------------------------
</TABLE>
F-27
<PAGE> 149
<TABLE>
<CAPTION>
MATURITY PAR (000) VALUE
<S> <C> <C> <C>
REPURCHASE AGREEMENTS - continued
Morgan (J.P.) Securities, Inc.
5.23%(k) 09/03/96 $175,000 $ 175,000,000
- ----------------------------------------------------------------------------
Nesbitt Burns Securities, Inc.
5.26%(l) -- 96,000 96,000,000
- ----------------------------------------------------------------------------
Nikko Securities Co. International
(The), Inc. 5.22%(m) -- 175,000 175,000,000
- ----------------------------------------------------------------------------
Nomura Securities International, Inc.
5.25%(n) -- 175,000 175,000,000
- ----------------------------------------------------------------------------
UBS Securities LLC 5.23%(o) -- 175,000 175,000,000
- ----------------------------------------------------------------------------
Total Repurchase Agreements 2,849,692,696
- ----------------------------------------------------------------------------
TOTAL INVESTMENTS - 104.90% 3,885,231,938 (p)
- ----------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES -
(4.90)% (181,340,798)
- ----------------------------------------------------------------------------
NET ASSETS - 100.00% $3,703,891,140
============================================================================
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
(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, including the Portfolio's pro-rata
interest in joint repurchase agreements, is taken into possession by the
Portfolio 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, private accounts and certain non-registered investment companies
managed by the investment advisor or its affiliates.
(c) Entered into 08/30/96 with a maturing value of $175,102,083. Collateralized
by $179,050,000 U.S. Treasury obligations, 4.75% to 5.75% due 02/15/97 to
01/31/98.
(d) Open repurchase agreement entered into 07/15/96; however, either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $164,934,000 U.S. Treasury
obligations, 4.75% to 14.00% due 10/31/96 to 08/15/26.
(e) Open repurchase agreement entered into 07/01/96; however, either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $325,225,000 U.S. Treasury STRIPS,
due 02/15/98 to 02/15/19.
(f) Joint repurchase agreement entered into 08/30/96 with a maturing value of
$148,238,724. Collateralized by $147,480,000 U.S. Treasury obligations,
5.375% to 7.875% due 11/30/97 to 11/15/07.
(g) Open repurchase agreement entered into 03/20/96; however, either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $603,991,000 U.S. Treasury Bills, 0%
due 08/21/97.
(h) Entered into 08/30/96 with a maturing value of $175,102,083. Collateralized
by $183,339,000 U.S. Treasury Bills, 0% due 09/19/96 to 07/24/97.
(i) Joint repurchase agreement entered into 08/30/96 with a maturing value of
$834,779,144. Collateralized by $823,484,000 U.S. Treasury obligations, 0%
to 10.75% due 10/10/96 to 08/15/05.
(j) Entered into 08/30/96 with a maturing value of $175,102,083. Collateralized
by $154,810,000 U.S. Treasury obligations, 7.25% to 13.875% due 02/15/07 to
11/15/16.
(k) Entered into 08/30/96 with a maturing value of $175,101,694. Collateralized
by $174,972,000 U.S. Treasury obligations, 7.125% to 7.875% due 02/15/21 to
02/15/23.
(l) Open joint repurchase agreement entered into 04/16/96; however, either
party may terminate the agreement upon demand. Interest rates, par and
collateral are redetermined daily. Collateralized by $638,599,000 U.S.
Treasury obligations, 0% to 10.75% due 10/31/96 to 02/15/25.
(m) Open repurchase agreement entered into 07/15/96; however, either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $177,003,000 U.S. Treasury
obligations, 0% to 7.50% due 11/30/96 to 11/15/16.
(n) Open repurchase agreement entered into 07/16/96; however, either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $171,615,000 U.S. Treasury
obligations, 0% to 12.75% due 09/12/96 to 11/15/24.
(o) Open repurchase agreement entered into 07/15/96; however, either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $172,532,000 U.S. Treasury
obligations, 4.375% to 7.50% due 08/31/96 to 12/31/96.
(p) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
F-28
<PAGE> 150
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase agreements, at value
(amortized cost) $1,035,539,242
- ------------------------------------------------------------------------
Repurchase agreements 2,849,692,696
- ------------------------------------------------------------------------
Interest receivable 9,950,056
- ------------------------------------------------------------------------
Investment for deferred compensation plan 46,313
- ------------------------------------------------------------------------
Other assets 152,808
- ------------------------------------------------------------------------
Total assets 3,895,381,115
- ------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 174,646,111
- ------------------------------------------------------------------------
Dividends 16,137,308
- ------------------------------------------------------------------------
Deferred compensation 46,313
- ------------------------------------------------------------------------
Accrued advisory fees 195,369
- ------------------------------------------------------------------------
Accrued distribution fees 228,007
- ------------------------------------------------------------------------
Accrued transfer agent fees 12,984
- ------------------------------------------------------------------------
Accrued trustees' fees 3,575
- ------------------------------------------------------------------------
Accrued administrative services fees 7,904
- ------------------------------------------------------------------------
Accrued operating expenses 212,404
- ------------------------------------------------------------------------
Total liabilities 191,489,975
- ------------------------------------------------------------------------
NET ASSETS $3,703,891,140
========================================================================
NET ASSETS:
Institutional Class $2,335,440,965
========================================================================
Private Investment Class $ 352,537,425
========================================================================
Personal Investment Class $ 192,946,526
========================================================================
Cash Management Class $ 789,626,991
========================================================================
Resource Class $ 33,339,233
========================================================================
SHARES OF BENEFICIAL INTEREST, $.01 PAR VALUE PER SHARE:
Institutional Class 2,335,032,174
========================================================================
Private Investment Class 352,475,718
========================================================================
Personal Investment Class 192,912,753
========================================================================
Cash Management Class 789,488,776
========================================================================
Resource Class 33,333,398
========================================================================
NET ASSET VALUE PER SHARE:
Net asset value, offering and redemption price per share $ 1.00
========================================================================
</TABLE>
See Notes to Financial Statements.
F-29
<PAGE> 151
STATEMENT OF OPERATIONS
For the year ended August 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $ 198,959,801
- ---------------------------------------------------------------------
EXPENSES:
Advisory fees 2,227,788
- ---------------------------------------------------------------------
Custodian fees 186,211
- ---------------------------------------------------------------------
Administrative services fees 86,796
- ---------------------------------------------------------------------
Trustees' fees and expenses 26,562
- ---------------------------------------------------------------------
Registration and filing fees 301,601
- ---------------------------------------------------------------------
Transfer agent fees 256,535
- ---------------------------------------------------------------------
Distribution fees (Note 2) 2,404,078
- ---------------------------------------------------------------------
Other 235,516
- ---------------------------------------------------------------------
Total expenses 5,725,087
- ---------------------------------------------------------------------
Less expenses assumed by advisor (113,500)
- ---------------------------------------------------------------------
Net expenses 5,611,587
- ---------------------------------------------------------------------
Net investment income 193,348,214
- ---------------------------------------------------------------------
Net realized gain on sales of investments 490,127
- ---------------------------------------------------------------------
Net increase in net assets resulting from operations $ 193,838,341
=====================================================================
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
For the years ended August 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 193,348,214 $ 164,659,385
- -----------------------------------------------------------------------------
Net realized gain on sales of investments 490,127 67,230
- -----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 193,838,341 164,726,615
- -----------------------------------------------------------------------------
Distributions to shareholders from net
investment income (193,348,214) (164,659,385)
- -----------------------------------------------------------------------------
Distributions to shareholders from net
realized gain on investments -- (63,547)
- -----------------------------------------------------------------------------
Share transactions-net 443,432,341 232,658,749
- -----------------------------------------------------------------------------
Net increase in net assets 443,922,468 232,662,432
- -----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 3,259,968,672 3,027,306,240
- -----------------------------------------------------------------------------
End of period $3,703,891,140 $3,259,968,672
=============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $3,703,242,819 $3,259,810,478
- -----------------------------------------------------------------------------
Undistributed net realized gain on sales of
investments 648,321 158,194
- -----------------------------------------------------------------------------
$3,703,891,140 $3,259,968,672
=============================================================================
</TABLE>
See Notes to Financial Statements.
F-30
<PAGE> 152
NOTES TO FINANCIAL STATEMENTS
August 31, 1996
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
five different classes of shares: the Institutional Class, the Private
Investment Class, the Personal Investment Class, the Cash Management Class and
the Resource Class. Matters affecting each class are voted on exclusively by
the shareholders of each class. The Portfolio's investment objective is the
maximization of current income to the extent consistent with the preservation
of capital and the maintenance of liquidity.
The following is a summary of significant accounting policies followed by the
Portfolio in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
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 $113,500 during the year ended August 31, 1996.
F-31
<PAGE> 153
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, 1996,
the Portfolio reimbursed AIM $86,796 for such services.
The Portfolio, pursuant to a transfer agent and service agreement, has agreed
to pay A I M Institutional Fund Services, Inc. ("AIFS") a fee for providing
transfer agent and shareholder services to the Portfolio. During the year ended
August 31, 1996, the Portfolio paid AIFS $256,535 for such services.
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 Rule 12b-1 under the 1940 Act with respect to the Private
Investment Class, the Personal Investment Class, the Cash Management Class and
the Resource Class of the Portfolio. The Plan provides that the Private
Investment Class, the Personal Investment Class, the Cash Management Class and
the Resource Class pay up to a 0.50%, 0.75%, 0.10%, and 0.20%, 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, (b) 0.10% of
the average daily net assets of the Cash Management Class and (c) 0.20% of the
average daily net assets of the Resource 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, the Cash Management
Class or the Resource 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, 1996, the Private Investment Class, the Personal Investment Class, the Cash
Management Class and the Resource Class accrued for compensation to FMC amounts
of $1,221,693, $712,960, $437,891, and $31,534, respectively, under the Plan.
Certain officers and trustees of the Trust are officers of AIM, FMC and AIFS.
During the year ended August 31, 1996, the Portfolio paid legal fees of
$12,753 for services provided by Kramer, Levin, Naftalis & Frankel. A member of
that firm is a trustee of the Fund.
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.
F-32
<PAGE> 154
NOTE 4-SHARE INFORMATION
Changes in shares outstanding during the years ended August 31, 1996 and 1995
were as follows:
<TABLE>
<CAPTION>
1996 1995
-------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
Sold:
Institutional Class 15,527,980,642 $15,527,980,642 13,265,129,336 $ 13,265,129,336
- --------------------------------------------------------------------------------
Private Investment
Class 2,472,141,697 2,472,141,697 3,483,722,415 3,483,722,415
- --------------------------------------------------------------------------------
Personal Investment
Class 1,088,591,830 1,088,591,830 628,065,796 628,065,796
- --------------------------------------------------------------------------------
Cash Management Class 4,232,083,227 4,232,083,227 97,195,296 97,195,296
- --------------------------------------------------------------------------------
Resource Class* 157,958,663 157,958,663 -- --
- --------------------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Institutional Class 9,763,491 9,763,491 11,558,277 11,558,277
- --------------------------------------------------------------------------------
Private Investment
Class 3,211,766 3,211,766 2,167,906 2,167,906
- --------------------------------------------------------------------------------
Personal Investment
Class 4,455,140 4,455,140 2,719,512 2,719,512
- --------------------------------------------------------------------------------
Cash Management Class 8,200,664 8,200,664 2,671,137 2,671,137
- --------------------------------------------------------------------------------
Resource Class* 789,507 789,507 -- --
- --------------------------------------------------------------------------------------------
Reacquired:
Institutional Class (15,872,219,385) (15,872,219,385) (13,059,443,790) (13,059,443,790)
- --------------------------------------------------------------------------------
Private Investment
Class (2,517,444,015) (2,517,444,015) (3,504,019,234) (3,504,019,234)
- --------------------------------------------------------------------------------
Personal Investment
Class (1,014,656,105) (1,014,656,105) (604,841,208) (604,841,208)
- --------------------------------------------------------------------------------
Cash Management Class (3,532,010,008) (3,532,010,008) (92,266,694) (92,266,694)
- --------------------------------------------------------------------------------
Resource Class* (125,414,773) (125,414,773) -- --
- --------------------------------------------------------------------------------------------
Net increase 443,432,341 $ 443,432,341 232,658,749 $ 232,658,749
============================================================================================
</TABLE>
* The Resource Class commenced operations on March 12, 1996.
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share outstanding of
the Treasury Portfolio Private Investment Class during each of the years in the
four-year period ended August 31, 1996 and the period November 25, 1991 (date
operations commenced) through August 31, 1992.
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
-------- -------- -------- -------- -----
<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 0.05 0.03 0.03 0.03
- ----------------------- -------- -------- -------- -------- -----
Total from investment
operations 0.05 0.05 0.03 0.03 0.03
- ----------------------- -------- -------- -------- -------- -----
Less distributions:
Dividends from net
investment income (0.05) (0.05) (0.03) (0.03) (0.03)
- ----------------------- -------- -------- -------- -------- -----
Net asset value, end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $1.00
======================= ======== ======== ======== ======== =====
Total return 5.25% 5.34% 3.22% 2.91% 3.92%(a)
======================= ======== ======== ======== ======== =====
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $352,537 $394,585 $412,716 $204,281 $ 525
======================= ======== ======== ======== ======== =====
Ratio of expenses to
average net assets 0.39%(b)(c) 0.40%(c) 0.38%(c) 0.38%(c) 0.40%(a)(c)
======================= ======== ======== ======== ======== =====
Ratio of net investment
income to average net
assets 5.14%(b)(d) 5.23%(d) 3.26%(d) 2.81%(d) 3.68%(a)(d)
======================= ======== ======== ======== ======== =====
</TABLE>
(a) Annualized.
(b) Ratios are based on average net assets of $407,231,329.
(c) Ratios of expenses to average net assets prior to waiver of distribution
fees and/or expense reimbursements were 0.59%, 0.60%, 0.60%, 0.67% and
4.54% for the periods 1996-1992, respectively. Ratios are annualized for
periods less than one year.
(d) Ratios of net investment income to average net assets prior to waiver of
distribution fees and/or expense reimbursements were 4.94%, 5.03%, 3.05%,
2.52% and (0.47%) for the periods 1996-1992, respectively. Ratios are
annualized for periods less than one year.
F-33
<PAGE> 155
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, 1996, 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 four-year period then ended
and the period November 25, 1991 (date operations commenced) through August 31,
1992. 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, 1996 by correspondence with the custodian and brokers. 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, 1996, 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 four-year period then ended and the period November 25, 1991 (date
operations commenced) through August 31, 1992, in conformity with generally
accepted accounting principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Houston, Texas
October 4, 1996
F-34
<PAGE> 156
TREASURY PORTFOLIO
RESOURCE CLASS
SCHEDULE OF INVESTMENTS
August 31, 1996
<TABLE>
<CAPTION>
MATURITY PAR (000) VALUE
<S> <C> <C> <C>
U.S. TREASURY SECURITIES - 27.96%
U.S. TREASURY BILLS(a) - 16.97%
5.20% 09/17/96 $175,000 $ 174,646,111
- ------------------------------------------------------------------------------
5.02% 10/24/96 50,000 49,630,472
- ------------------------------------------------------------------------------
5.16% 12/05/96 50,000 49,319,167
- ------------------------------------------------------------------------------
5.115% 12/12/96 50,000 49,275,374
- ------------------------------------------------------------------------------
5.22% 12/26/96 25,000 24,579,500
- ------------------------------------------------------------------------------
5.215% 01/02/97 25,000 24,554,552
- ------------------------------------------------------------------------------
5.33% 01/30/97 50,000 48,882,181
- ------------------------------------------------------------------------------
5.095% 02/13/97 25,000 24,416,198
- ------------------------------------------------------------------------------
5.10% 02/13/97 25,000 24,415,625
- ------------------------------------------------------------------------------
5.09% 03/06/97 25,000 24,342,541
- ------------------------------------------------------------------------------
5.248% 05/01/97 25,000 24,118,129
- ------------------------------------------------------------------------------
5.28% 05/01/97 25,000 24,112,667
- ------------------------------------------------------------------------------
5.318% 05/29/97 40,000 38,404,750
- ------------------------------------------------------------------------------
5.505% 06/26/97 25,000 23,860,771
- ------------------------------------------------------------------------------
5.39% 07/24/97 25,000 23,779,764
- ------------------------------------------------------------------------------
628,337,802
- ------------------------------------------------------------------------------
U.S. TREASURY NOTES - 10.99%
6.50% 09/30/96 50,000 50,052,967
- ------------------------------------------------------------------------------
7.00% 09/30/96 75,000 75,104,646
- ------------------------------------------------------------------------------
8.00% 10/15/96 55,000 55,174,050
- ------------------------------------------------------------------------------
7.50% 12/31/96 100,000 100,785,704
- ------------------------------------------------------------------------------
8.00% 01/15/97 75,000 75,763,373
- ------------------------------------------------------------------------------
6.625% 03/31/97 25,000 25,132,339
- ------------------------------------------------------------------------------
6.875% 03/31/97 25,000 25,188,361
- ------------------------------------------------------------------------------
407,201,440
- ------------------------------------------------------------------------------
Total U.S. Treasury Securities 1,035,539,242
- ------------------------------------------------------------------------------
Total Investments (excluding Repurchase
Agreements) 1,035,539,242
- ------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 76.94%(b)
BA Securities, Inc. 5.25%(c) 09/03/96 175,000 175,000,000
- ------------------------------------------------------------------------------
BZW Securities, Inc. 5.25%(d) -- 175,000 175,000,000
- ------------------------------------------------------------------------------
Bear, Stearns & Co. 5.23%(e) -- 200,000 200,000,000
- ------------------------------------------------------------------------------
Daiwa Securities America, Inc. 5.24%(f) 09/03/96 93,693 93,692,696
- ------------------------------------------------------------------------------
Deutsche Morgan Grenfell/C.J. Lawrence, Inc.
5.25%(g) -- 560,000 560,000,000
- ------------------------------------------------------------------------------
CS First Boston Corp. (The) 5.25%(h) 09/03/96 175,000 175,000,000
- ------------------------------------------------------------------------------
Goldman, Sachs & Co. 5.28%(i) 09/03/96 500,000 500,000,000
- ------------------------------------------------------------------------------
HSBC Securities, Inc. 5.25%(j) 09/03/96 175,000 175,000,000
- ------------------------------------------------------------------------------
</TABLE>
F-35
<PAGE> 157
<TABLE>
<CAPTION>
MATURITY PAR (000) VALUE
<S> <C> <C> <C>
REPURCHASE AGREEMENTS - continued
Morgan (J.P.) Securities, Inc.
5.23%(k) 09/03/96 $175,000 $ 175,000,000
- ----------------------------------------------------------------------------
Nesbitt Burns Securities, Inc.
5.26%(l) -- 96,000 96,000,000
- ----------------------------------------------------------------------------
Nikko Securities Co. International
(The), Inc. 5.22%(m) -- 175,000 175,000,000
- ----------------------------------------------------------------------------
Nomura Securities International, Inc.
5.25%(n) -- 175,000 175,000,000
- ----------------------------------------------------------------------------
UBS Securities LLC 5.23%(o) -- 175,000 175,000,000
- ----------------------------------------------------------------------------
Total Repurchase Agreements 2,849,692,696
- ----------------------------------------------------------------------------
TOTAL INVESTMENTS - 104.90% 3,885,231,938 (p)
- ----------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES -
(4.90)% (181,340,798)
- ----------------------------------------------------------------------------
NET ASSETS - 100.00% $3,703,891,140
============================================================================
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
(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, including the Portfolio's pro-rata
interest in joint repurchase agreements, is taken into possession by the
Portfolio 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, private accounts and certain non-registered investment companies
managed by the investment advisor or its affiliates.
(c) Entered into 08/30/96 with a maturing value of $175,102,083. Collateralized
by $179,050,000 U.S. Treasury obligations, 4.75% to 5.75% due 02/15/97 to
01/31/98.
(d) Open repurchase agreement entered into 07/15/96; however, either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $164,934,000 U.S. Treasury
obligations, 4.75% to 14.00% due 10/31/96 to 08/15/26.
(e) Open repurchase agreement entered into 07/01/96; however, either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $325,225,000 U.S. Treasury STRIPS,
due 02/15/98 to 02/15/19.
(f) Joint repurchase agreement entered into 08/30/96 with a maturing value of
$148,238,724. Collateralized by $147,480,000 U.S. Treasury obligations,
5.375% to 7.875% due 11/30/97 to 11/15/07.
(g) Open repurchase agreement entered into 03/20/96; however, either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $603,991,000 U.S. Treasury Bills, 0%
due 08/21/97.
(h) Entered into 08/30/96 with a maturing value of $175,102,083. Collateralized
by $183,339,000 U.S. Treasury Bills, 0% due 09/19/96 to 07/24/97.
(i) Joint repurchase agreement entered into 08/30/96 with a maturing value of
$834,779,144. Collateralized by $823,484,000 U.S. Treasury obligations, 0%
to 10.75% due 10/10/96 to 08/15/05.
(j) Entered into 08/30/96 with a maturing value of $175,102,083. Collateralized
by $154,810,000 U.S. Treasury obligations, 7.25% to 13.875% due 02/15/07 to
11/15/16.
(k) Entered into 08/30/96 with a maturing value of $175,101,694. Collateralized
by $174,972,000 U.S. Treasury obligations, 7.125% to 7.875% due 02/15/21 to
02/15/23.
(l) Open joint repurchase agreement entered into 04/16/96; however, either
party may terminate the agreement upon demand. Interest rates, par and
collateral are redetermined daily. Collateralized by $638,599,000 U.S.
Treasury obligations, 0% to 10.75% due 10/31/96 to 02/15/25.
(m) Open repurchase agreement entered into 07/15/96; however, either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $177,003,000 U.S. Treasury
obligations, 0% to 7.50% due 11/30/96 to 11/15/16.
(n) Open repurchase agreement entered into 07/16/96; however, either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $171,615,000 U.S. Treasury
obligations, 0% to 12.75% due 09/12/96 to 11/15/24.
(o) Open repurchase agreement entered into 07/15/96; however, either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $172,532,000 U.S. Treasury
obligations, 4.375% to 7.50% due 08/31/96 to 12/31/96.
(p) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
F-36
<PAGE> 158
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase agreements, at value
(amortized cost) $1,035,539,242
- ------------------------------------------------------------------------
Repurchase agreements 2,849,692,696
- ------------------------------------------------------------------------
Interest receivable 9,950,056
- ------------------------------------------------------------------------
Investment for deferred compensation plan 46,313
- ------------------------------------------------------------------------
Other assets 152,808
- ------------------------------------------------------------------------
Total assets 3,895,381,115
- ------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 174,646,111
- ------------------------------------------------------------------------
Dividends 16,137,308
- ------------------------------------------------------------------------
Deferred compensation 46,313
- ------------------------------------------------------------------------
Accrued advisory fees 195,369
- ------------------------------------------------------------------------
Accrued distribution fees 228,007
- ------------------------------------------------------------------------
Accrued transfer agent fees 12,984
- ------------------------------------------------------------------------
Accrued trustees' fees 3,575
- ------------------------------------------------------------------------
Accrued administrative services fees 7,904
- ------------------------------------------------------------------------
Accrued operating expenses 212,404
- ------------------------------------------------------------------------
Total liabilities 191,489,975
- ------------------------------------------------------------------------
NET ASSETS $3,703,891,140
========================================================================
NET ASSETS:
Institutional Class $2,335,440,965
========================================================================
Private Investment Class $ 352,537,425
========================================================================
Personal Investment Class $ 192,946,526
========================================================================
Cash Management Class $ 789,626,991
========================================================================
Resource Class $ 33,339,233
========================================================================
Shares of beneficial interest, $.01 par value per share:
Institutional Class 2,335,032,174
========================================================================
Private Investment Class 352,475,718
========================================================================
Personal Investment Class 192,912,753
========================================================================
Cash Management Class 789,488,776
========================================================================
Resource Class 33,333,398
========================================================================
NET ASSET VALUE PER SHARE:
Net asset value, offering and redemption price per share $ 1.00
========================================================================
</TABLE>
See Notes to Financial Statements.
F-37
<PAGE> 159
STATEMENT OF OPERATIONS
For the year ended August 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $ 198,959,801
- ---------------------------------------------------------------------
EXPENSES:
Advisory fees 2,227,788
- ---------------------------------------------------------------------
Custodian fees 186,211
- ---------------------------------------------------------------------
Administrative services fees 86,796
- ---------------------------------------------------------------------
Trustees' fees and expenses 26,562
- ---------------------------------------------------------------------
Registration and filing fees 301,601
- ---------------------------------------------------------------------
Transfer agent fees 256,535
- ---------------------------------------------------------------------
Distribution fees (Note 2) 2,404,078
- ---------------------------------------------------------------------
Other 235,516
- ---------------------------------------------------------------------
Total expenses 5,725,087
- ---------------------------------------------------------------------
Less expenses assumed by advisor (113,500)
- ---------------------------------------------------------------------
Net expenses 5,611,587
- ---------------------------------------------------------------------
Net investment income 193,348,214
- ---------------------------------------------------------------------
Net realized gain on sales of investments 490,127
- ---------------------------------------------------------------------
Net increase in net assets resulting from operations $ 193,838,341
=====================================================================
</TABLE>
See Notes to Financial Statements.
F-38
<PAGE> 160
STATEMENT OF CHANGES IN NET ASSETS
For the years ended August 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 193,348,214 $ 164,659,385
- -----------------------------------------------------------------------------
Net realized gain on sales of investments 490,127 67,230
- -----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 193,838,341 164,726,615
- -----------------------------------------------------------------------------
Distributions to shareholders from net
investment income (193,348,214) (164,659,385)
- -----------------------------------------------------------------------------
Distributions to shareholders from net
realized gain on investments -- (63,547)
- -----------------------------------------------------------------------------
Share transactions-net 443,432,341 232,658,749
- -----------------------------------------------------------------------------
Net increase in net assets 443,922,468 232,662,432
- -----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 3,259,968,672 3,027,306,240
- -----------------------------------------------------------------------------
End of period $3,703,891,140 $3,259,968,672
=============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $3,703,242,819 $3,259,810,478
- -----------------------------------------------------------------------------
Undistributed net realized gain on sales of
investments 648,321 158,194
- -----------------------------------------------------------------------------
$3,703,891,140 $3,259,968,672
=============================================================================
</TABLE>
See Notes to Financial Statements.
F-39
<PAGE> 161
NOTES TO FINANCIAL STATEMENTS
August 31, 1996
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
five different classes of shares: the Institutional Class, the Private
Investment Class, the Personal Investment Class, the Cash Management Class and
the Resource Class. Matters affecting each class are voted on exclusively by
the shareholders of each class. The Portfolio's investment objective is the
maximization of current income to the extent consistent with the preservation
of capital and the maintenance of liquidity.
The following is a summary of significant accounting policies followed by the
Portfolio in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
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 $113,500 during the year ended August 31, 1996.
F-40
<PAGE> 162
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, 1996,
the Portfolio reimbursed AIM $86,796 for such services.
The Portfolio, pursuant to a transfer agent and service agreement, has agreed
to pay A I M Institutional Fund Services, Inc. ("AIFS") a fee for providing
transfer agent and shareholder services to the Portfolio. During the year ended
August 31, 1996, the Portfolio paid AIFS $256,535 for such services.
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 Rule 12b-1 under the 1940 Act with respect to the Private
Investment Class, the Personal Investment Class, the Cash Management Class and
the Resource Class of the Portfolio. The Plan provides that the Private
Investment Class, the Personal Investment Class, the Cash Management Class and
the Resource Class pay up to a 0.50%, 0.75%, 0.10%, and 0.20%, 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, (b) 0.10% of
the average daily net assets of the Cash Management Class and (c) 0.20% of the
average daily net assets of the Resource 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, the Cash Management
Class or the Resource 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, 1996, the Private Investment Class, the Personal Investment Class, the Cash
Management Class and the Resource Class accrued for compensation to FMC amounts
of $1,221,693, $712,960, $437,891, and $31,534, respectively, under the Plan.
Certain officers and trustees of the Trust are officers of AIM, FMC and AIFS.
During the year ended August 31, 1996, the Portfolio paid legal fees of
$12,753 for services provided by Kramer, Levin, Naftalis & Frankel. A member of
that firm is a trustee of the Fund.
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.
F-41
<PAGE> 163
NOTE 4-SHARE INFORMATION
Changes in shares outstanding during the years ended August 31, 1996 and 1995
were as follows:
<TABLE>
<CAPTION>
1996 1995
-------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
Sold:
Institutional Class 15,527,980,642 $15,527,980,642 13,265,129,336 $ 13,265,129,336
- -------------------------------------------------------------------------------------------
Private Investment
Class 2,472,141,697 2,472,141,697 3,483,722,415 3,483,722,415
- -------------------------------------------------------------------------------------------
Personal Investment
Class 1,088,591,830 1,088,591,830 628,065,796 628,065,796
- -------------------------------------------------------------------------------------------
Cash Management Class 4,232,083,227 4,232,083,227 97,195,296 97,195,296
- -------------------------------------------------------------------------------------------
Resource Class* 157,958,663 157,958,663 -- --
- --------------------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Institutional Class 9,763,491 9,763,491 11,558,277 11,558,277
- -------------------------------------------------------------------------------------------
Private Investment
Class 3,211,766 3,211,766 2,167,906 2,167,906
- -------------------------------------------------------------------------------------------
Personal Investment
Class 4,455,140 4,455,140 2,719,512 2,719,512
- -------------------------------------------------------------------------------------------
Cash Management Class 8,200,664 8,200,664 2,671,137 2,671,137
- -------------------------------------------------------------------------------------------
Resource Class* 789,507 789,507 -- --
- -------------------------------------------------------------------------------------------
Reacquired:
Institutional Class (15,872,219,385) (15,872,219,385) (13,059,443,790) (13,059,443,790)
- -------------------------------------------------------------------------------------------
Private Investment
Class (2,517,444,015) (2,517,444,015) (3,504,019,234) (3,504,019,234)
- -------------------------------------------------------------------------------------------
Personal Investment
Class (1,014,656,105) (1,014,656,105) (604,841,208) (604,841,208)
- -------------------------------------------------------------------------------------------
Cash Management Class (3,532,010,008) (3,532,010,008) (92,266,694) (92,266,694)
- -------------------------------------------------------------------------------------------
Resource Class* (125,414,773) (125,414,773) -- --
- -------------------------------------------------------------------------------------------
Net increase 443,432,341 $ 443,432,341 232,658,749 $ 232,658,749
===========================================================================================
</TABLE>
* The Resource Class commenced operations on March 12, 1996.
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share outstanding of
the Treasury Portfolio Resource Class during the period March 12, 1996 (date
operations commenced) through August 31, 1996.
<TABLE>
<CAPTION>
AUGUST 31,
1996
----------
<S> <C>
Net asset value, beginning of period $ 1.00
- ------------------------------------------------------- -------
Income from investment operations:
Net investment income 0.03
- ------------------------------------------------------- -------
Total from investment operations 0.03
- ------------------------------------------------------- -------
Less distributions:
Dividends from net investment income (0.03)
- ------------------------------------------------------- -------
Net asset value, end of period $ 1.00
- ------------------------------------------------------- =======
Total return 5.09%(a)
======================================================= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $33,339
======================================================= =======
Ratio of expenses to average net assets(a) 0.25%(b)(c)
======================================================= =======
Ratio of net investment income to average net assets(a) 5.07%(b)(d)
======================================================= =======
</TABLE>
(a) Annualized.
(b) Ratios are annualized and based on average net assets of $41,695,963.
(c) Ratio of expenses to average net assets prior to waiver of distribution
fees was 0.29% for the period 1996.
(d) Ratio of net investment income to average net assets prior to waiver of
distribution fees was 5.03% for the period 1996.
F-42
<PAGE> 164
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, 1996, 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 the period March 12, 1996 (date operations commenced)
through August 31, 1996. 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, 1996 by correspondence with the custodian and brokers. 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, 1996, 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 the period March
12, 1996 (date operations commenced) through August 31, 1996, in conformity
with generally accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Houston, Texas
October 4, 1996
F-43
<PAGE> 165
SHORT-TERM
INVESTMENTS TRUST
Prospectus
- --------------------------------------------------------------------------------
TREASURY
TAXADVANTAGE The Treasury TaxAdvantage Portfolio is a money
PORTFOLIO market fund whose investment objective is the
maximization of current income to the extent
consistent with the preservation of capital and the
maintenance of liquidity. The Treasury TaxAdvantage
INSTITUTIONAL CLASS Portfolio seeks to achieve its objective by investing
in direct obligations of the U.S. Treasury. The
Treasury TaxAdvantage Portfolio's investment strategy
is intended to enable the Portfolio to provide its
shareholders with dividends that are exempt from state
and local income taxation in certain jurisdictions.
DECEMBER 30, 1996 The instruments purchased by the Treasury TaxAdvantage
Portfolio will have maturities of 397 days or less.
The Treasury TaxAdvantage Portfolio is a series
portfolio of Short-Term Investments Trust (the
"Trust"), an open-end diversified series management
investment company. This prospectus relates solely to
the Institutional Class of the Treasury TaxAdvantage
Portfolio, a class of shares designed to be a
convenient vehicle in which institutions, particularly
banks, acting for themselves or in a fiduciary,
advisory, agency, custodial or other similar capacity,
can invest short-term cash reserves. The Trust also
offers shares of another class of the Treasury
TaxAdvantage Portfolio, the Private Investment Class,
pursuant to a separate prospectus, as well as shares
of classes of another portfolio, the Treasury
Portfolio, pursuant to separate prospectuses.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS SETS FORTH BASIC INFORMATION THAT
A PROSPECTIVE INVESTOR SHOULD KNOW BEFORE INVESTING IN
SHARES OF THE TREASURY TAXADVANTAGE PORTFOLIO AND
SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE. A
STATEMENT OF ADDITIONAL INFORMATION, DATED DECEMBER
30, 1996, HAS BEEN FILED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION (THE "SEC") AND IS
HEREBY INCORPORATED BY REFERENCE. A COPY OF THE
STATEMENT OF ADDITIONAL INFORMATION IS ATTACHED
HERETO. THE SEC MAINTAINS A WEB SITE AT
HTTP://WWW.SEC.GOV THAT CONTAINS THE STATEMENT OF
ADDITIONAL INFORMATION, MATERIAL INCORPORATED BY
REFERENCE, AND OTHER INFORMATION REGARDING THE TRUST
THE TRUST'S SHARES ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY,
ANY BANK, AND THE TRUST'S SHARES ARE NOT FEDERALLY
INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. THERE CAN BE NO
ASSURANCE THAT THE TREASURY TAXADVANTAGE PORTFOLIO
WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF
$1.00 PER SHARE. SHARES OF THE TRUST INVOLVE
INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
[LOGO APPEARS HERE]
Fund Management Company
11 Greenway Plaza
Suite 1919
Houston, Texas 77046-1173
(800) 659-1005
<PAGE> 166
SUMMARY
THE PORTFOLIO AND ITS INVESTMENT OBJECTIVE
The Trust is an open-end diversified series management investment company.
Pursuant to this Prospectus, the Trust offers shares of the Institutional Class
(the "Class") of the Treasury TaxAdvantage Portfolio (the "Portfolio") without a
sales charge. 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. To achieve its objective, the Portfolio will invest in
direct obligations of the U.S. Treasury. The instruments purchased by the
Portfolio will have maturities of 397 days or less. The Portfolio's investment
strategy is intended to enable the Portfolio to provide its shareholders with
dividends that are exempt from state and local income taxation in certain
jurisdictions.
Pursuant to a separate prospectus, the Trust offers shares of another class of
shares of beneficial interest of the Portfolio representing an interest in the
Portfolio. Such class has a different distribution arrangement and is designed
for another category of investors. The Trust also offers shares of several
classes of the Trust representing an interest in another portfolio, the Treasury
Portfolio. The portfolios of the Trust are referred to collectively as the
"Portfolios."
Because the Trust 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 and economical investment vehicle in
which institutions, particularly banks, acting for themselves or in a fiduciary,
advisory, agency, custodial or other similar capacity, can invest short-term
cash reserves. Although shares of the Class may not be purchased by individuals
directly, institutions may purchase shares for accounts maintained by
individuals. See "Suitability for Investors." Although there is no sales charge
imposed on the purchase of shares of the Class, banks or other institutions may
charge a recordkeeping, account maintenance or other fee to their customers and
beneficial holders of the shares of the Class should consult with the
institutions maintaining their accounts to obtain a schedule of applicable fees.
PURCHASE OF SHARES
The shares of the Class are sold at net asset value, without a sales charge.
The minimum initial investment in the Class is $1,000,000. There is no minimum
amount for subsequent investments. Payment for shares of the Class purchased
must be in federal funds or other funds immediately available to the Portfolio.
See "Purchase of Shares."
REDEMPTION OF SHARES
Redemptions may be made without charge at net asset value. Payment for
redeemed shares of the Class for which redemption orders are received prior to
1:00 p.m. Eastern Time will normally be made in federal funds on the same day.
See "Redemption of Shares."
DIVIDENDS
The net income of the Portfolio is declared as a dividend daily to
shareholders of record immediately after 1:00 p.m. Eastern Time. Dividends are
paid monthly by check or wire transfer unless a shareholder has previously
elected to have such dividends automatically reinvested in additional shares of
the Class. Information concerning the amount of the dividends declared on any
particular day will normally be available by 3:30 p.m. Eastern Time on that day.
See "Dividends."
CONSTANT NET ASSET VALUE
The Trust uses the amortized cost method of valuing its securities held by the
Portfolio and rounds the per share net asset value to the nearest whole cent.
Accordingly, the net asset value per share of the Portfolio will normally remain
constant at $1.00. AN INVESTMENT IN THE PORTFOLIO IS NOT INSURED OR GUARANTEED
BY THE U.S. GOVERNMENT, AND THERE IS NO ASSURANCE THAT THE PORTFOLIO WILL BE
ABLE TO MAINTAIN A STABLE NET ASSET VALUE. SEE "NET ASSET VALUE."
2
<PAGE> 167
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 pursuant to a
master investment advisory agreement. For its services, AIM receives a fee based
on the average daily net assets of the Portfolio. During the fiscal year ended
August 31, 1996, the Trust paid AIM fees with respect to the Portfolio which
represented 0.15% of the average net assets of the Portfolio. AIM is primarily
engaged in the business of acting as manager or advisor to investment companies.
See "Management of the Trust -- Investment Advisor." Under a separate
administrative services agreement with the Trust, AIM may receive reimbursement
of its costs to perform certain accounting and other administrative services for
the Portfolio. See "Management of the Trust -- Investment Advisor" and
"-- Administrative Services."
On November 4, 1996, A I M Management Group Inc. ("AIM Management"), announced
that it had entered into an Agreement and Plan of Merger among INVESCO plc,
INVESCO Group Services, Inc. and AIM Management, pursuant to which AIM
Management will be merged with INVESCO Group Services, Inc. INVESCO plc and its
subsidiaries are an independent investment management group engaged in
institutional investment management and retail mutual fund businesses in the
United States, Europe and the Pacific region. It is contemplated that the merger
will occur on February 28, 1997. The Trust's investment advisor, AIM, is a
wholly-owned subsidiary of AIM Management.
The proposed transaction may be deemed to cause an "assignment" (as that term
is defined under the Investment Company Act of 1940, as amended (the "1940
Act")) of the Master Investment Advisory Agreement between the Trust and AIM.
Under the 1940 Act and the Master Investment Advisory Agreement, an assignment
results in the automatic termination of the Master Investment Advisory
Agreement.
On December 11, 1996, the Board of Trustees of the Trust approved a new
investment advisory agreement, subject to shareholder approval, between AIM and
the Trust with respect to the Portfolio. Shareholders will be asked to approve
the proposed advisory agreement at an annual meeting of shareholders to be held
on February 7, 1997 (the "Annual Meeting"). The Board of Trustees has also
approved a new administrative services agreement with AIM and a new distribution
agreement with Fund Management Company ("FMC"). There are no material changes to
the terms of the new agreements, including the fees payable by the Portfolio. No
change is anticipated in the investment advisory or other personnel responsible
for the Portfolio as a result of these new agreements.
The Board of Trustees has approved these new agreements because the
Portfolio's corresponding existing agreements will terminate upon the
consummation of the proposed merger of AIM Management into a subsidiary of
INVESCO plc. Provided that the Portfolio's shareholders approve the new
investment advisory agreement at the Annual Meeting and the merger is
consummated, the new investment advisory agreement with respect to the
Portfolio, as well as the new administrative services and distribution
agreements, will automatically become effective as of the closing date of the
merger.
DISTRIBUTOR
Fund Management Company ("FMC") acts as the exclusive distributor of the
shares of the Class. FMC does not receive any fee for distribution services from
the Trust. See "Purchase of Shares."
SPECIAL RISK CONSIDERATIONS
The Portfolio may borrow money and enter into reverse repurchase agreements
for temporary or emergency purposes, and may purchase securities for delayed
delivery. Accordingly, an investment in the Portfolio may entail somewhat
different risks from an investment in an investment company that does not engage
in such practices. There can be no assurance that the Portfolio will be able to
maintain a stable net asset value of $1.00 per share. See "Investment Program."
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
Logo), AIM and Design, AIM, AIM LINK and AIM Institutional Funds are registered
service marks and La Familia AIM de Fondos and La Familia AIM de Fondos and
Design are service marks of A I M Management Group Inc.
3
<PAGE> 168
TABLE OF FEES AND EXPENSES
<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES*
Maximum sales load imposed on purchases
(as a percentage of offering price)...................................... None
Maximum sales load on reinvested dividends
(as a percentage of offering price)...................................... None
Deferred sales load (as a percentage of original
purchase price or redemption proceeds, as applicable).................... None
Redemption fees (as a percentage of amount
redeemed, if applicable)................................................. None
Exchange fee................................................................ None
ANNUAL PORTFOLIO OPERATING EXPENSES -- INSTITUTIONAL CLASS
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management fees**........................................................... 0.15%
12b-1 fees.................................................................. None
Other expenses:
Custodian fees........................................................... 0.01%
Other.................................................................... 0.04%
-----
Total other expenses................................................... 0.05%
----
Total portfolio operating expenses --
Institutional Class................................................. 0.20%
=====
</TABLE>
- ------------
* Beneficial owners of shares of the Class should consider the effect of any
charges imposed by their bank or other financial institution for various
services.
** Had there been no fee waivers, Management fees and Total portfolio operating
expenses would have been 0.18% and 0.23%, respectively.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment, assuming
(1) a 5% annual return and (2) redemption at the end of each time period.
<TABLE>
<S> <C>
1 year............................................................ $ 2
3 years........................................................... $ 6
5 years........................................................... $11
10 years........................................................... $26
</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 Trust" below. The expense figures are based
upon actual costs and fees charged to the Class for the fiscal year ended August
31, 1996. Future waivers of fees (if any) may vary from the figures reflected in
the Table of Fees and Expenses. To the extent any service providers assume
expenses of the Class, such assumption of 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 -- Institutional Class" remain the same in the years shown.
The example shown in the above table is based on the amounts listed under
"Annual Portfolio Operating Expenses." THE EXAMPLE SHOULD NOT BE CONSIDERED TO
BE AN ACCURATE REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY
BE GREATER OR LESS THAN THOSE SHOWN.
4
<PAGE> 169
FINANCIAL HIGHLIGHTS
Shown below are the per share ratios and supplemental data (collectively
"data") for the years in the six-year period ended August 31, 1996 and the
period August 17, 1990 (date operations commenced) through August 31, 1990. The
data has been audited and reported on by KPMG Peat Marwick LLP, independent
auditors, whose unqualified report on the financial statements and the related
notes appears in the Statement of Additional Information.
<TABLE>
<CAPTION>
AUGUST 31,
-----------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment
operations:
Net investment income... 0.05 0.05 0.03 0.03 0.04 0.07 0.003
-------- -------- -------- -------- -------- -------- -------
Less distributions:
Dividends from net
investment income..... (0.05) (0.05) (0.03) (0.03) (0.04) (0.07) (0.003)
-------- -------- -------- -------- -------- -------- -------
Net asset value, end of
period.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ======== =======
Total return.............. 5.19% 5.35% 3.29% 2.96% 4.32% 6.70% 7.79%(a)
======== ======== ======== ======== ======== ======== =======
Ratios/supplemental data:
Net assets, end of
period (000s
omitted).............. $407,218 $394,376 $403,882 $434,693 $573,283 $403,846 $ 16,201
======== ======== ======== ======== ======== ======== =======
Ratio of expenses to
average net assets.... 0.20%(b)(c) 0.20%(c) 0.20%(c) 0.20% 0.17%(e) 0.14%(e) 0.10%(a)(e)
======== ======== ======== ======== ======== ======== =======
Ratio of net investment
income to average net
assets................ 5.06%(b)(d) 5.21%(d) 3.23%(d) 2.93% 4.16%(f) 6.16%(f) 7.74%(a)(f)
======== ======== ======== ======== ======== ======== =======
</TABLE>
- ------------
(a) Annualized.
(b) Ratios are based on average net assets of $424,432,042.
(c) Ratios of expenses to average net assets prior to waiver of advisory fees
were 0.23% for the periods 1996-1994, respectively.
(d) Ratios of net investment income to average net assets prior to waiver of
advisory fees were 5.04%, 5.18% and 3.20% for the periods 1996-1994,
respectively.
(e) Ratios of expenses to average net assets prior to waiver of advisory fees
and/or expense reimbursements were 0.21%, 0.25% and 1.24% for the periods
1992-1990, respectively.
(f) Ratios of net investment income to average net assets prior to waiver of
advisory fees and/or expense reimbursements were 4.13%, 6.04% and 6.60% for
the periods 1992-1990, respectively.
5
<PAGE> 170
SUITABILITY FOR INVESTORS
The Class is intended for use primarily by institutions, particularly banks,
acting for themselves or in a fiduciary, advisory, agency, custodial or other
similar capacity. It is designed to be a convenient and economical vehicle in
which such institutions can invest short-term cash reserves. The Portfolio's
investment strategy is intended to provide its shareholders with dividends that
are exempt from state and local income taxation in certain jurisdictions. Shares
of the Class may not be purchased directly by individuals, although institutions
may purchase shares for accounts maintained by individuals. Prospective
investors should determine if an investment in the Class is consistent with the
objectives of an account and with applicable state and federal laws and
regulations.
An investment in the Class may relieve the institution of many of the
investment and administrative burdens encountered when investing in money market
instruments directly. These include: selection of portfolio investments;
surveying the market for the best price at which to buy and sell; valuation of
portfolio securities; selection and scheduling of maturities; receipt, delivery
and safekeeping of securities; and portfolio recordkeeping. It is anticipated
that most institutions will perform their own sub-accounting. To assist these
institutions, information concerning the dividends declared by the Portfolio on
any particular day will normally be available by 3:30 p.m. Eastern Time on that
day.
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 same-day liquidity. Although there is no sales charge
imposed on the purchase of shares of the Class, banks or other institutions may
charge a recordkeeping, account maintenance or other fee to their customers, and
beneficial holders of the shares of the Class should consult with the
institutions maintaining their accounts to obtain a schedule of applicable fees.
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. However, these expenses are expected to be relatively small due primarily
to the following factors: the Class will have a small number of shareholders who
do not need many of the services provided by other money market investment
companies, thereby resulting in lower transfer agent fees and costs for printing
reports and proxy statements; sales of the Class' shares to institutions acting
for themselves or in a fiduciary capacity are exempt from the registration
requirements of most state securities laws, thereby resulting in reduced state
registration fees; and the relatively low investment advisory fee paid to AIM.
Because the Portfolio invests in direct obligations of the U.S. Treasury it
may be considered to have somewhat less risk than many other money market funds
and yields on the Portfolio may be expected to be somewhat lower than many other
money market funds. However, the possible exemption from state and local income
taxation with respect to dividends paid by the Portfolio may enable shareholders
to achieve an after-tax return comparable to or higher than that obtained from
other money market funds, which may provide an advantage to some shareholders.
INVESTMENT PROGRAM
INVESTMENT OBJECTIVE
The investment objective of the Portfolio is the maximization of current
income to the extent consistent with the preservation of capital and the
maintenance of liquidity. The Portfolio intends to provide its shareholders with
dividends that are exempt from state and local income taxation in certain
jurisdictions. The Portfolio seeks to achieve its objective by investing in
direct obligations of the U. S. Treasury. The obligations 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 instruments of lesser quality.
INVESTMENT POLICIES
The Portfolio invests exclusively in direct obligations of the U.S. Treasury,
which include Treasury bills, notes and bonds. The market values of the money
market instruments held by the Portfolio will be affected by changes in the
yields available on similar securities. If yields have increased since a
security was purchased, the market value of such security will generally have
decreased. Conversely, if yields have decreased, the market value of such
security will generally have increased.
BORROWING MONEY/REVERSE REPURCHASE AGREEMENTS. The Portfolio may borrow money
and enter into reverse repurchase agreements with respect to its portfolio
securities in amounts up to 10% of the value of its total assets at the time of
borrowing or entering into a reverse repurchase agreement. The Portfolio will
only borrow money or enter into reverse repurchase agreements for temporary or
emergency purposes, such as to facilitate the orderly sale of portfolio
securities to accommodate abnormally heavy redemption requests should they
occur. Borrowing will not be made for leverage purposes. Reverse repurchase
transactions are limited to a term not to exceed 92 days. The Portfolio will use
reverse repurchase agreements when the interest income to be earned from the
securities that would otherwise have to be liquidated to meet redemption
requests is greater than the interest expense of the reverse repurchase
transaction. Reverse repurchase agreements involve the risk that
6
<PAGE> 171
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.
PURCHASING DELAYED DELIVERY SECURITIES. In managing the Portfolio's
investments, AIM may indicate to dealers or issuers its interest in acquiring
certain securities for the Portfolio for settlement beyond a customary
settlement date. In some cases, the Portfolio may agree to purchase such
securities at stated prices and yields. In such cases, such securities are
considered "delayed delivery" securities when traded in the secondary market.
Since this is done to facilitate the acquisition of portfolio securities and is
not for the purpose of investment leverage, the amount of delayed delivery
securities involved may not exceed the estimated amount of funds available for
investment on the settlement date. Until the settlement date, assets of the
Portfolio with a dollar value sufficient at all times to make payment for the
delayed delivery securities will be segregated. The total amount of segregated
assets may not exceed 25% of the Portfolio's total assets. The delayed delivery
securities, which will not begin to accrue interest until the settlement date,
will be recorded as an asset of the Portfolio and will be subject to the risks
of market value fluctuations. The purchase price of the delayed delivery
securities will be recorded as a liability of the Portfolio until settlement.
Absent extraordinary circumstances, the Portfolio's right to acquire delayed
delivery securities will not be divested prior to the settlement date.
ILLIQUID SECURITIES. The Portfolio will invest no more than 10% of its net
assets in illiquid securities.
PORTFOLIO TRANSACTIONS. The Portfolio does not seek profits through short-term
trading and will generally hold portfolio securities to maturity, but AIM may
seek to enhance the yield of the Portfolio by taking advantage of yield
disparities or other factors that occur in the money market. For example, market
conditions frequently result in similar securities trading at different prices.
AIM may dispose of any portfolio security prior to its maturity if such
disposition and reinvestment of proceeds are expected to enhance yield
consistent with AIM's judgment as to desirable portfolio maturity structure or
if such disposition is believed to be advisable due to other circumstances or
conditions. Securities held by the Portfolio will be disposed of prior to
maturity if an earlier disposition is deemed desirable by AIM to meet redemption
requests. The Portfolio's policy of investing in securities with maturities of
397 days or less will result in high portfolio turnover. Since brokerage
commissions are not normally paid on investments of the type made by the
Portfolio, however, the high turnover rate should not adversely affect the
Portfolio's net income.
The investment policies described above may be changed by the Board of
Trustees without the affirmative vote of a majority of the outstanding shares of
the Portfolio.
INVESTMENT RESTRICTIONS
The Portfolio's investment program is subject to a number of investment
restrictions which reflect self-imposed standards as well as federal and state
regulatory limitations. These restrictions are designed to minimize certain
risks associated with investing in specified types of securities or engaging in
certain transactions and to limit the amount of the Portfolio's assets which may
be concentrated in any specific industry or issuer. The most significant of
these restrictions provides that the Portfolio will not:
borrow money or issue senior securities except (a) for
temporary or emergency purposes (e.g., in order to facilitate
the orderly sale of portfolio securities to accommodate
abnormally heavy redemption requests), the Portfolio may
borrow money from banks or obtain funds by entering into
reverse repurchase agreements, and (b) to the extent that
entering into commitments to purchase securities in accordance
with the Portfolio's investment program may be considered the
issuance of senior securities. The Portfolio will not purchase
securities while borrowings in excess of 5% of its total
assets are outstanding.
The foregoing investment restriction of the Portfolio (as well as certain
others set forth in the Statement of Additional Information) is a matter of
fundamental policy which may not be changed without the affirmative vote of a
majority of the outstanding shares of the Portfolio.
The Board of Trustees has unanimously approved the elimination of a
fundamental investment policy of the Trust, subject to shareholder approval.
Shareholders will be asked to approve this change at the Annual Meeting. If
approved, they will become effective on March 1, 1997.
The Trust is currently generally prohibited from investing in other investment
companies. The Board of Trustees has approved the elimination of this
prohibition. The elimination of this fundamental investment policy would permit
investment in other investment companies to the extent permitted by the 1940
Act, and rules and regulations thereunder, and, if applicable, exemptive orders
granted by the SEC.
7
<PAGE> 172
In addition to the restrictions described above, the Portfolio must also
comply with the requirements of Rule 2a-7 under the 1940 Act, as such Rule may
be amended from time to time, which governs the operations of money market
funds, and may be more restrictive than the policies described herein. The SEC
has proposed certain changes to Rule 2a-7. While such proposed changes may have
a prospective impact on the investments of the Portfolio, the Portfolio
anticipates no difficulty in complying with any proposed change if adopted by
the SEC. A description of further investment restrictions applicable to the
Portfolio is contained in the Statement of Additional Information.
PURCHASE OF SHARES
Shares of the Class are sold on a continuous basis at their net asset value
next determined after an order has been received by the Portfolio. As discussed
below, the Trust reserves the right to reject any purchase order. Although there
is no sales charge imposed on the purchase of shares of the Class, banks or
other institutions may charge a recordkeeping, account maintenance or other fee
to their customers, and beneficial holders of the shares of the Class should
consult with the institutions maintaining their accounts to obtain a schedule of
applicable fees. To facilitate the investment of proceeds of purchase orders,
investors are urged to place their orders as early in the day as possible.
Purchase orders will be accepted for execution on the day the order is placed,
provided that the order is properly submitted and received by the Portfolio
prior to 1:00 p.m. Eastern Time on a business day of the Portfolio. Purchase
orders received after such time will be processed at the next day's net asset
value. Shares of the Class will earn the dividend declared on the effective date
of purchase.
A "business day of the Portfolio" is any day on which both the Federal Reserve
Bank of New York and The Bank of New York, the Trust'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.
Subject to the conditions stated above and the Trust's right to reject any
purchase order, orders will be accepted (i) when payment for the shares of the
Class purchased is received by The Bank of New York, the Trust's custodian bank,
in the form described below and notice of such order is provided to A I M
Institutional Fund Services, Inc. ("AIFS") (the Trust's transfer agent) or (ii)
at the time the order is placed, if the Trust is assured of payment. Shares of
the Class purchased by orders which are accepted prior to 1:00 p.m. Eastern Time
will earn the dividend declared on the date of purchase.
Payments for shares purchased must be in the form of federal funds or other
funds immediately available to the Portfolio. Federal Reserve wires should be
sent as early as possible in order to facilitate crediting to the shareholder's
account. Any funds received with respect to an order which is not accepted by
the Portfolio and any funds received for which an order has not been received
will be returned to the sending institution.
The minimum initial investment in the Class is $1,000,000. Institutions may be
requested to maintain separate Master Accounts in the Class for shares held by
the institution (i) for its own account, for the account of other institutions
and for accounts for which the institution acts as a fiduciary, and (ii) for
accounts for which the institution acts in some other capacity. An institution's
Master Account(s) and sub-accounts with the Class may be aggregated for the
purpose of the minimum investment requirement. No minimum amount is required for
subsequent investments in the Class nor are minimum balances required. Prior to
the initial purchase of shares of the Class, an Account Application must be
completed and sent to A I M Institutional Fund Services, Inc., 11 Greenway
Plaza, Suite 1919, Houston, Texas 77046-1173. Account Applications may be
obtained from AIFS. 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.
The Trust 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 Trust. 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 per share. See "Net Asset Value." Redemption requests with respect to
shares are normally made by calling the Trust.
Payment for redeemed shares is normally made by Federal Reserve wire to the
commercial bank account designated in the shareholder's Account Application, but
may be remitted by check upon request by a shareholder. If a redemption request
is received by AIFS prior to 1:00 p.m. Eastern Time on a business day of the
Portfolio, the redemption will be effected at the net
8
<PAGE> 173
asset value next determined on such day and the shares 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 1:00 p.m. Eastern Time or on other
than a business day of the Portfolio, the redemption will be effected at the net
asset value of the Portfolio determined as of 1:00 p.m. Eastern Time on the next
business day of the Portfolio, and the proceeds of such redemption will normally
be wired on the effective day of the redemption.
A shareholder may change the bank account designated to receive redemption
proceeds by written notice to the Trust. 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 Trust or AIFS, the
Trust'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 if they do not follow reasonable procedures for verification of
telephone transactions. Such reasonable procedures for verification 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 under $1,000 will be made by check mailed within seven
days after receipt of the redemption request in proper form. The Trust 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.
The shares of the Class are not redeemable at the option of the Trust unless
the Board of Trustees of the Trust determines in its sole discretion that
failure to so redeem may have materially adverse consequences to the
shareholders of the Trust.
DIVIDENDS
Dividends from the net income of the Portfolio are declared daily to
shareholders of record of the Class as of immediately after 1:00 p.m. Eastern
Time on the day of declaration. Net income for dividend purposes is determined
daily as of 1 :00 p.m. Eastern Time. The dividend accrued and paid for each
class will consist of (a) income of the Portfolio, the allocation of which is
based upon such class' pro rata share of the total outstanding shares
representing an interest in the Portfolio, less (b) Portfolio 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, and
transfer agency fees. 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 the Portfolio's net asset value of $1.00 per share
for purposes of purchases and redemptions. See "Net Asset Value." Distributions
from net realized short-term gains may be declared and paid yearly or more
frequently. See "Taxes." The Portfolio does not expect to realize any long-term
capital gains or losses.
All dividends declared during a month will normally be paid by wire transfer.
Payment will normally be made on the first business day of the following month.
A shareholder may elect to have all dividends automatically reinvested in
additional full and fractional shares of the Portfolio at the net asset value of
such shares as of 1:00 p.m. Eastern Time on the last business day of the month.
Such election, or any revocation thereof, must be made in writing by the
shareholder to AIFS at P.O. Box 4497, Houston, Texas 77210-4497 and will become
effective with dividends paid after its receipt by AIFS. If a shareholder
redeems all the shares of the Portfolio in its account at any time during the
month, all dividends declared through the date of redemption are paid to the
shareholder along with the proceeds of the redemption.
The Portfolio uses its best efforts to maintain its net asset value per share
of the Portfolio at $1.00 for purposes of sales and redemptions. See "Net Asset
Value." Should the Trust incur or anticipate any unusual expense, loss or
depreciation which could adversely affect the income or net asset value of the
Portfolio, the Trust'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 and cause such a shareholder to receive upon
redemption a price per share lower than the shareholder's original cost.
TAXES
FEDERAL TAXATION
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 intends to
distribute at least 98% of its net investment income for the calendar
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year and at least 98% of its net realized capital gains, if any, for the
one-year period ending on October 31 and therefore to meet the distribution
requirements imposed by the Code in order to avoid the imposition of a 4% excise
tax. The 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 federal income taxes on net
investment income and net realized capital gains paid to shareholders.
The Portfolio will be treated as a separate corporation for purposes of
determining taxable income, distribution requirements and other requirements of
Subchapter M. Therefore, the Portfolio may not offset its gains against losses
of the other portfolio of the Trust and each portfolio of the Trust must
specifically comply with all the provisions of the Code.
Dividends paid by the Portfolio are subject to taxation as of the date of
payment, whether received by shareholders in cash or shares of the Portfolio.
The Code provides an exception to this general rule: if the Portfolio declares a
dividend in October, November or December to shareholders of record in such
months and pays the dividend during January of the next year, a shareholder will
be treated for tax purposes as having received the dividend on December 31 of
the year in which it is declared rather than in January of the following year
when it is paid. It is anticipated that no portion of distributions will be
eligible for the dividends received deduction for corporations. Dividends paid
by the Portfolio from its net investment income and short-term capital gains are
taxable to shareholders at ordinary income tax rates.
Foreign persons who file a United States tax return after December 31, 1996
for a U.S. tax refund and who are not eligible to obtain a social security
number must apply to the Internal Revenue Service ("IRS") for an individual
taxpayer identification number, using IRS Form W-7. For a copy of the IRS Form
W-7 and accompanying instructions, please contact your tax advisor or AIFS.
STATE AND LOCAL TAXATION
Distributions and other Trust transactions referred to in the preceding
paragraphs may be subject to state, local or foreign taxes, and the treatment
thereof may differ from the federal income tax consequences discussed herein.
The Portfolio's investment strategy is intended to provide shareholders with
dividends that are exempt from state and local personal and, in some cases,
corporate income taxation in as many jurisdictions as possible. The possible
exemption from such taxation may enable shareholders to achieve an after-tax
return comparable to or higher than that obtained from other money market funds.
Shareholders should consult their own tax advisors concerning the tax impact of
their investment in the Portfolio and the application of state, local or foreign
taxes.
NET ASSET VALUE
The net asset value per share of the Portfolio is determined daily as of 1:00
p.m. Eastern Time on each business day of the Portfolio. 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 Trust at (800)
659-1005. 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 Portfolio. A SHAREHOLDER'S INVESTMENT IN THE TRUST IS NOT INSURED
OR GUARANTEED BY THE U.S. GOVERNMENT OR BY ANY INSTITUTION. These factors should
be carefully considered by the investor before making an investment in the
Portfolio.
For the seven-day period ended August 31, 1996, the current yield and the
effective yield of the Class (which assumes the reinvestment of dividends for a
365-day year and a return for the entire year equal to the average annualized
current yield for
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the period) were 5.64% and 5.16%, 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 Class to eight
decimal places and current yield normally will be available by 3:30 p.m. Eastern
Time.
From time to time and in its discretion, AIM or its affiliates 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 Trust furnishes shareholders with semi-annual reports containing
information about the Portfolio and its operations, including a list of the
investments held in the Portfolio and financial statements. The annual financial
statements are audited by the Trust's independent certified public accountants.
A copy of the current list of the investments of the Portfolio will be sent to
shareholders upon request.
Unless otherwise requested by the shareholder, each shareholder will be
provided with a written confirmation for each transaction. Institutions
establishing sub-accounts will receive a written confirmation for each
transaction in a sub-account. Duplicate confirmations may be transmitted to the
beneficial owner of the sub-account if requested by the institution. The
institution will receive a periodic statement setting forth, for each
sub-account, the share balance, income earned for the month, income earned for
the year to date and the total current value of the account.
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES
The overall management of the business and affairs of the Trust is vested with
its Board of Trustees. The Board of Trustees approves all significant agreements
between the Trust and persons or companies furnishing services to the Trust,
including agreements with the Trust's investment advisor, distributor, custodian
and transfer agent. The day-to-day operations of the Trust are delegated to the
Trust's officers and to AIM, subject always to the objective and policies of the
Trust and to the general supervision of the Trust'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, organized in 1976, together with its affiliates, manages or
advises 41 investment company portfolios. As of November 14, 1996, the total
assets of the investment company portfolios managed or advised by AIM and its
affiliates were approximately $61.1 billion. All of the directors and certain of
the officers of AIM are also trustees or executive officers of the Trust. AIM is
a wholly-owned subsidiary of AIM Management. AIM Management is a holding company
in the financial services business.
Pursuant to the terms of the Advisory Agreement, AIM manages the investment of
the Portfolio's assets and obtains and evaluates economic, statistical and
financial information to formulate and implement investment policies for the
Portfolio. The
Advisory Agreement requires AIM to reduce its fee to the extent required to
satisfy any expense limitations imposed by the securities laws or regulations
thereunder of any state in which the Portfolio's shares are qualified for sale.
For the fiscal year ended August 31, 1996, AIM received fees from the Trust
under the Advisory Agreement with respect to the Portfolio which represented
0.15% of the Portfolio's average daily net assets. During such fiscal year, the
expenses of the Class, including AIM's fees, amounted to 0.20% of the Class'
average daily net assets.
ADMINISTRATIVE SERVICES
The Trust 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 Trust 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.
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FEE WAIVERS
AIM or its affiliates 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 for such
fee or expenses prior to the end of each fiscal year. AIM voluntarily waived
advisory fees of $116,126 on the Portfolio and assumed expenses of $25,600.
DISTRIBUTOR
The Trust 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 Portfolio. The address of FMC is 11 Greenway Plaza, Suite 1919,
Houston, Texas 77046-1173. Certain trustees and officers of the Trust are
affiliated with FMC and AIM. The Distribution Agreement provides that FMC has
the exclusive right to distribute shares of the Trust 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, banks or other financial institutions 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, banks or financial 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 the 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.
PORTFOLIO TRANSACTIONS AND BROKERAGE
AIM is responsible for decisions to buy and sell securities for the Portfolio,
broker-dealer selection and negotiation of commission rates. Since purchases and
sales of portfolio securities by the Portfolio are usually principal
transactions, the Portfolio incurs little or no brokerage commissions. Portfolio
securities are normally purchased directly from the issuer or from a market
maker for the securities. The purchase price paid to dealers serving as market
makers may include a spread between the bid and asked prices.
AIM's primary consideration in effecting a security transaction is to obtain
the best net price and the most favorable execution of the order. To the extent
that the executions and prices offered by more than one dealer are comparable,
AIM may, in its discretion, effect transactions with dealers that furnish
statistical, research or other information or services which are deemed by AIM
to be beneficial to the Portfolio's investment programs. Certain research
services furnished by dealers may be useful to clients of AIM with 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.
GENERAL INFORMATION
ORGANIZATION AND DESCRIPTION OF SHARES
The Trust is a Delaware business trust. The Trust was originally incorporated
in Maryland on January 24, 1977, but had no operations prior to November 10,
1980. Effective December 31, 1986, the Trust was reorganized as a Massachusetts
business trust; and effective October 15, 1993, the Trust was reorganized as a
Delaware business trust. On October 15, 1993, the Portfolio succeeded to the
assets and assumed the liabilities of the Treasury TaxAdvantage Portfolio (the
"Predecessor Portfolio") of Short-Term Investments Co., a Massachusetts business
trust ("STIC"), pursuant to an Agreement and Plan of Reorganization between the
Trust 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 Trust are divided into seven
classes of which five represent interests in the Treasury Portfolio and two
represent interests in the Portfolio. Each class of shares has a par value of
$.01 per share. The other classes of the Trust may have different sales charges
and other expenses which may affect performance. An investor may obtain
information concerning the Trust's other classes by contacting FMC.
All shares of the Trust 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 Trust,
holders of shares of each portfolio will receive
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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 Trust 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 Trust's outstanding shares. As of December
1, 1996, First Trust/VAR & Co. was the owner of record of 33.57% of the
outstanding shares of the Class. As long as First Trust/VAR & Co. owns over 25%
of such shares, it may be presumed to be in "control" of the Institutional Class
of the Treasury TaxAdvantage Portfolio, as defined in the 1940 Act.
There are no preemptive or conversion rights applicable to any of the Trust's
shares. The Trust's shares, when issued, will be fully paid and non-assessable.
The Board of Trustees may create additional portfolios or classes of shares of
the Trust without shareholder approval.
TRANSFER AGENT AND CUSTODIAN
The Bank of New York, 90 Washington Street, 11th Floor, New York, New York
10286, acts as custodian for the portfolio securities and cash of the Portfolio.
A I M Institutional Fund Services, Inc., 11 Greenway Plaza, Suite 1919, Houston,
Texas 77046-1173, acts as transfer agent for the shares of the Class.
LEGAL COUNSEL
The law firm of Ballard Spahr Andrews & Ingersoll, Philadelphia, Pennsylvania,
serves as counsel to the Trust 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 Trust at 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, or may
be made by calling (800) 659-1005.
OTHER INFORMATION
This Prospectus sets forth basic information that investors should know about
the Trust 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 Trust 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.
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<S> <C> <C>
SHORT-TERM INVESTMENTS TRUST
11 Greenway Plaza, Suite 1919 PROSPECTUS
Houston, Texas 77046-1173
(800) 659-1005 December 30, 1996
INVESTMENT ADVISOR SHORT-TERM
A I M ADVISORS, INC. INVESTMENTS TRUST
11 Greenway Plaza, Suite 1919 ---------------------
Houston, Texas 77046-1173
(713) 626-1919 TREASURY TAXADVANTAGE
PORTFOLIO
DISTRIBUTOR ---------------------
FUND MANAGEMENT COMPANY
11 Greenway Plaza, Suite 1919 INSTITUTIONAL CLASS
Houston, Texas 77046-1173
(800) 659-1005 TABLE OF CONTENTS
AUDITORS
KPMG PEAT MARWICK LLP PAGE
NationsBank Building Summary........................... 2
700 Louisiana Building Table of Fees and Expenses........ 4
Houston, Texas 77002 Financial Highlights.............. 5
Suitability For Investors......... 6
CUSTODIAN Investment Program................ 6
THE BANK OF NEW YORK Purchase of Shares................ 8
90 Washington Street Redemption of Shares.............. 8
11th Floor Dividends......................... 9
New York, New York 10286 Taxes............................. 9
Net Asset Value................... 10
TRANSFER AGENT Yield Information................. 10
A I M INSTITUTIONAL FUND SERVICES, INC. Reports to Shareholders........... 11
11 Greenway Plaza, Suite 1919 Management of the Trust........... 11
Houston, Texas 77046-1173 General Information............... 12
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 THE PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST
OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY
JURISDICTION TO ANY PERSON TO WHOM SUCH OFFERING MAY NOT LAWFULLY BE MADE.
==============================================================================
</TABLE>
<PAGE> 180
PROSPECTUS
PRIVATE INVESTMENT CLASS
OF THE
TREASURY TAXADVANTAGE PORTFOLIO
OF
SHORT-TERM INVESTMENTS TRUST
11 GREENWAY PLAZA, SUITE 1919
HOUSTON, TEXAS 77046-1173
(800) 877-7748
------------------
The Treasury TaxAdvantage Portfolio is a money market fund whose investment
objective is the maximization of current income to the extent consistent with
the preservation of capital and the maintenance of liquidity. The Treasury
TaxAdvantage Portfolio seeks to achieve its objective by investing in direct
obligations of the U.S. Treasury. The Treasury TaxAdvantage Portfolio's
investment strategy is intended to enable the Portfolio to provide its
shareholders with dividends that are exempt from state and local income taxation
in certain jurisdictions. The instruments purchased by the Treasury TaxAdvantage
Portfolio will have maturities of 397 days or less.
The Treasury TaxAdvantage Portfolio is a series portfolio of Short-Term
Investments Trust (the "Trust"), an open-end diversified, series, management
investment company. This Prospectus relates solely to the Private Investment
Class of the Treasury TaxAdvantage Portfolio, a class of shares designed to be a
convenient vehicle in which customers of banks, certain broker-dealers and other
financial institutions can invest short-term cash reserves.
The Trust also offers shares of another class of the Treasury TaxAdvantage
Portfolio pursuant to a separate prospectus: the Institutional Class, as well as
shares of other classes of another portfolio of the Trust, the Treasury
Portfolio: the Cash Management Class, the Institutional Class, the Personal
Investment Class, the Private Investment Class and the Resource Class.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
------------------
THIS PROSPECTUS SETS FORTH BASIC INFORMATION THAT A PROSPECTIVE INVESTOR
SHOULD KNOW BEFORE INVESTING IN SHARES OF THE PRIVATE INVESTMENT CLASS OF THE
TREASURY TAXADVANTAGE PORTFOLIO AND SHOULD BE READ AND RETAINED FOR FUTURE
REFERENCE. A STATEMENT OF ADDITIONAL INFORMATION, DATED DECEMBER 30, 1996, HAS
BEEN FILED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE "SEC")
AND IS HEREBY INCORPORATED BY REFERENCE. FOR A COPY OF THE STATEMENT OF
ADDITIONAL INFORMATION WITHOUT CHARGE, WRITE TO THE ADDRESS ABOVE OR CALL (800)
877-7748. THE SEC MAINTAINS A WEB SITE AT HTTP://WWW.SEC.GOV THAT CONTAINS THE
STATEMENT OF ADDITIONAL INFORMATION, MATERIAL INCORPORATED BY REFERENCE, AND
OTHER INFORMATION REGARDING THE TRUST.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND THE TRUST'S SHARES ARE NOT FEDERALLY INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. THERE CAN BE NO ASSURANCE THAT
THE TREASURY TAXADVANTAGE PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET
VALUE OF $1.00 PER SHARE. SHARES OF THE TRUST INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
PROSPECTUS DATED: DECEMBER 30, 1996
<PAGE> 181
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
SUMMARY.......................................... 2
TABLE OF FEES AND EXPENSES....................... 5
FINANCIAL HIGHLIGHTS............................. 6
SUITABILITY FOR INVESTORS........................ 7
INVESTMENT PROGRAM............................... 7
PURCHASE OF SHARES............................... 9
REDEMPTION OF SHARES............................. 11
DIVIDENDS........................................ 11
TAXES............................................ 12
NET ASSET VALUE.................................. 13
YIELD INFORMATION................................ 13
REPORTS TO SHAREHOLDERS.......................... 14
MANAGEMENT OF THE TRUST.......................... 14
GENERAL INFORMATION.............................. 17
</TABLE>
SUMMARY
THE PORTFOLIO AND ITS INVESTMENT OBJECTIVE
The Trust is an open-end diversified series management investment company.
This Prospectus relates to the Private Investment Class (the "Class") of the
Treasury TaxAdvantage Portfolio (the "Portfolio"). The Portfolio is a money
market fund which invests in direct obligations of the U.S. Treasury. The
instruments purchased by the Portfolio will have maturities of 397 days or less.
The investment objective of the Portfolio is the maximization of current income
to the extent consistent with the preservation of capital and the maintenance of
liquidity. The Portfolio's investment strategy is intended to enable the
Portfolio to provide its shareholders with dividends that are exempt from state
and local income taxation in certain jurisdictions.
Pursuant to a separate prospectus, the Trust also offers other shares of
another class of shares of beneficial interest of the Portfolio representing an
interest in the Portfolio. Such class has different distribution arrangements
and is designed for institutional investors. The Trust also offers shares of
several classes representing an interest in another portfolio, the Treasury
Portfolio, pursuant to separate prospectuses. The portfolios of the Fund are
referred to collectively as "Portfolios."
Because the Trust declares dividends on a daily basis, shares of each class
of the Portfolio have the same net asset value (proportionate interest in the
net assets of the Portfolio) and bear equally those expenses, such as the
advisory fee, that are allocated to the Portfolio as a whole. All classes of the
Portfolio share a common investment objective and portfolio of investments.
However, different classes of the Portfolio have different shareholder
qualifications, and are separately allocated certain class expenses, such as
those associated with the distribution of their shares. Therefore, each class
will have a different dividend payment and a different yield.
INVESTORS IN THE CLASS
The Class is designed to be a convenient vehicle in which customers of
banks, certain broker-dealers and other financial institutions can invest in a
diversified open-end money market fund.
PURCHASE OF SHARES
Shares of the Class that are offered hereby are sold at net asset value.
The minimum initial investment in the Class is $10,000. There is no minimum
amount for subsequent investments. Payment for shares of the Class purchased
must be in funds immediately available to the Trust. See "Purchase of Shares."
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REDEMPTION OF SHARES
Redemptions may be made without charge at net asset value. Payment for
redeemed shares of the Class for which redemption orders are received prior to
1:00 p.m. Eastern Time will normally be made on the same day. See "Redemption of
Shares."
DIVIDENDS
The net income of the Portfolio is declared as a dividend daily to
shareholders of record immediately after 1:00 p.m. Eastern Time. Dividends are
paid monthly by check or wire transfer unless the shareholder has previously
elected to have such dividends automatically reinvested in additional shares of
the Class. Information concerning the amount of the dividends declared on any
particular day will normally be available by 3:30 p.m. Eastern Time on that day.
See "Dividends."
CONSTANT NET ASSET VALUE
The Trust uses the amortized cost method of valuing the securities held by
the Portfolio and rounds the per share net asset value to the nearest whole
cent. Accordingly, the net asset value per share of the Portfolio will normally
remain constant at $1.00. AN INVESTMENT IN THE PORTFOLIO IS NOT INSURED OR
GUARANTEED BY THE U.S. GOVERNMENT, AND THERE IS NO ASSURANCE THAT THE PORTFOLIO
WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE. See "Net Asset Value."
INVESTMENT ADVISOR
A I M Advisors, Inc. ("AIM") serves as the Trust's investment advisor and
receives a fee based on the Trust's average daily net assets. During the fiscal
year ended August 31, 1996, the Trust paid AIM advisory fees with respect to the
Portfolio which represented 0.15% of the average daily net assets of the
Portfolio. AIM is primarily engaged in the business of acting as manager or
advisor to investment companies. Under an Administrative Services Agreement, AIM
may be reimbursed by the Trust for its costs of performing certain accounting
and other administrative services for the Trust. See "Management of the
Trust -- Investment Advisor" "-- Administrative Services."
On November 4, 1996, A I M Management Group Inc. ("AIM Management"),
announced that it had entered into an Agreement and Plan of Merger among INVESCO
plc, INVESCO Group Services, Inc. and AIM Management, pursuant to which AIM
Management will be merged with INVESCO Group Services, Inc. INVESCO plc and its
subsidiaries are an independent investment management group engaged in
institutional investment management and retail mutual fund businesses in the
United States, Europe and the Pacific region. It is contemplated that the merger
will occur on February 28, 1997. The Trust's investment advisor, AIM, is a
wholly-owned subsidiary of AIM Management.
The proposed transaction may be deemed to cause an "assignment" (as that
term is defined under the Investment Company Act of 1940, as amended (the "1940
Act")) of the Master Investment Advisory Agreement between the Trust and AIM.
Under the 1940 Act and the Master Investment Advisory Agreement, an assignment
results in the automatic termination of the Master Investment Advisory
Agreement.
On December 11, 1996, the Board of Trustees of the Trust approved a new
investment advisory agreement, subject to shareholder approval, between AIM and
the Trust with respect to the Portfolio. Shareholders will be asked to approve
the proposed advisory agreement at an annual meeting of shareholders
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to be held on February 7, 1997 (the "Annual Meeting"). The Board of Trustees has
also approved a new administrative services agreement with AIM and a new
distribution agreement with Fund Management Company ("FMC"). There are no
material changes to the terms of the new agreements, including the fees payable
by the Portfolio. No change is anticipated in the investment advisory or other
personnel responsible for the Portfolio as a result of these new agreements.
The Board of Trustees has approved these new agreements because the
Portfolio's corresponding existing agreements will terminate upon the
consummation of the proposed merger of AIM Management into a subsidiary of
INVESCO plc. Provided that the Portfolio's shareholders approve the new
investment advisory agreement at the Annual Meeting and the merger is
consummated, the new investment advisory agreement with respect to the
Portfolio, as well as the new administrative services and distribution
agreements, will automatically become effective as of the closing date of the
merger.
DISTRIBUTOR AND DISTRIBUTION PLAN
Fund Management Company ("FMC") acts as the exclusive distributor of the
shares of the Class. Pursuant to a plan of distribution adopted by the Trust's
Board of Trustees, the Trust may pay up to 0.50% of the average daily net asset
value of the Portfolio attributable to the Class to FMC as well as to certain
broker-dealers or other financial institutions. Of this amount, up to 0.25% may
be for continuing personal services to shareholders provided by broker-dealers
or institutions and the balance would be deemed an asset-based sales charge. See
"Purchase of Shares" and "Distribution Plan."
SPECIAL RISK CONSIDERATIONS
The Portfolio may borrow money and enter into reverse repurchase agreements
for temporary or emergency purposes, and may purchase securities for delayed
delivery. Accordingly, an investment in the Portfolio may entail somewhat
different risks from an investment in an investment company that does not engage
in such practices. There can be no assurance that the Portfolio will be able to
maintain a stable net asset value of $1.00 per share. See "Investment Program."
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
Logo), AIM and Design, AIM, AIM LINK and AIM Institutional Funds are registered
service marks and La Familia AIM de Fondos and La Familia AIM de Fondos and
Design are service marks of A I M Management Group Inc.
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TABLE OF FEES AND EXPENSES
<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES*
Maximum sales load imposed on purchases
(as a percentage of offering price).................................. None
Maximum sales load on reinvested dividends
(as a percentage of offering price).................................. None
Deferred sales load (as a percentage of original purchase price or
redemption proceeds, as applicable).................................. None
Redemption fees (as a percentage of amount redeemed,
if applicable)....................................................... None
Exchange fee............................................................ None
ANNUAL PORTFOLIO OPERATING EXPENSES -- PRIVATE INVESTMENT CLASS
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management fees (after fee waivers)**................................... 0.15%
12b-1 fees (after fee waivers)**........................................ 0.25%***
Other expenses:
Custodian fees....................................................... 0.01%
Other................................................................ 0.04%
----
Total other expenses............................................ 0.05%
-----
Total portfolio operating expenses --
Private Investment Class............................................. 0.45%
=====
</TABLE>
- ---------------
* Beneficial owners of shares of the Class should consider the effect of any
charges imposed by their bank, broker-dealer or financial institution for
various services.
** Had there been no fee waivers, Management fees, 12b-1 fees and Total
portfolio operating expenses would have been 0.18%, 0.50% and 0.73%,
respectively.
*** It is possible that as a result of Rule 12b-1 fees, long-term shareholders
may pay more than the economic equivalent of the maximum front-end sales
charges permitted under rules of the National Association of Securities
Dealers, Inc. Given the Rule 12b-1 fee of the Class, however, it is
estimated that it would take a substantial number of years for a shareholder
to exceed such maximum front-end sales charges.
EXAMPLE
An investor in the Class would pay the following expenses on a $1,000
investment, assuming (1) a 5% annual return and (2) redemption at the end of
each time period.
<TABLE>
<S> <C>
1 year............................................................... $ 5
3 years.............................................................. $14
5 years.............................................................. $25
10 years.............................................................. $57
</TABLE>
The Table of Fees and Expenses is designed to assist an investor in
understanding the various costs and expenses that an investor in the Class will
bear directly or indirectly. (For more complete descriptions of the various
costs and expenses, see "Management of the Trust" below.) The expense figures
are based upon actual
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<PAGE> 185
costs and fees charged to the Class for the fiscal year ended August 31, 1996.
The Table of Fees and Expenses reflects voluntary waivers for the Class. Future
waivers of fees (if any) may vary from the figures reflected in the Table of
Fees and Expenses. To the extent any service providers assume additional
expenses of the Class, such assumption of additional expenses will have the
effect of lowering the Class's overall expense ratio and increasing its yield to
investors. Beneficial owners of shares of the Class should also consider the
effect of any charges imposed by the institution maintaining their accounts.
The example in the Table of Fees and Expenses assumes that all dividends
and distributions are reinvested and that the amounts listed under "Annual
Portfolio Operating Expenses -- Private Investment Class" remain the same in the
years shown.
The example shown in the above table is based on the amounts listed under
"Annual Portfolio Operating Expenses." THE EXAMPLE SHOULD NOT BE CONSIDERED TO
BE AN ACCURATE REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY
BE GREATER OR LESSER THAN THOSE SHOWN.
FINANCIAL HIGHLIGHTS
Shown below are the per share data, ratios and supplemental data
(collectively, "data") for the fiscal year ended August 31, 1996 and for the
period December 21, 1994 (date operations commenced) through August 31, 1995.
The data has been audited by KPMG Peat Marwick LLP, independent auditors, whose
unqualified report thereon appears in the Statement of Additional Information.
<TABLE>
<CAPTION>
1996 1995
------- ------
<S> <C> <C>
Net asset value, beginning of period.................................. $ 1.00 $ 1.00
Income from investment operations:
Net investment income............................................... 0.05 0.04
------- ------
Total from investment operations............................ 0.05 0.04
------- ------
Less distributions:
Dividends from net investment income................................ (0.05) (0.04)
------- ------
Net asset value, end of period........................................ $ 1.00 $ 1.00
======= ======
Total return.......................................................... 4.93% 5.32%(a)
======= ======
Ratios/supplemental data:
Net assets, end of period (000s omitted)............................ $49,978 $5,423
======= ======
Ratio of expenses to average net assets(b).......................... 0.45%(c) 0.45%(a)
======= ======
Ratio of net investment income to average net assets(b)............. 4.72%(c) 5.21%(a)
======= ======
</TABLE>
- ---------------
(a) Annualized.
(b) After waiver of advisory fees, distribution fees and expense reimbursements.
Ratios of expenses and net investment income to average net assets prior to
waivers and expense reimbursements were 0.85% and 4.32% for 1996 and 1.02%
and 4.64% for 1995.
(c) Ratios are based on average net assets of $21,111,080.
6
<PAGE> 186
SUITABILITY FOR INVESTORS
The Class is intended for use primarily by customers of banks, certain
broker-dealers and other financial institutions who seek a convenient vehicle in
which to invest in an open-end diversified money market fund. The Portfolio's
investment strategy is intended to provide its shareholders with dividends that
are exempt from state and local income taxation in certain jurisdictions. The
minimum initial investment is $10,000.
Investors in the Class have the opportunity to receive a somewhat higher
yield than might be obtainable through direct investment in money market
instruments, and enjoy the benefits of diversification, economies of scale and
same-day liquidity. Generally, higher interest rates can be obtained on the
purchase of very large blocks of money market instruments. Of course, any such
relative increase in interest rates may be offset to some extent by the
operating expenses of the Class.
Because the Portfolio invests in direct obligations of the U.S. Treasury it
may be considered to have somewhat less risk than many other money market funds
and yields on the Portfolio may be expected to be somewhat lower than many other
money market funds. However, the possible exemption from state and local income
taxation with respect to dividends paid by the Portfolio may enable shareholders
to achieve an after-tax return comparable to or higher than that obtained from
other money market funds, which may provide an advantage to some shareholders.
INVESTMENT PROGRAM
INVESTMENT OBJECTIVE
The investment objective of the Portfolio is the maximization of current
income to the extent consistent with the preservation of capital and the
maintenance of liquidity. The Portfolio intends to provide its shareholders with
dividends that are exempt from state and local income taxation in certain
jurisdictions. The Portfolio seeks to achieve its objective by investing in
direct obligations of the U.S. Treasury. The money market instruments in which
the Portfolio invests are considered to carry very little risk and accordingly
may not have as high a yield as that available on money market instruments of
lesser quality.
INVESTMENT POLICIES
The Portfolio invests exclusively in direct obligations of the U.S.
Treasury, which include Treasury bills, notes and bonds. The market values of
the money market instruments held by the Portfolio will be affected by changes
in the yields available on similar securities. If yields have increased since a
security was purchased, the market value of such security will generally have
decreased. Conversely, if yields have decreased, the market value of such
security will generally have increased.
BORROWING MONEY/REVERSE REPURCHASE AGREEMENTS. The Portfolio may borrow
money and enter into reverse repurchase agreements with respect to its portfolio
securities in amounts up to 10% of the value of its total assets at the time of
borrowing or entering into a reverse repurchase agreement. The Portfolio will
only borrow money or enter into reverse repurchase agreements for temporary or
emergency purposes, such as to facilitate the orderly sale of portfolio
securities to accommodate abnormally heavy redemption requests should they
occur. Borrowing will not be made for leverage purposes. Reverse repurchase
transactions are limited to a term not to exceed 92 days. The Portfolio will use
reverse repurchase agreements when the interest income to be earned from the
securities that would otherwise have to be liquidated to meet redemption
requests is greater than the interest expense of the reverse repurchase
transaction. Reverse repurchase agreements involve the risk that the market
value of securities retained by the Portfolio in lieu of liquidation may decline
below
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<PAGE> 187
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.
PURCHASING DELAYED DELIVERY SECURITIES. In managing the Portfolio's
investments, AIM may indicate to dealers or issuers its interest in acquiring
certain securities for the Portfolio for settlement beyond a customary
settlement date. In some cases, the Portfolio may agree to purchase such
securities at stated prices and yields. In such cases, such securities are
considered "delayed delivery" securities when traded in the secondary market.
Since this is done to facilitate the acquisition of portfolio securities and is
not for the purpose of investment leverage, the amount of delayed delivery
securities involved may not exceed the estimated amount of funds available for
investment on the settlement date. Until the settlement date, assets of the
Portfolio with a dollar value sufficient at all times to make payment for the
delayed delivery securities will be segregated. The total amount of segregated
assets may not exceed 25% of the Portfolio's total assets. The delayed delivery
securities, which will not begin to accrue interest until the settlement date,
will be recorded as an asset of the Portfolio and will be subject to the risks
of market value fluctuations. The purchase price of the delayed delivery
securities will be recorded as a liability of the Portfolio until settlement.
Absent extraordinary circumstances, the Portfolio's right to acquire delayed
delivery securities will not be divested prior to the settlement date.
ILLIQUID SECURITIES. The Portfolio will invest no more than 10% of its net
assets in illiquid securities.
PORTFOLIO TRANSACTIONS. The Portfolio does not seek profits through
short-term trading and will generally hold portfolio securities to maturity, but
AIM may seek to enhance the yield of the Portfolio by taking advantage of yield
disparities or other factors that occur in the money market. For example, market
conditions frequently result in similar securities trading at different prices.
AIM may dispose of any portfolio security prior to its maturity if such
disposition and reinvestment of proceeds are expected to enhance yield
consistent with AIM's judgment as to desirable portfolio maturity structure or
if such disposition is believed to be advisable due to other circumstances or
conditions. Securities held by the Portfolio will be disposed of prior to
maturity if an earlier disposition is deemed desirable by AIM to meet redemption
requests. The Portfolio's policy of investing in securities with maturities of
397 days or less will result in high portfolio turnover. Since brokerage
commissions are not normally paid on investments of the type made by the
Portfolio, however, the high turnover rate should not adversely affect the
Portfolio's net income.
The investment policies described above may be changed by the Board of
Trustees without the affirmative vote of a majority of the outstanding shares of
the Portfolio.
INVESTMENT RESTRICTIONS
The Portfolio's investment program is subject to a number of investment
restrictions which reflect self-imposed standards as well as federal and state
regulatory limitations. These restrictions are designed to minimize certain
risks associated with investing in specified types of securities or engaging in
certain transactions and to limit the amount of the Portfolio's assets which may
be concentrated in any specific industry or issuer. The most significant of
these restrictions provides that the Portfolio will not:
borrow money or issue senior securities except (a) for
temporary or emergency purposes (e.g., in order to facilitate
the orderly sale of portfolio securities to accommodate
abnormally heavy redemption requests), the Portfolio may
borrow money from banks or obtain funds by entering into
reverse repurchase agreements, and (b) to the extent that
entering into commitments to purchase securities in accordance
with the
8
<PAGE> 188
Portfolio's investment program may be considered the issuance
of senior securities. The Portfolio will not purchase
securities while borrowings in excess of 5% of its total
assets are outstanding.
The foregoing investment restriction of the Portfolio (as well as certain
others set forth in the Statement of Additional Information) is a matter of
fundamental policy which may not be changed without the affirmative vote of a
majority of the outstanding shares of the Portfolio.
In addition to the restrictions described above, the Portfolio must also
comply with the requirements of Rule 2a-7 under the 1940 Act, as such Rule may
be amended from time to time, which governs the operations of money market
funds, and may be more restrictive than the policies described herein. The SEC
has proposed certain changes to Rule 2a-7. While such proposed changes may have
a prospective impact on the investments of the Portfolio, the Portfolio
anticipates no difficulty in complying with any proposed change if adopted by
the SEC. A description of further investment restrictions applicable to the
Portfolio is contained in the Statement of Additional Information.
PURCHASE OF SHARES
Shares of the Class are sold on a continuing basis at their net asset value
next determined after an order has been received by the Portfolio. As discussed
below, the Trust reserves the right to reject any purchase order. Although there
is no sales charge imposed on the purchase of shares of the Class, banks or
other institutions may charge a recordkeeping, account maintenance or other fee
to their customers, and beneficial holders of the shares of the Class should
consult with the institutions maintaining their accounts to obtain a schedule of
applicable fees. To facilitate the investment of proceeds of purchase orders,
investors are urged to place their orders as early in the day as possible.
Purchase orders will be accepted for execution on the day the order is placed,
provided that the order is properly submitted and received by the Portfolio
prior to 1:00 p.m. Eastern Time on a business day of the Portfolio. Purchase
orders received after such time will be processed at the next day's net asset
value. Shares of the Class will earn the dividend declared on the effective date
of purchase.
A "business day of the Portfolio" is any day on which both the Federal
Reserve Bank of New York and The Bank of New York, the Trust's custodian bank,
are open for business. It is expected that The Bank of New York and the Federal
Reserve Bank of New York will be closed during the next twelve months on
Saturdays and Sundays, and on the observed holidays of New Year's Day, Martin
Luther King, Jr.'s Birthday, Presidents' Day, Memorial Day, Independence Day,
Labor Day, Columbus Day, Veterans' Day, Thanksgiving Day and Christmas Day.
Shares of the Class are sold to customers of banks, certain broker-dealers
and other financial institutions (each, an Institution, and collectively,
"Institutions"). Individuals, corporations, partnerships and other businesses
that maintain qualified accounts at an Institution may invest in the shares of
the Class. Each Institution will render administrative support services to its
customers who are the beneficial owners of the shares of the Class. Such
services may include, among other things, establishment and maintenance of
shareholder accounts and records; assistance in processing purchase and
redemption transactions in shares of the Class; providing periodic statements
showing a customer's account balance in shares of the Class; distribution of
Trust proxy statements, annual reports and other communications to shareholders
whose accounts are serviced by the Institution; and such other services as the
Trust may reasonably request. Institutions will be required to certify to the
Trust that they comply with applicable state law regarding registration as
broker-dealers, or that they are exempt from such registration.
9
<PAGE> 189
Prior to the initial purchase of shares of the Class, an Account
Application, which can be obtained from A I M Institutional Fund Services, Inc.
("AIFS"), must be completed and sent to AIFS at 11 Greenway Plaza, Suite 1919,
Houston, Texas 77046-1173. Any changes made to the information provided in the
Account Application must be made in writing or by completing a new form and
providing it to AIFS. An investor must open an account in the shares of the
Class through an Institution in accordance with procedures established by such
Institution. Each Institution separately determines the rules applicable to
accounts in the shares of the Class opened with it, including minimum initial
and subsequent investment requirements and the procedures to be followed by
investors to effect purchases of shares of the Class. The minimum initial
investment is $10,000, and there is no minimum amount of subsequent purchases of
shares of the Class by an Institution on behalf of its customers. An investor
who proposes to open a Portfolio account with an Institution should consult with
a representative of such Institution to obtain a description of the rules
governing such an account. The Institution holds shares of the Class registered
in its name, as agent for the customer, on the books of the Institution. A
statement with regard to the customer's shares of the Class is supplied to the
customer periodically, and confirmations of all transactions for the account of
the customer are provided by the Institution to the customer promptly upon
request. In addition, the Institution sends to each customer proxies, periodic
reports and other information with regard to the customer's shares of the Class.
The customer's shares of the Class are fully assignable and subject to
encumbrance by the customer.
All agreements which relate to a customer's account with an Institution are
with the Institution. An investor may terminate his relationship with an
Institution at any time, in which case an account in the investor's name will be
established directly with the Portfolio and the investor will become a
shareholder of record. In such case, however, the investor will not be able to
purchase additional shares of the Class directly, except through reinvestment of
dividends and distributions.
Orders for the purchase of shares of the Class are placed by the investor
with the Institution. The Institution is responsible for the prompt transmission
of the order to the Trust. The Portfolio will normally be required to make
immediate settlement in federal funds (member bank deposits with a Federal
Reserve Bank) for portfolio securities purchased. Accordingly, payment for
shares of the Class purchased by Institutions on behalf of their customers must
be in federal funds. If an investor's order to purchase shares of the Class is
paid for other than in federal funds, the Institution, acting on behalf of the
investor, completes the conversion into federal funds (which may take two
business days), or itself advances federal funds prior to conversion, and
promptly transmits the order and payment in the form of federal funds to AIFS.
Subject to the conditions stated above and to the Trust's right to reject
any purchase order, orders will be accepted (i) when payment for the shares of
the Class purchased is received by The Bank of New York, the Trust's custodian
bank, in the form described above and notice of such order is provided to AIFS
or (ii) at the time the order is placed, if the Portfolio is assured of payment.
Shares of the Class purchased by orders which are accepted prior to 12:00 p.m.
Eastern Time will earn the dividend declared on the date of purchase.
Federal Reserve wires should be sent as early as possible in order to
facilitate crediting to the shareholder's account. Any funds received with
respect to an order which is not accepted by the Trust and any funds received
for which an order has not been received will be returned to the sending
Institution. An order must specify that it is for the purchase of Shares of the
"Private Investment Class of the Treasury TaxAdvantage Portfolio," otherwise any
funds received will be returned to the sending Institution.
The Trust 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.
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<PAGE> 190
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 Trust. Redemption requests with respect to the Class may also be
made via AIM LINK--Registered Trademark--, a personal computer application
software product. Normally, the net asset value per share of the Portfolio will
remain constant at $1.00. See "Net Asset Value." Redemption requests with
respect to shares of the Class are normally made through a customer's
Institution.
Payment for redeemed shares of the Class is normally made by Federal
Reserve wire to the commercial bank account designated in the Institution's
Account Application, but may be remitted by check upon request by a shareholder.
If a redemption request is received by the Portfolio prior to 1:00 p.m. Eastern
Time on a business day of the Portfolio, the redemption will be effected at the
net asset value next determined on such day and the shares of the Class to be
redeemed will not receive the dividend declared on the effective date of the
redemption. If a redemption request is received by the Portfolio after 1:00 p.m.
Eastern Time or on other than a business day of the Portfolio, the redemption
will be effected at the net asset value of the Portfolio determined as of 1:00
p.m. Eastern Time on the next business day of the Portfolio, and the proceeds of
such redemption will normally be wired on the effective day of the redemption.
A shareholder may change the bank account designated to receive redemption
proceeds by written notice to the Trust. 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 Trust or AIFS, the
Trust'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 if they do not follow reasonable procedures for verification of
telephone transactions. Such reasonable procedures for verification 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 Trust may
make payment for telephone redemptions in excess of $1,000 by check when it is
considered to be in the Portfolio's best interest to do so.
In certain cases, the Trust may call for the redemption of, or refuse to
transfer or issue, shares of the Class in order to comply with the law or to
further the purposes for which the Trust is formed. If a transfer or redemption
of shares of the Class causes the value of shares of the Class in an account to
be less than $500, the Trust may cause the remaining shares to be redeemed.
DIVIDENDS
Dividends from the net income of the Portfolio are declared daily to
shareholders of record of each class of the Portfolio as of immediately after
1:00 p.m. Eastern Time on the day of declaration. Net income for dividend
purposes is determined daily as of 1:00 p.m. Eastern Time. The dividend accrued
and paid for each class will consist of (a) income of the Portfolio, the
allocation of which is based upon such class's pro rata share of the total
outstanding shares representing an interest in the Portfolio, less (b) Portfolio
expenses, such as custodian fees, trustees' fees, accounting and legal expenses,
based upon such class' pro rata share of the net
11
<PAGE> 191
assets of the Portfolio, less (c) expenses directly attributable to such class,
such as distribution expenses, if any, and transfer agency fees. Although
realized gains and losses on the assets of the Portfolio are reflected in its
net asset value, they are not expected to be of an amount which would affect its
$1.00 per share net asset value for purposes of purchases and redemptions. See
"Net Asset Value." Distributions from net realized short-term gains may be
declared and paid yearly or more frequently. See "Taxes." The Portfolio does not
expect to realize any long-term capital gains or losses.
All dividends declared during a month will normally be paid by wire
transfer. Payment will normally be made on the first business day of the
following month. A shareholder may elect to have all dividends automatically
reinvested in additional full and fractional shares of the Class at the net
asset value as of 1:00 p.m. Eastern Time on the last business day of the month.
Such election, or any revocation thereof, must be made in writing by the
Institution to AIFS at 11 Greenway Plaza, Suite 1919, Houston, TX 77046-1173,
and will become effective with dividends paid after its receipt by AIFS. If a
shareholder redeems all the shares of the Class in its account at any time
during the month, all dividends declared through the date of redemption are paid
to the shareholder along with the proceeds of the redemption.
The Portfolio uses its best efforts to maintain the net asset value per
share at $1.00 for purposes of sales and redemptions. See "Net Asset Value."
Should the Trust incur or anticipate any unusual expense, loss or depreciation
which could adversely affect the income or net asset value of the Portfolio, the
Trust's Board of Trustees would at that time consider whether to adhere to the
present dividend policy described above or to revise it in light of the then
prevailing circumstances. For example, under such unusual circumstances, the
Board of Trustees might reduce or suspend the daily dividend in order to prevent
to the extent possible the net asset value per share of the Portfolio from being
reduced below $1.00. Thus, such expenses, losses or depreciation may result in a
shareholder receiving no dividends for the period during which it held its
shares of the Class and cause such a shareholder to receive upon redemption a
price per share lower than the shareholder's original cost.
TAXES
FEDERAL TAXATION
The 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 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 one-year period
ending on October 31 and therefore to meet the distribution requirements imposed
by the Code in order to avoid the imposition of a 4% excise tax. The 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 federal income taxes on net investment income and
net realized capital gains paid to shareholders.
The Portfolio will be treated as a separate corporation for purposes of
determining taxable income, distribution requirements and other requirements of
Subchapter M. Therefore, the Portfolio may not offset its gains against losses
of the other portfolio of the Trust and each portfolio of the Trust must
specifically comply with all the provisions of the Code.
Dividends paid by the Portfolio are subject to taxation as of the date of
payment, whether received by shareholders in cash or shares of the Portfolio.
The Code provides an exception to this general rule: if the
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<PAGE> 192
Portfolio declares a dividend in October, November or December to shareholders
of record in such months and pays the dividend during January of the next year,
a shareholder will be treated for tax purposes as having received the dividend
on December 31 of the year in which it is declared rather than in January of the
following year when it is paid. It is anticipated that no portion of
distributions will be eligible for the dividends received deduction for
corporations. Dividends paid by the Portfolio from its net investment income and
short-term capital gains are taxable to shareholders at ordinary income tax
rates.
Foreign persons who file a United States tax return after December 31, 1996
for a U.S. tax refund and who are not eligible to obtain a social security
number must apply to the Internal Revenue Service ("IRS") for an individual
taxpayer identification number, using IRS Form W-7. For a copy of the IRS Form
W-7 and accompanying instructions, please contact your tax advisor or AIFS.
STATE AND LOCAL TAXATION
Distributions and other Trust transactions referred to in the preceding
paragraphs may be subject to state, local or foreign taxes, and the treatment
thereof may differ from the federal income tax consequences discussed herein.
The Portfolio's investment strategy is intended to provide shareholders with
dividends that are exempt from state and local personal and, in some cases,
corporate income taxation in as many jurisdictions as possible. The possible
exemption from such taxation may enable shareholders to achieve an after-tax
return comparable to or higher than that obtained from other money market funds.
Shareholders should consult their own tax advisors concerning the tax impact of
their investment in the Portfolio and the application of state, local or foreign
taxes.
NET ASSET VALUE
The net asset value per share of the Portfolio is determined daily as of
1:00 p.m. Eastern Time on each business day of the Portfolio. Net asset value
per share is determined by dividing the value of the Portfolio's securities,
cash and other assets (including interest accrued but not collected) less all of
its liabilities (including accrued expenses and dividends payable), by the
number of shares outstanding of the Portfolio and rounding the resulting per
share net asset value to the nearest one cent.
The securities of the Portfolio are valued on the basis of amortized cost
pursuant to rules promulgated by the SEC applicable to money market funds. This
method values a security at its cost on the date of purchase and thereafter
assumes a constant amortization to maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the market value of
the security. While this method provides certainty in valuation, it may result
in periods during which value, as determined by amortized cost, is higher or
lower than the price the Portfolio would receive if the security were sold.
During such periods, the daily yield on shares of the Portfolio, computed as
described in "Purchases and Redemptions -- Performance Information" in the
Statement of Additional Information, may differ somewhat from an identical
computation made by an investment company with identical investments utilizing
available indications as to market value to value its portfolio securities.
YIELD INFORMATION
Yield information for the Class can be obtained by calling the Trust at
(800) 877-7748. Yields will fluctuate from time to time and are not necessarily
indicative of future results. Accordingly, the yield information may not provide
a basis for comparison with investments which pay a fixed rate of interest for a
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<PAGE> 193
stated period of time. Yield is a function of the type and quality of a
Portfolio's investments, the Portfolio's maturity and the operating expense
ratio of the Class. A SHAREHOLDER'S INVESTMENT IN THE PORTFOLIO IS NOT INSURED
OR GUARANTEED BY THE U.S. GOVERNMENT OR BY ANY INSTITUTION. These factors should
be carefully considered by the investor before making an investment in the
Portfolio.
For the seven-day period ended August 31, 1996, the current yield and the
effective yield of the Class (which assumes the reinvestment of dividends for a
365-day year and a return for the entire year equal to the average annualized
current yield for the period) were 4.79% and 4.90%, respectively. These
performance numbers are quoted for illustration purposes only. The performance
numbers for any other seven-day period may be substantially different from those
quoted above.
To assist banks and other institutions performing their own sub-accounting,
same day information as to the daily dividend per share for the Portfolio to
eight decimal places and current yield normally will be available by 4:00 p.m.
Eastern Time.
From time to time and in its discretion, AIM or its affiliates 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 Trust furnishes shareholders with semi-annual reports containing
information about the Portfolio and its operations, including a list of the
investments held in the Portfolio and financial statements. The annual financial
statements are audited by the Trust's independent auditors.
Unless otherwise requested by the shareholder, each shareholder will be
provided with a written confirmation for each transaction by its Institution.
Institutions establishing sub-accounts will receive a written confirmation for
each transaction in a sub-account. Duplicate confirmations may be transmitted to
the beneficial owner of the sub-account if requested by the Institution. The
Institution will receive a periodic statement setting forth, for each
sub-account, the share balance, income earned for the month, income earned for
the year to date and the total current value of the account.
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES
The overall management of the business and affairs of the Trust is vested
with its Board of Trustees. The Board of Trustees approves all significant
agreements between the Trust and persons or companies furnishing services to the
Trust, including agreements with the Trust's investment advisor, distributor,
custodian and transfer agent. The day-to-day operations of the Trust are
delegated to the Trust's officers and to AIM, subject always to the objectives
and policies of the Trust and to the general supervision of the Trust'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,
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manages or advises 41 investment company portfolios. As of November 14, 1996,
total assets of the investment company portfolios managed or advised by AIM and
its affiliates were approximately $61.1 billion. All of the directors and
certain of the officers of AIM are also trustees or executive officers of the
Trust. AIM is a wholly-owned subsidiary of AIM Management. AIM Management is a
holding company in the financial services business.
Pursuant to the terms of the Advisory Agreement, AIM manages the investment
of the Portfolio's assets and obtains and evaluates economic, statistical and
financial information to formulate and implement investment policies for the
Portfolio. The Advisory Agreement requires AIM to reduce its fee to the extent
required to satisfy any expense limitations imposed by the securities laws or
regulations thereunder of any state in which the Portfolio's shares are
qualified for sale.
For the fiscal year ended August 31, 1996, AIM received fees from the Trust
under an advisory agreement previously in effect, which provided for the same
level of compensation to AIM as the Advisory Agreement, as well as received fees
from the Trust under the Advisory Agreement, with respect to the Portfolio which
represented 0.15% of the Portfolio's average daily net assets. During such
fiscal year, the expenses of the Class, including AIM's fees, amounted to 0.45%
of the Class' daily net assets.
ADMINISTRATIVE SERVICES
The Trust 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 Trust 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.
FEE WAIVERS
AIM or its affiliates 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 for such
fee or expenses prior to the end of each 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 for such fee or expenses prior to the end of each
fiscal year. AIM voluntarily waived advisory fees of $116,126 on the Portfolio
and assumed expenses of $25,600.
DISTRIBUTOR
The Trust 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
Trust are affiliated with FMC and AIM. The Distribution Agreement provides that
FMC has the exclusive right to distribute shares of the Class either directly or
through other broker-dealers. FMC is the distributor of several of the mutual
funds managed or advised by AIM.
FMC may, from time to time, at its expense, pay a bonus or other
consideration or incentive to dealers or banks who sell a minimum dollar amount
of the shares of the Class during a specific period of time. In some instances,
these incentives may be offered only to certain dealers or institutions who have
sold or may sell
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significant amounts of shares. The total amount of such additional bonus
payments or other consideration shall not exceed 0.05% of the net asset value of
the shares of the Class sold. Any such bonus or incentive programs will not
change the price paid by investors for the purchase of shares of the Class or
the amount received as proceeds from such sales. Dealers or institutions may not
use sales of the shares of the Class to qualify for any incentives to the extent
that such incentives may be prohibited by the laws of any jurisdiction.
DISTRIBUTION PLAN
The Trust has adopted a Master Distribution Plan (the "Plan") pursuant to
Rule 12b-1 under the 1940 Act. The Plan provides that the Trust may compensate
FMC in connection with the distribution of shares of the Class in an amount
equal to 0.50% on an annualized basis of the average daily net assets of the
Portfolio attributable to the Class. Such amounts may be expended when and if
authorized by the Board of Trustees and may be used to finance such
distribution-related services as expenses of organizing and conducting sales
seminars, printing of prospectuses and statements of additional information (and
supplements thereto) and reports for other than existing shareholders,
preparation and distribution of advertising material and sales literature and
costs of administering the Plan.
Of the compensation paid to FMC under the Plan, a service fee may be paid
to dealers and other financial institutions that provide continuing personal
shareholder services to their customers who purchase and own shares of the
Class, in amounts of up to 0.25% of the average net assets of the Portfolio
attributable to the Class which are attributable to the customers of such
dealers or financial institutions. Payments to dealers and other financial
institutions in excess of such amount and payments retained by FMC would be
characterized as an asset-based sales charge pursuant to the Plan. The Plan also
imposes a cap on the total amount of sales charges, including asset-based sales
charges, that may be paid by the Portfolio with respect to the Class. The Plan
does not obligate the Trust 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 Trust 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 Trust to provide the Board of
Trustees at least quarterly with a written report of the amounts expended
pursuant to each Plan and the purposes for which such expenditures were made.
The Board of Trustees shall review these reports in connection with their
decisions with respect to the Plan.
As required by Rule 12b-1 under the 1940 Act, the Plan was approved by the
Board of Trustees, including a majority of the trustees who are not "interested
persons" (as defined in the 1940 Act) of the Trust and who have no direct or
indirect financial interest in the operation of the Plan or in any agreements
related to the Plan ("Qualified Trustees") on December 6, 1994. In approving the
Plan in accordance with the requirements of Rule 12b-1, the trustees considered
various factors and determined that there is a reasonable likelihood that the
Plan will benefit the Trust and the shareholders of the Class.
The Plan may be terminated by a vote of a majority of the Qualified
Trustees, or by a vote of a majority of the holders of the outstanding voting
securities of the shares of the Class. Any change in the Plan that would
increase materially the distribution expenses paid by the Class requires
shareholder approval; otherwise the Plan may be amended by the trustees,
including a majority of the Qualified Trustees, by vote cast in person at a
meeting called for the purpose of voting upon such amendment. As long as the
Plan is in effect, the selection or nomination of the Qualified Trustees is
committed to the discretion of the Qualified Trustees.
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PORTFOLIO TRANSACTIONS AND BROKERAGE
AIM is responsible for decisions to buy and sell securities for the
Portfolio, broker-dealer selection and negotiation of commission rates. Since
purchases and sales of portfolio securities by the Portfolio are usually
principal transactions, the Portfolio incurs little or no brokerage commissions.
Portfolio securities are normally purchased directly from the issuer or from a
market maker for the securities. The purchase price paid to dealers serving as
market makers may include a spread between the bid and asked prices.
AIM's primary consideration in effecting a security transaction is to
obtain the best net price and the most favorable execution of the order. To the
extent that the executions and prices offered by more than one dealer are
comparable, AIM may, in its discretion, effect transactions with dealers that
furnish statistical, research or other information or services which are deemed
by AIM to be beneficial to the Portfolio's investment programs. Certain research
services furnished by dealers may be useful to clients of AIM other than the
Portfolio. Similarly, any research services received by AIM through placement of
portfolio transactions of other clients may be of value to AIM in fulfilling its
obligations to the Portfolio.
GENERAL INFORMATION
ORGANIZATION AND DESCRIPTION OF SHARES
The Trust is a Delaware business trust. The Trust was originally
incorporated in Maryland on January 24, 1977, but had no operations prior to
November 10, 1980. Effective December 31, 1986, the Trust was reorganized as a
Massachusetts business trust; and effective October 15, 1993, the Trust was
reorganized as a Delaware business trust. On October 15, 1993, the Portfolio
succeeded to the assets and assumed the liabilities of the Treasury TaxAdvantage
Portfolio (the "Predecessor Portfolio") of Short-Term Investments Co., a
Massachusetts business trust ("STIC"), pursuant to an Agreement and Plan of
Reorganization between the Trust 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 Trust are divided into seven classes. Two classes, including the Class,
represent interests in the Portfolio, and five classes represent interests in
the Treasury Portfolio. Each class of shares has a par value of $.01 per share.
The other classes of the Trust may have different sales charges and other
expenses which may affect performance. An investor may obtain information
concerning the Trust's other classes by contacting FMC.
All shares of the Trust have equal rights with respect to voting, except
that the holders of shares of a particular portfolio or class will have the
exclusive right to vote on matters pertaining solely to that portfolio or class.
For example, holders of shares of a particular portfolio will have the exclusive
right to vote on any investment advisory agreement or investment restriction
that relates only to such portfolio. In addition, if a portfolio is divided into
various classes, holders of shares of a particular class will have the exclusive
right to vote on any matter, such as distribution arrangements, which relates
solely to such class. The shareholders of the Class have distinctive rights with
respect to dividends and redemption which are more fully described in this
Prospectus. In the event of liquidation or termination of the Trust, 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 Trust
attributable to the respective portfolio or allocated to the respective
portfolio based on the liquidation value of such portfolio. Fractional shares of
each portfolio have the same rights as full shares to the extent of their
proportionate interest.
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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 Trust's outstanding shares. As of December
1, 1996, First National Bank of Chicago was the owner of record of 61.27% of the
outstanding shares of the Class. As long as First National Bank of Chicago owns
over 25% of such shares, it may be presumed to be in "control" of the Private
Investment Class of the Treasury TaxAdvantage Portfolio, as defined in the 1940
Act.
There are no preemptive or conversion rights applicable to any of the
Trust's shares. The Trust's shares, when issued, will be fully paid and
non-assessable. The Board of Trustees may create additional portfolios and
classes of the Trust without shareholder approval.
TRANSFER AGENT AND CUSTODIAN
The Bank of New York, 90 Washington Street, 11th Floor, New York, New York
10286, acts as custodian for the portfolio securities and cash of the Portfolio.
A I M Institutional Fund Services, Inc., 11 Greenway Plaza, Suite 1919, Houston,
Texas 77046-1173, acts as transfer agent for the shares of the Portfolio.
LEGAL COUNSEL
The law firm of Ballard Spahr Andrews & Ingersoll, Philadelphia,
Pennsylvania, serves as counsel to the Trust and has passed upon the legality of
the shares of the Portfolio.
SHAREHOLDER INQUIRIES
Shareholder inquiries concerning the status of an account should be
directed to an investor's Institution, or to the Trust at 11 Greenway Plaza,
Suite 1919, Houston, Texas 77046-1173, or may be made by calling (800) 877-7748.
OTHER INFORMATION
This Prospectus sets forth basic information that investors should know
about the Trust 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 Trust 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.
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<TABLE>
<S> <C>
SHORT-TERM INVESTMENTS TRUST SHORT-TERM
11 Greenway Plaza, Suite 1919 INVESTMENTS TRUST
Houston, Texas 77046-1173
(800) 877-7748 PRIVATE
INVESTMENT CLASS
INVESTMENT ADVISOR OF THE
A I M ADVISORS, INC. -----------------------
11 Greenway Plaza, Suite 1919 TREASURY
Houston, Texas 77046-1173 TAXADVANTAGE
(713) 626-1919 PORTFOLIO PROSPECTUS
DISTRIBUTOR
FUND MANAGEMENT COMPANY DECEMBER 30, 1996
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
(800) 877-7748 [LOGO APPEARS HERE]
Fund Management Company
AUDITORS
KPMG PEAT MARWICK LLP
NationsBank Building
700 Louisiana
Houston, Texas 77002
CUSTODIAN
THE BANK OF NEW YORK
90 Washington Street
11th 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 TRUST
OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY
JURISDICTION TO ANY PERSON TO WHOM SUCH OFFERING MAY NOT LAWFULLY BE MADE.
</TABLE>
<PAGE> 200
STATEMENT OF
ADDITIONAL INFORMATION
SHORT-TERM INVESTMENTS TRUST
TREASURY TAXADVANTAGE PORTFOLIO
(INSTITUTIONAL CLASS)
(PRIVATE INVESTMENT CLASS)
11 GREENWAY PLAZA
SUITE 1919
HOUSTON, TEXAS 77046-1173
(800) 659-1005
---------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS.
IT SHOULD BE READ IN CONJUNCTION WITH A PROSPECTUS
OF EACH OF THE ABOVE-NAMED FUNDS,
COPIES OF WHICH MAY BE OBTAINED BY WRITING
FUND MANAGEMENT COMPANY, 11 GREENWAY PLAZA,
SUITE 1919, HOUSTON, TEXAS 77046-1173
OR CALLING (800) 659-1005
---------------------
STATEMENT OF ADDITIONAL INFORMATION DATED DECEMBER 30, 1996
RELATING TO THE PROSPECTUS OF EACH OF THE FOLLOWING CLASSES OF THE
TREASURY TAXADVANTAGE PORTFOLIO:
INSTITUTIONAL CLASS PROSPECTUS DATED DECEMBER 30, 1996
AND PRIVATE INVESTMENT CLASS PROSPECTUS DATED DECEMBER 30, 1996
<PAGE> 201
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Introduction....................................................... 3
General Information about the Trust................................ 3
The Trust and Its Shares...................................... 3
Trustees and Officers......................................... 4
Remuneration of Trustees...................................... 7
Investment Advisor............................................ 8
Administrative Services....................................... 9
Expenses...................................................... 9
Banking Regulations........................................... 10
Transfer Agent and Custodian.................................. 10
Reports....................................................... 10
Principal Holders of Securities............................... 11
Purchases and Redemptions.......................................... 13
Net Asset Value Determination................................. 13
Distribution Agreement........................................ 14
Distribution Plan............................................. 14
Performance Information....................................... 14
Suspension of Redemption Rights............................... 15
Investment Program and Restrictions................................ 15
Investment Program............................................ 15
Eligible Securities........................................... 15
Investment Restrictions....................................... 16
Other Investment Policies..................................... 17
Portfolio Transactions............................................. 17
Tax Matters........................................................ 18
Qualifications as a Regulated Investment Company.............. 18
Excise Tax on Regulated Investment Companies.................. 19
Portfolio Distributions....................................... 19
Sale or Redemption of Shares.................................. 19
Foreign Shareholders.......................................... 20
Effect of Future Legislation; State and Local Tax
Considerations............................................... 20
Financial Statements............................................... FS-1
</TABLE>
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INTRODUCTION
The Treasury TaxAdvantage Portfolio (the "Portfolio") is an investment
portfolio of Short-Term Investments Trust (the "Trust"), 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 the Institutional Class Prospectus
dated December 30, 1996 and the Private Investment Class Prospectus dated
December 30, 1996 (each a "Prospectus"). Copies of each Prospectus and
additional copies of this Statement of Additional Information may be obtained
without charge by writing the principal distributor of the Trust's shares, Fund
Management Company ("FMC"), 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173 or by calling (800) 659-1005. Investors must receive a Prospectus
before they invest.
This Statement of Additional Information is intended to furnish prospective
investors with additional information concerning each class of the Portfolio.
Some of the information required to be in this Statement of Additional
Information is also included in each Prospectus; and, in order to avoid
repetition, reference will be made to sections of the applicable Prospectus.
Additionally, each 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 each
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 TRUST
THE TRUST AND ITS SHARES
The Trust is an open-end, diversified, management series 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 Trust was reorganized as a business trust under the laws of the
Commonwealth of Massachusetts on December 31, 1986. The Trust was again
reorganized as a business trust under the laws of the State of Delaware on
October 15, 1993. A copy of the Agreement and Declaration of Trust ("Declaration
of Trust") establishing the Trust is on file with the SEC. On October 15, 1993,
the Portfolio succeeded to the assets and assumed the liabilities of the
Treasury TaxAdvantage Portfolio (the "Predecessor Portfolio") of Short-Term
Investments Co., a Massachusetts business trust ("STIC"), pursuant to an
Agreement and Plan of Reorganization between the Trust and STIC. All historical
financial and other information contained in this Statement of Additional
Information for periods prior to October 15, 1993 relating to the Portfolio (or
a class thereof) is that of the Predecessor Portfolio (or the corresponding
class thereof). Shares of beneficial interest of the Trust are redeemable at the
net asset value thereof at the option of the shareholder or at the option of the
Trust 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 Trust offers on a continuous basis shares representing an interest in one
of two portfolios: the Portfolio and the Treasury Portfolio (together, the
"Portfolios"). The Portfolio consists of the following two classes of shares:
Institutional Class and Private Investment Class. Each class of shares is sold
pursuant to a separate prospectus and this joint Statement of Additional
Information. The Treasury Portfolio consists of the following five classes of
shares: Cash Management Class, Institutional Class, Personal Investment Class,
Private Investment Class and Resource Class. Each such class has different
shareholder qualifications and bears expenses differently. This Statement of
Additional Information relates to the shares of each class of the Portfolio.
Shares of the five classes of the Treasury Portfolio are offered pursuant to
separate prospectuses and a separate statement of additional information.
Shares of beneficial interest of the Trust will be redeemable at the net asset
value thereof at the option of the shareholder or at the option of the Trust in
certain circumstances. For information concerning the methods of redemption and
the rights of share ownership, investors should consult the Prospectus under the
caption "Redemption of Shares."
As used in the Prospectus, the term "majority of the outstanding shares" of
the Trust, a particular portfolio or a particular class means, respectively, the
vote of the lesser of (i) 67% or more of the shares of the Trust, such portfolio
or such class present at a meeting of the Trust's shareholders, if the holders
of more than 50% of the outstanding shares of the Trust, such portfolio or such
class are present or represented by proxy, or (ii) more than 50% of the
outstanding shares of the Trust, such portfolio or such class.
Shareholders of the Trust 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 Trust.
The Trust, 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 out-
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standing shares of the Trust, such Portfolio and such class, respectively;
provided, however that the Board of Trustees may terminate, without such
shareholder approval, the Trust, 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 Trust. 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 portfolio of shares of the
Trust.
The assets received by the Trust 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 Trust. While certain expenses of the Trust 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 Trust.
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, however, there is a remote possibility that
shareholders could, under certain circumstances, be held liable for the
obligations of the Trust 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 Trust and
requires that notice of such disclaimer be given in each agreement, obligation
or instrument entered into or executed by the Trust or the trustees to all
parties, and each party thereto must expressly waive all rights of action
directly against shareholders of the Trust. The Declaration of Trust provides
for indemnification out of the Trust's property for all losses and expenses of
any shareholder of the Trust 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 Trust 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 Trust of
the trustees and the officers of the Trust 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 Trust. Such person
may not be indemnified against any liability to the Trust or to the Trust's
shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office. The Declaration of Trust also authorizes
the purchase of liability insurance on behalf of trustees and officers.
As described in the Prospectus, the Trust 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 Trust and filed with the Trust'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 Trust.
TRUSTEES AND OFFICERS
The trustees and officers of the Trust 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 (77)
Director, Chairman and Chief Executive Officer, A I M Management Group
Inc.; and Chairman of the Board of Directors, A I M Advisors, Inc., A I M
Capital Management, Inc., A I M Distributors, Inc., A I M Fund Services,
Inc., A I M Institutional Fund Services, Inc. and Fund Management Company.
- ---------------
*A trustee who is an "interested person" of the Trust and A I M Advisors, Inc.,
as defined in the Investment Company Act of 1940, as amended (the "1940 Act").
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BRUCE L. CROCKETT, Trustee (52)
906 Frome Lane
McLean, VA 22102
Formerly, 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 (72)
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.
**CARL FRISCHLING, Trustee (59)
919 Third Avenue
New York, NY 10022
Partner, Kramer, Levin, Naftalis & 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 (50)
Director, President and Chief Operating Officer, A I M Management
Group Inc.; Director and President, A I M Advisors, Inc.; and Director and
Senior Vice President, 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.
JOHN F. KROEGER, Trustee (72)
37 Pippins Way
Morristown, NJ 07960
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 (54)
6363 Woodway, Suite 825
Houston, TX 77057
Attorney in private practice in Houston, Texas.
IAN W. ROBINSON, Trustee (73)
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 Trust and A I M Advisors, Inc.,
as defined in the Investment Company Act of 1940, as amended (the "1940 Act").
**A trustee who is an "interested person" of the Trust, as defined in the 1940
Act.
5
<PAGE> 205
LOUIS S. SKLAR, Trustee (57)
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 (52)
Senior Vice President and Treasurer, A I M Advisors, Inc.; and Vice
President and Treasurer, A I M Management Group Inc., A I M Capital
Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc.,
A I M Institutional Fund Services, Inc. and Fund Management Company.
GARY T. CRUM, Senior Vice President (49)
Director and President, A I M Capital Management, Inc.; Director and
Senior Vice President, A I M Management Group Inc. and A I M Advisors,
Inc.; and Director, A I M Distributors, Inc.
*CAROL F. RELIHAN, Senior Vice President and Secretary (42)
Senior Vice President, General Counsel and Secretary, A I M Advisors,
Inc.; Vice President, General Counsel and Secretary, A I M Management Group
Inc.; Vice President and General Counsel, Fund Management Company; and Vice
President, A I M Capital Management, Inc., A I M Distributors, Inc., A I M
Fund Services, Inc. and A I M Institutional Fund Services, Inc.
DANA R. SUTTON, Vice President and Assistant Treasurer (37)
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 (53)
Vice President and Chief Compliance Officer, A I M Advisors, Inc.,
A I M Capital Management, Inc., A I M Distributors, Inc., A I M Fund
Services, Inc., A I M Institutional Fund Services, Inc., and Fund
Management Company. Formerly, Vice President, Charles Schwab & Co., Inc.;
Assistant Secretary, Charles Schwab Family of Funds and Schwab Investments;
Chief Compliance Officer, Charles Schwab Investment Management, Inc.; and
Vice President, Integrated Resources Life Insurance Co. and Capitol Life
Insurance Co.
KAREN DUNN KELLEY, Vice President (36)
Senior Vice President, A I M Capital Management, Inc.; and Vice
President, A I M Advisors, Inc.
J. ABBOTT SPRAGUE, Vice President (41)
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 standing committees of the Board of Trustees are the Audit Committee, the
Investments Committee, and the 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
Trust'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 Trust's fund accounting or its internal accounting
controls, or for considering such matters as may from time to time be set forth
in a charter adopted by the Board of Trustees and such committee.
The members of the Investments Committee are Messrs. Bauer, Crockett, Daly
(Chairman), Kroeger and Pennock. The Investments Committee is responsible for
reviewing portfolio compliance, brokerage allocation, portfolio investment
pricing issues, interim dividend and distribution issues, or considering such
matters as may from time to time be set forth in a charter adopted by the Board
of Trustees and such committee.
- ---------------
*Mr. Arthur and Ms. Relihan are married to each other.
6
<PAGE> 206
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 Trust
maintains a distribution plan pursuant to Rule 12b-1 under the 1940 Act,
reviewing from time to time the compensation payable to the disinterested
trustees, or considering such matters as may from time to time be set forth in a
charter adopted by the Board of Trustees and such committee.
All of the Trust'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 Trust's executive
officers hold similar offices with some or all of such investment companies.
REMUNERATION OF TRUSTEES
Each trustee is reimbursed for expenses incurred in connection with each
meeting of the Board of Trustees or any committee thereof. Each trustee who is
not an officer of the Trust is compensated for his services according to a fee
schedule which recognizes the fact that such trustee also serves as a director
or trustee of other regulated investment companies managed, administered or
distributed by AIM or its affiliates (the "AIM Funds"). Each such trustee
receives a fee, allocated among the AIM Funds for which he serves as a director
or trustee, which consists of an annual retainer component and a meeting fee
component.
Set forth below is information regarding compensation paid or accrued for each
trustee of the Trust:
<TABLE>
<CAPTION>
RETIREMENT
AGGREGATE BENEFITS TOTAL
COMPENSATION ACCRUED COMPENSATION
FROM BY ALL FROM ALL
TRUSTEE TRUST(1) AIM FUNDS(2) AIM FUNDS(3)
------- ------------ ------------ ------------
<S> <C> <C> <C>
Charles T. Bauer.................................... $ 0 $ 0 $ 0
Bruce L. Crockett................................... 4,823 3,655 57,750
Owen Daly II........................................ 5,708 18,662 58,125
Carl Frischling..................................... 5,560 11,323 57,250(4)
Robert H. Graham.................................... 0 0 0
John F. Kroeger..................................... 5,345 22,313 58,125
Lewis F. Pennock.................................... 4,705 5,067 58,125
Ian W. Robinson..................................... 4,841 15,381 56,750
Louis S. Sklar...................................... 5,613 6,632 57,250
</TABLE>
- ---------------
(1) The total amount of compensation deferred by all Trustees of the Trust
during the fiscal year ended August 31, 1996, including interest earned
thereon, was $20,310.
(2) During the fiscal year ended August 31, 1996, the total amount of expenses
allocated to the Trust in respect of such retirement benefits was $25,775.
Data reflects compensation for the calendar year ended December 31, 1995.
(3) Each serves as a Director or Trustee of a total of 10 AIM Funds. Data
reflects total compensation for the calendar year ended December 31, 1995.
(4) See also page 8 regarding fees earned by Mr. Frischling's law firm.
AIM Funds Retirement Plan for Eligible Directors/Trustees
Under the terms of the AIM Funds Retirement Plan for Eligible
Directors/Trustees (the "Plan"), each trustee (who is not an 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 Trustees.
Pursuant to the Plan, the normal retirement date is the date on which the
eligible trustee has attained age 65 and has completed at least five years of
continuous service with one or more of the AIM Funds. Each eligible trustee 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 75% of the retainer paid or accrued by the AIM Funds for such trustee
during the twelve-month period immediately preceding the trustee's retirement
(including amounts deferred under separate agreement between the AIM Funds and
the trustee) for 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. 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 ten years beginning the first
day of the calendar quarter following the date of the trustee's death. Payments
under the Plan are not secured or funded by any AIM Fund.
7
<PAGE> 207
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 for Messrs.
Crockett, Daly, Frischling, Kroeger, Pennock, Robinson and Sklar are 9, 9, 19,
18, 14, 9, and 6 years, respectively.
ESTIMATED BENEFITS UPON RETIREMENT
<TABLE>
<CAPTION>
ANNUAL COMPENSATION PAID BY ALL AIM FUNDS
NUMBER OF YEARS OF SERVICE -----------------------------------------
WITH THE AIM FUNDS $55,000 $60,000 $65,000
- -------------------------- ------- ------- -------
<S> <C> <C> <C> <C>
10..................................... $41,250 $45,000 $48,750
9..................................... $37,125 $40,500 $43,875
8..................................... $33,000 $36,000 $39,000
7..................................... $28,875 $31,500 $34,125
6..................................... $24,750 $27,000 $29,250
5..................................... $20,625 $22,500 $24,375
</TABLE>
Deferred Compensation Agreements
Messrs. Daly, Frischling, Kroeger, Robinson and Sklar (for purposes of this
paragraph only, the "deferring trustees") have each executed a Deferred
Compensation Agreement (collectively, the "Agreements"). Pursuant to the
Agreements, the deferring trustees may elect to defer receipt of up to 100% of
their compensation payable by the Trust, and such amounts are placed into a
deferral account. Currently, the deferring trustees may select various AIM Funds
in which all or part of their deferral accounts shall be deemed to be invested.
Distributions from the deferring trustees' deferral accounts will be paid in
cash, generally in equal quarterly installments over a period of five years
beginning on the date the deferring trustee's retirement benefits commence under
the Plan. The Trust's Board of Trustees, in its sole discretion, may accelerate
or extend the distribution of such deferral accounts after the deferring
trustee's termination of service as a trustee of the Trust. If a deferring
trustee 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 trustee's death. The Agreements are not funded and, with respect to
the payments of amounts held in the deferral accounts, the deferring trustees
have the status of unsecured creditors of the Trust and of each other AIM Fund
from which they are deferring compensation.
The Portfolio paid legal fees of $3,900 for the year ended August 31, 1996 for
services rendered by Kramer, Levin, Naftalis & Frankel as counsel to the Board
of Trustees. Carl Frischling, a trustee of the Trust, is a member of that firm.
INVESTMENT ADVISOR
A I M Advisors, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173, acts as the investment advisor of the Portfolio pursuant to a Master
Investment Advisory Agreement dated as of October 18, 1993 (the "Advisory
Agreement"). AIM was organized in 1976, and together with its affiliates advises
or manages 41 investment company portfolios. As of November 14, 1996, the total
assets of the investment company portfolios managed or advised by AIM and its
affiliates were approximately $61.1 billion.
Pursuant to the terms of the Advisory Agreement, AIM manages the investment of
the assets of the Portfolio. AIM obtains and evaluates economic, statistical and
financial information to formulate and implement investment policies for the
Portfolio. Any investment program undertaken by AIM will at all times be subject
to the policies and control of the Trust's Board of Trustees. AIM shall not be
liable to the Trust or to its shareholders for any act or omission by AIM or for
any loss sustained by the Trust or its shareholders except in the case of
willful misfeasance, bad faith, gross negligence or reckless disregard of duty.
AIM and the Trust 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.
As compensation for its services with respect to the Portfolio, AIM receives a
monthly fee which is calculated by applying the following annual rates to the
average daily net assets of the Portfolio:
<TABLE>
<CAPTION>
NET ASSETS RATE
-------------------------------------------------------------- ----
<S> <C>
First $250 million............................................ .20%
Over $250 million to $500 million............................. .15%
Over $500 million............................................. .10%
</TABLE>
8
<PAGE> 208
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.
Pursuant to the Advisory Agreement between the Trust and AIM currently in
effect, AIM received fees (net of fee waivers, if any) from the Trust for the
fiscal years ended August 31, 1996, 1995 and 1994, with respect to the Portfolio
in the amounts of $675,795, $596,449 and $640,698, respectively. For the fiscal
years ended August 31, 1996, 1995 and 1994, AIM waived fees with respect to the
Portfolio in the amounts of $116,126, $117,100 and $131,042, respectively.
The Advisory Agreement provides, that, upon the request of the Board of
Trustees, AIM may perform or arrange for the performance of certain additional
services on behalf of the Portfolio which are not required by the Advisory
Agreement. AIM may receive reimbursement or reasonable compensation for certain
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
a Master Administrative Services Agreement under which AIM will provide the
additional services described below under the caption "Administrative Services."
The Advisory Agreement was approved for its initial term by the Board of
Trustees on July 19, 1993. The Advisory Agreement will continue in effect until
June 30, 1997 and from year to year thereafter provided that it is specifically
approved at least annually by the Trust's Board of Trustees and the affirmative
vote of a majority of the trustees who are not parties to the Advisory Agreement
or "interested persons" of any such party by votes cast in person at a meeting
called for such purpose. The Trust or AIM may terminate the Advisory Agreement
on 60 days' notice without penalty. The Advisory 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 Trust and their affiliations are shown under "Trustees and Officers." The
address of each director and officer of AIM is 11 Greenway Plaza, Suite 1919,
Houston, Texas 77046.
FMC is a registered broker-dealer and a wholly-owned subsidiary of AIM. FMC
acts as distributor of the shares of the Portfolio.
ADMINISTRATIVE SERVICES
AIM also provides certain services pursuant to a Master Administrative
Services Agreement dated as of October 18, 1993 between AIM and the Trust (the
"Administrative Services Agreement").
Under the Administrative Services Agreement, AIM performs 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 Trust and of
persons working under his supervision for maintaining the financial accounts and
books and records of the Trust, 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 Trust's
Board of Trustees.
Under the Administrative Services Agreement, AIM was reimbursed for the fiscal
years ended August 31, 1996, 1995 and 1994, in the amounts of $30,056, $42,823
and $31,534, respectively, for fund accounting services for the Portfolio.
Under the terms of a Transfer Agency and Service Agreement, dated September
16, 1994, as amended, July 1, 1995, between the Trust and A I M Institutional
Fund Services, Inc. ("AIFS"), a registered transfer agent and wholly-owned
subsidiary of AIM, as well as under previous agreements, AIFS received $33,534
and $10,913 for the fiscal years ended August 31, 1996 and 1995, respectively,
for the provision of certain shareholder services for the Trust.
EXPENSES
In addition to fees paid to AIM pursuant to the Agreement and the expenses
reimbursed to AIM under the Administrative Services Agreement, the Trust also
pays or causes to be paid all other expenses of the Trust, including, without
limitation: the charges and expenses of any registrar, any custodian or
depository appointed by the Trust for the safekeeping of its cash, portfolio
securities and other property, and any transfer, dividend or accounting agent or
agents appointed by the Trust; brokers' commissions chargeable to the Trust in
connection with portfolio securities transactions to which the Trust is a party;
all taxes, including securities issuance and transfer taxes, and fees payable by
the Trust to federal, state or other governmental agencies; the costs and
expenses of engraving or printing of certificates representing shares of the
Trust; all costs and expenses in connection with the registration and
maintenance of registration of the Trust and its shares with the SEC and various
states and
9
<PAGE> 209
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 Trust
and supplements thereto to the Trust'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 Trust's shares; charges and expenses of legal
counsel, including counsel to the trustees of the Trust who are not "interested
persons" (as defined in the 1940 Act) of the Trust or AIM, and of independent
accountants in connection with any matter relating to the Trust; membership dues
of industry associations; interest payable on Trust borrowings; postage;
insurance premiums on property or personnel (including officers and trustees) of
the Trust 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). 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 Trust) 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 Trust's shares.
Expenses of the Trust which are not directly attributable to the operations of
any class of shares or portfolio of the Trust are prorated among all classes of
the Trust. Expenses of the Trust except those listed in the next sentence are
prorated among all classes of such Portfolio. Distribution and service fees,
transfer agency fees and shareholder recordkeeping fees 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 Trust and alternate means for continuing
the servicing of such shareholders would be sought. In such event, changes in
the operation of the Trust might occur and shareholders serviced by such bank
might no longer be able to avail themselves of any automatic investment or other
services then being provided by such bank. It is not expected that shareholders
would suffer any adverse financial consequences as a result of any of these
occurrences. In addition, state securities laws on this issue may differ from
the interpretations of federal law expressed herein and certain banks and
financial institutions may be required to register as dealers pursuant to state
law.
TRANSFER AGENT AND CUSTODIAN
The Bank of New York ("BONY") acts as custodian for the portfolio securities
and cash of the Portfolio. BONY receives such compensation from the Trust for
its services in such capacity as is agreed to from time to time by BONY and the
Trust. The address of BONY is 90 Washington Street, 11th Floor, New York, New
York 10286.
A I M Institutional Fund Services, Inc., 11 Greenway Plaza, Suite 1919,
Houston, Texas 77046-1173, acts as transfer agent for the shares of each class
of the Portfolio and receives an annual fee from the Trust for its services in
such capacity in the amount of .007% of average daily net assets of the Trust,
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 Trust.
REPORTS
The Trust furnishes shareholders with semi-annual reports containing
information about the Trust and its operations, including a schedule of
investments held in the Portfolio and its financial statements. The annual
financial statements are audited by the Trust'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.
10
<PAGE> 210
PRINCIPAL HOLDERS OF SECURITIES
TREASURY PORTFOLIO
To the best of the knowledge of the Trust, the names and addresses of the
holders of 5% or more of the outstanding shares of any class of the Portfolio as
of December 1, 1996, and the percentage of such shares owned by such
shareholders as of such date are as follows:
CASH MANAGEMENT CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY(a)
---------------- --------------
<S> <C>
The Bank of New York........................................................... 68.64%b
4 Fisher Lane
White Plains, NY 10603
Fund Services Associates....................................................... 22.85%
11835 West Olympic Boulevard
Suite 205
Los Angeles, CA 90064
</TABLE>
INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY(a)
---------------- --------------
<S> <C>
Trust Company Bank............................................................. 10.66%
P.O. Box 105504
Atlanta, GA 30348
Victoria Bank & Trust.......................................................... 8.76%
One O'Connor Plaza 6th Fl.
Victoria, TX 77902
Liberty Registration Co. of Oklahoma........................................... 7.46%
P.O. Box 25848
Oklahoma City, OK 73125
U.S. Bank of Washington....................................................... 7.31%
P.O. Box 3168
Portland, OR 97208
NationsBank Texas.............................................................. 6.32%
P.O. Box 831000
Dallas, TX 75283-1000
Wachovia Bank and Trust........................................................ 5.85%
P.O. Box 3075
Winston-Salem, NC 27150
SunTrust Bank.................................................................. 5.67%
P.O. Box 105504
Atlanta, GA 30308
FRNCO.......................................................................... 5.47%
P.O. Box 939
Rogers, AR 72757-0939
Key Trust Company.............................................................. 5.02%
4900 Tiedman
Cleveland, OH 44101-5971
</TABLE>
- ---------------
(a) The Trust 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.
11
<PAGE> 211
PERSONAL INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY(a)
---------------- --------------
<S> <C>
Cullen/Frost Discount Brokers............................................ 64.64%(b)
P.O. Box 2358
San Antonio, TX 78299
The Bank of New York..................................................... 26.55%(b)
4 Fisher Lane
White Plains, NY 10603
Kinco & Co............................................................... 6.88%
c/o RNB Securities
1 Hanson Pl., Lower Level
Brooklyn, NY 11243
</TABLE>
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY(a)
---------------- --------------
<S> <C>
Liberty Bank and Trust Co. of Tulsa, N.A. ............................... 45.06%(b)
P.O. Box 25848
Oklahoma City, OK 73125
First Trust/VAR & Co..................................................... 19.67%
180 E. 5th Street
St. Paul, MN 55101
Huntington Capital Corp.................................................. 17.05%
41 S. High St., 9th Floor
Columbus, Ohio 43287
The Bank of New York..................................................... 6.25%
4 Fisher Lane
White Plains, NY 10603
</TABLE>
RESOURCE CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY(a)
---------------- --------------
<S> <C>
Corestates Capital Markets............................................... 63.59%(b)
1345 Chestnut Street
Philadelphia, PA 19101
Mellon Bank.............................................................. 35.27%(b)
Three Mellon Center, Room 3840
Pittsburgh, PA 15259-0001
</TABLE>
- ---------------
(a) The Trust 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.
12
<PAGE> 212
TREASURY TAXADVANTAGE PORTFOLIO
To the best of the knowledge of the Trust, 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 December 1, 1996, 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>
First Trust/VAR & Co. ............................................. 33.57%(b)
180 East 5th Street
St. Paul, MN 55101
Peoples Two Ten Company............................................ 19.12%
c/o Summit Bank
Trust Operations, 7th Floor
P.O. Box 821
Hackensack, NJ 07602
Boatmen's Trust Company............................................ 11.22%
100 North Broadway
St. Louis, MO 63101
Liberty Registration Co. of Oklahoma............................... 10.02%
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>
First National Bank of Chicago..................................... 61.27%(b)
Mail Suite 0126
Chicago, IL 60670-0126
The Bank of New York............................................... 19.76%
4 Fisher Lane
White Plains, NY 10603
Huntington Capital Corp............................................ 18.82%
41 S. High St., 9th Floor
Columbus, OH 43287
</TABLE>
- ---------------
(a) The Trust 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.
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 Trust, as of December 1, 1996, the
trustees and officers of the Trust beneficially owned less than 1% of each class
of the Trust's outstanding shares.
PURCHASES AND REDEMPTIONS
NET ASSET VALUE DETERMINATION
Shares of the Portfolio are sold at the net asset value of such shares.
Shareholders may at any time redeem all or a portion of their shares at net
asset value. The investor's price for purchases and redemptions will be the net
asset value next determined following the receipt of an order to purchase or a
request to redeem shares.
The valuation of the portfolio instruments based upon their amortized cost and
the concomitant maintenance of the net asset value per share of $1.00 for the
Portfolio is permitted in accordance with applicable rules and regulations of
the SEC, including Rule 2a-7, which require the Trust 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.
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The Board of Trustees is required to establish procedures designed to
stabilize, to the extent reasonably practicable, the Trust's price per share at
$1.00 for the Portfolio as computed for the purpose of sales and redemptions.
Such procedures include review of the Portfolio's portfolio holdings by the
Board of Trustees, at such intervals as they may deem appropriate, to determine
whether the net asset value calculated by using available market quotations or
other reputable sources for the Portfolio deviates from $1.00 per share and, if
so, whether such deviation may result in material dilution or is otherwise
unfair to existing holders of the Portfolio's shares. In the event the Board of
Trustees determines that such a deviation exists for the Portfolio, it will take
such corrective action as the Board of Trustees deems necessary and appropriate
with respect to the Portfolio, including the sale of portfolio instruments prior
to maturity to realize capital gains or losses or to shorten the average
portfolio maturity; the withholding of dividends; redemption of shares in kind;
or the establishment of a net asset value per share by using available market
quotations.
DISTRIBUTION AGREEMENT
The Trust 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 each class of the Portfolio. The address of FMC is 11 Greenway Plaza,
Suite 1919, Houston, Texas 77046-1173. See "General Information About the
Trust -- Trustees and Officers" and "-- Investment Advisor" for information as
to the affiliation of certain trustees and officers of the Trust with FMC, AIM
and AIM Management.
The Distribution Agreement provides that FMC has the exclusive right to
distribute shares of each class of the Portfolio 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 Trust and
the costs of preparing and distributing any other supplemental sales literature.
FMC has not undertaken to sell any specified number of shares of the Portfolio.
FMC does not receive any fees with respect to the shares of the Institutional
Class pursuant to the Distribution Agreement.
The Distribution Agreement will remain in effect until June 30, 1997, and it
will continue in effect from year to year thereafter only if such continuation
is specifically approved at least annually by the Trust'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
Trust and FMC, with terms substantially the same as those of the Distribution
Agreement, was in effect through October 15, 1993. The Trust or FMC may
terminate the Distribution Agreement on sixty 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 Trust has adopted a Master Distribution Plan (the "Plan") pursuant to Rule
12b-1 under the 1940 Act. Pursuant to the Plan, the Trust 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 Private Investment Class of the
Portfolio. These services may include among other things: (i) answering customer
inquiries regarding the shares of the class and the Portfolio; (ii) assisting
customers in changing dividend options, account designations and addresses;
(iii) performing sub-accounting; (iv) establishing and maintaining shareholder
accounts and records; (v) processing purchase and redemption transactions; (vi)
automatic investment in the shares of the class of customer cash account
balances; (vii) providing periodic statements showing a customer's account
balance and integrating such statements with those of other transactions and
balances in the customer's other accounts serviced by such firm; (viii)
arranging for bank wires; and (ix) such other services as the Trust may request
on behalf of the shares of the class, to the extent such firms are permitted to
engage in such services by applicable statute, rule or regulation. The Plan may
only be used for the purposes specified above and as stated in the Plan.
Expenses may not be carried over from year to year.
For the fiscal year ended August 31, 1996, FMC received compensation pursuant
to the Plan in the amount of $52,922, or an amount equal to 0.25% of the average
daily net assets of the Private Investment Class. With respect to the Private
Investment Class, all of such amount was paid to dealers and financial
institutions and none of such compensation 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 Trust, owns shares
of AIM Management and Robert H. Graham, a Trustee and President of the Trust,
also owns shares of AIM Management.
PERFORMANCE INFORMATION
As stated under the caption "Yield Information" in the Prospectus, yield
information for the shares of each class of the Portfolio may be obtained by
calling the Trust at (800) 659-1005. The current yield quoted will be the net
average annualized yield
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for an identified period, such as seven days or a month. Current yield will be
computed by assuming that an account was established with a single share (the
"Single Share Account") on the first day of the period. To arrive at the quoted
yield, the net change in the value of that Single Share Account for the period
(which would include dividends accrued with respect to the share, and dividends
declared on shares purchased with dividends accrued and paid, if any, but would
not include realized gains and losses or unrealized appreciation or
depreciation) will be multiplied by 365 and then divided by the number of days
in the period, with the resulting figure carried to the nearest hundredth of one
percent. The Trust 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, 1996, the current yield and the
effective yield (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) for the Institutional Class were 5.04% and 5.16% and for the Private
Investment Class were 4.79% and 4.90%, respectively. These performance numbers
are quoted for illustration purposes only. Performance numbers for any other
seven-day period may be substantially different from those quoted above.
The Trust may compare the performance of a class or the performance of
securities in which it may invest to:
- IBC/Donoghue's Money Fund Averages, which are average yields of
various types of money market funds that include the effect of compounding
distributions;
- 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;
- yields on other money market securities or averages of other money
market securities as reported by the Federal Reserve Bulletin, by TeleRate,
a financial information network, or by Bloomberg, a financial information
firm; and
- other fixed-income investments such as Certificates of Deposit
(CDs).
The principal value and interest rate of CDs and money market securities are
fixed at the time of purchase whereas a class' yield will fluctuate. Unlike some
CDs and certain other money market securities, money market mutual funds are not
insured by the FDIC. Investors should give consideration to the quality and
maturity of the Portfolio's securities when comparing investment alternatives.
The Trust may reference the growth and variety of money market mutual funds
and AIM's innovation and participation in the industry.
SUSPENSION OF REDEMPTION RIGHTS
The right of redemption may be suspended or the date of payment upon
redemption may be postponed when (a) trading on the New York Stock Exchange is
restricted, as determined by applicable rules and regulations of the SEC, (b)
the New York Stock Exchange is closed for other than customary weekend or
holiday closings, (c) the SEC has by order permitted such suspension, or (d) an
emergency as determined by the SEC exists making disposition of portfolio
securities or the valuation of the net assets of the Portfolio not reasonably
practicable.
INVESTMENT PROGRAM AND RESTRICTIONS
INVESTMENT PROGRAM
The Portfolio seeks to achieve its objective by investing in high grade money
market instruments. The money market instruments in which the Portfolio invests
are considered to carry very little risk and accordingly may not have as high a
yield as that available on money market instruments of lesser quality. The
Portfolio invests exclusively in direct obligations of the U.S. Treasury, which
include Treasury bills, notes and bonds.
ELIGIBLE SECURITIES
The Portfolio limits its investments to direct U.S. Treasury obligations.
These securities are "Eligible Securities" as defined in Rule 2a-7. Rule 2a-7
limits securities that may be purchased by money market funds to "Eligible
Securities," and defines an "Eligible Security" as follows:
(i) a security with a remaining maturity of 397 calendar days or
less that has received a short-term rating (or that has been issued by
an issuer that is rated with respect to a class of short-term debt
obligations, or any debt obli-
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gation within that class, that is comparable in priority and security
with the security) by the Requisite NRSROs1 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 had a remaining maturity of
more than 397 calendar days 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 debt obligations (or any within
that class) that is now comparable in priority and security with
the security, in one of the two highest rating categories (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)(9)(i) or (ii) of
this section, as determined by the money market fund's board of
trustees; provided, however, that:
(A) the board of trustees may base its determination that a
Standby Commitment that is not a Demand Feature 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 had a remaining
maturity of more than 397 calendar days but that has a remaining
maturity of 397 calendar days or less and that is an unrated
security is not an Eligible Security if the security has received a
long-term rating from any NRSRO that is not within the NRSRO's
three highest long-term rating categories (within which there may
be sub-categories or gradations indicating relative standing).
The securities purchased by the Portfolio, which are limited to those issued
by the U.S. Treasury, are considered to be in the highest ratings category for
short-term debt obligations.
INVESTMENT RESTRICTIONS
As a matter of fundamental policy which may not be changed without a majority
vote of shareholders of the Portfolio (as that term is defined under "General
Information about the Trust -- The Trust and its Shares"), the Portfolio may
not:
(1) concentrate more than 25% of the value of its total assets in the
securities of one or more issuers conducting their principal business
activities in the same industry, provided that there is no limitation with
respect to investments in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and bank instruments, such as
CDs, bankers' acceptances, time deposits and bank repurchase agreements;
(2) borrow money or issue senior securities except (a) for temporary
or emergency purposes (e.g., in order to facilitate the orderly sale of
portfolio securities or to accommodate abnormally heavy redemption
requests), the Portfolio may borrow money from banks or obtain funds by
entering into reverse repurchase agreements, and (b) to the extent that
entering into commitments to purchase securities in accordance with the
Portfolio's investment program may be considered the issuance of senior
securities, provided that the Portfolio will not purchase portfolio
securities while borrowings in excess of 5% of its total assets are
outstanding;
(3) 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;
(4) make loans of money or securities other than (a) through the
purchase of debt securities in accordance with the Portfolio's investment
program, (b) by entering into repurchase agreements and (c) by lending
portfolio securities to the extent permitted by law or regulation;
(5) underwrite securities issued by any other person, except to the
extent that the purchase of securities and the later disposition of such
securities in accordance with the Portfolio's investment program may be
deemed an underwriting;
- ---------------
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 class of debt obligations of an issuer
at the time the fund purchases or rolls over the security, that NRSRO. At
present the NRSROs are: Standard & Poor's Corp., ("S&P"), Moody's Investors
Service, Inc., ("Moody's"), Duff and Phelps, Inc., Fitch Investors Services,
Inc. and, with respect to certain types of securities, IBCA Limited and its
affiliate, IBCA Inc. Subcategories or gradations in ratings (such as a "+" or
"-") do not count as rating categories.
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(6) invest in real estate, except that the Portfolio may purchase and
sell securities secured by real estate or interests therein or issued by
issuers which invest in real estate or interests therein;
(7) purchase or sell commodities or commodity futures contracts,
purchase securities on margin, make short sales or invest in puts or calls;
(8) invest in any obligation not payable as to principal and interest
in United States currency; or
(9) acquire for value the securities of any other investment company,
except in connection with a merger, consolidation, reorganization or
acquisition of assets.
On December 11, 1996, the Board of Trustees of the Trust approved, subject to
shareholder approval, the elimination of Investment Restriction No. (9) of the
Trust, indicated above. Shareholders of the Trust will be asked to approve the
change at an annual meeting of shareholders to be held on February 7, 1997. In
the event shareholders approve the proposed change, Investment Restriction No.
(9) will no longer apply. If approved, the change will become effective as of
March 1, 1997.
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.
PORTFOLIO TRANSACTIONS
AIM is responsible for decisions to buy and sell securities for the Portfolio,
broker-dealer selection and negotiation of commission rates. Since purchases and
sales of portfolio securities by the Portfolio are usually principal
transactions, the Portfolio incurs little or no brokerage commissions. Portfolio
securities are normally purchased directly from the issuer or from a market
maker for the securities. The purchase price paid to dealers serving as market
makers may include a spread between the bid and asked prices.
The Portfolio does not seek to profit from short-term trading, and will
generally (but not always) hold portfolio securities to maturity, but AIM may
seek to enhance the yield of the Portfolio by taking advantage of yield
disparities or other factors that occur in the money markets. For example,
market conditions frequently result in similar securities trading at different
prices. AIM may dispose of any portfolio security prior to its maturity if such
disposition and reinvestment of proceeds are expected to enhance yield
consistent with AIM's judgment as to desirable portfolio maturity structure or
if such disposition is believed to be advisable due to other circumstances or
conditions. The amortized cost method of valuing portfolio securities requires
that the Portfolio maintain an average weighted portfolio maturity of ninety
days or less. Thus, there is likely to be relatively high portfolio turnover,
but since brokerage commissions are not normally paid on money market
instruments, the high rate of portfolio turnover is not expected to have a
material effect on the net income or expenses of the Portfolio.
AIM's primary consideration in effecting a security transaction is to obtain
the best net price and the most favorable execution of the order. To the extent
that the execution and prices offered by more than one dealer are comparable,
AIM may, in its discretion, effect transactions with dealers that furnish
statistical, research or other information or services which are deemed by AIM
to be beneficial to the Portfolio's investment program. Certain research
services furnished by dealers may be useful to AIM with respect to clients other
than the Portfolio. Similarly, any research services received by AIM through
placement of portfolio transactions of other clients may be of value to AIM in
fulfilling its obligations to the Portfolio. AIM is of the opinion that the
material received is beneficial in supplementing AIM's research and analysis,
and, therefore, it may benefit the Portfolio by improving the quality of AIM's
investment advice. The advisory fees paid by the Portfolio are not reduced
because AIM receives such services.
From time to time, the Trust 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 AIM Capital have been adopted by
the Boards of Directors/Trustees of the various AIM Funds, including the Trust.
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 been
construed to prohibit the Trust from purchasing securities or instruments from,
or selling securities or instruments to, any holder of 5% or more of the voting
securities of any
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investment company managed or advised by AIM. The Trust has obtained an order of
exemption from the SEC which permits the Trust to engage in certain transactions
with such 5% holder, if the Trust complies with conditions and procedures
designed to ensure that such transactions are executed at fair market value and
present no conflicts of interest.
AIM and its affiliates manage several other investment accounts, some of which
may have objectives similar to the Portfolio's. It is possible that at times
identical securities will be acceptable for one or more of such investment
accounts. However, the position of each account in the securities of the same
issue may vary and the length of time that each account may choose to hold its
investment in the securities of the same issue may likewise vary. The timing and
amount of purchase by each account will also be determined by its cash position.
If the purchase or sale of securities is consistent with the investment policies
of the Portfolio and one or more of these accounts and is considered at or about
the same time, transactions in such securities will be allocated in good faith
among such accounts, in accordance with applicable laws and regulations, in
order to obtain the best net price and most favorable execution. The allocation
and combination of simultaneous securities purchases on behalf of the Portfolio
will be made in the same way that such purchases are allocated among or combined
with those of other AIM accounts. Simultaneous transactions could adversely
affect the ability of the Portfolio to obtain or dispose of the full amount of a
security which it seeks to purchase or sell.
Under the 1940 Act, persons affiliated with the Trust 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 Trust from purchasing a security being
publicly underwritten by a syndicate of which persons affiliated with the Trust
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 Trust 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 Trust's Board of Trustees and
any such purchases are reviewed at least quarterly by the Trust'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
Trust was fair and reasonable in relation to the fees charged by others
performing similar services. During the fiscal year ended August 31, 1996, 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 tax planning.
QUALIFICATION AS A REGULATED INVESTMENT COMPANY
The Portfolio has elected to be taxed as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As a
regulated investment company, the Portfolio is not subject to federal income tax
on the portion of its net investment income (i.e., taxable interest, dividends
and other taxable ordinary income, net of expenses) and capital gain net income
(i.e., the excess of capital gains over capital losses) that it distributes to
shareholders, provided that it distributes at least 90% of its investment
company taxable income (i.e., net investment income and the excess of net
short-term capital gain over net long-term capital loss) for the taxable year
(the "Distribution Requirement"), and satisfies certain other requirements of
the Code that are described below. Distributions by the Portfolio made during
the taxable year or, under specified circumstances, within twelve months after
the close of the taxable year, will be considered distributions of income and
gains for the taxable year and can therefore satisfy the Distribution
Requirement.
In addition to satisfying the Distribution Requirement, a regulated investment
company must (1) derive at least 90% of its gross income from dividends,
interest, certain payments with respect to securities loans, gains from the sale
or other disposition of stock or securities or foreign currencies (to the extent
such currency gains are directly related to the regulated investment company's
principal business of investing in stock or securities) and other income
(including but not limited to gains from options, futures or forward contracts)
derived with respect to its business of investing in such stock, securities or
currencies (the "Income Requirement"); and (2) derive less than 30% of its gross
income (exclusive of certain gains on designated hedging transactions that are
offset by realized or unrealized losses on offsetting positions) from the sale
or other disposition of stock, securities or foreign currencies (or 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 prin-
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cipal business of investing in stock or securities (or options or futures
thereon). Because of the Short-Short Gain Test, the Portfolio may have to limit
the sale of appreciated securities that it has held for less than three months.
However, the Short-Short Gain Test will not prevent the Portfolio from disposing
of investments at a loss, since the recognition of a loss before the expiration
of the three-month holding period is disregarded. Interest (including original
issue discount) received by the Portfolio at maturity or upon the disposition of
a security held for less than three months will not be treated as gross income
derived from the sale or other disposition of a security within the meaning of
the Short-Short Gain Test. However, income that is attributable to realized
market appreciation will be treated as gross income from the sale or other
disposition of securities for this purpose.
In addition to satisfying the requirements described above, the Portfolio must
satisfy an asset diversification test in order to qualify for tax purposes as a
regulated investment company. Under this test, at the close of each quarter of
the Portfolio's taxable year, at least 50% of the value of the Portfolio'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 the Portfolio has not invested more than 5% of the value of
the Portfolio's total assets in securities of such issuer and as to which the
Portfolio 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 the Portfolio controls and which are engaged in the same or
similar trades or businesses.
If for any taxable year the Portfolio does not qualify as a regulated
investment company, all of its taxable income (including its net capital gain)
will be subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable as
ordinary dividends to the extent of the Portfolio's current and accumulated
earnings and profits. Such distributions generally will be eligible for the
dividends received deduction in the case of corporate shareholders.
EXCISE TAX ON REGULATED INVESTMENT COMPANIES
A 4% non-deductible excise tax is imposed on a regulated investment company
that fails to distribute in each calendar year an amount equal to 98% of
ordinary taxable income for the calendar year and 98% of capital gain net income
for the one-year period ended on October 31 of such calendar year (or, at the
election of a regulated investment company having a taxable year ending November
30 or December 31, for its taxable year (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,
distributions declared in October, November or December of any year and payable
to shareholders of record on a specified date in such a month will be deemed to
have been received by the shareholders (and made by the Portfolio) on December
31 of such calendar year if such distributions are actually made 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 ordinary income dividends and capital gain dividends, and
the proceeds of redemption of shares, paid to any shareholder (1) who has
provided either an incorrect tax identification number or no number at all, (2)
who is subject to backup withholding by the Internal Revenue Service for failure
to report the receipt of interest or dividend income properly, or (3) who has
failed to certify to the Portfolio that it is not subject to backup withholding
or that it is a corporation or other "exempt recipient."
SALE OR REDEMPTION OF SHARES
A shareholder will recognize gain or loss on the sale or redemption of shares
of a 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
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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 a class will be considered capital gain or loss and will
be long-term capital gain or loss if the shares were held for longer than one
year. However, any capital loss arising from the sale or redemption of shares
held for six months or less will be treated as a long-term capital loss to the
extent of the amount of capital gain dividends received on such shares. For this
purpose, the special holding period rules of Code Section 246(c)(3) and (4)
generally will apply in determining the holding period of shares.
FOREIGN SHAREHOLDERS
Taxation of a shareholder who, as to the United States, is a nonresident alien
individual, foreign trust or estate, foreign corporation, or foreign partnership
("foreign shareholder"), depends on whether the income from the Portfolio is
"effectively connected" with a U.S. trade or business carried on by such
shareholder.
If the income from the Portfolio is not effectively connected with a U.S.
trade or business carried on by a foreign shareholder, dividends and
distributions (other than capital gains dividends) will be subject to U.S.
withholding tax at the rate of 30% (or lower treaty rate) upon the gross amount
of the dividend or distribution. Such a foreign shareholder would generally be
exempt from U.S. federal income tax on gains realized on the sale of shares of a
class, capital gain dividends and amounts retained by the Portfolio that are
designated as undistributed capital gains.
If the income from the Portfolio is effectively connected with a U.S. trade or
business carried on by a foreign shareholder, then ordinary income dividends,
capital gain dividends and any gains realized upon the sale of shares of the
Portfolio will be subject to U.S. federal income tax at the rates applicable to
U.S. citizens or domestic corporations.
In the case of foreign 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; STATE AND 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 December
30, 1996. Future legislative or administrative changes or court decisions may
significantly change the conclusions expressed herein, and any such changes or
decisions may have a retroactive effect with respect to the transactions
contemplated herein.
Rules of state and local taxation of ordinary income dividends and capital
gain dividends from regulated investment companies often differ from the rules
for U.S. federal income taxation described above. It is anticipated that the
ordinary income dividends paid by the Portfolio from net investment income will
be exempt from state and local personal and, in some cases, corporate income
taxes in many states. Shareholders are urged to consult their tax advisers as to
the consequences of these and other state and local tax rules affecting their
investment in the Portfolio.
20
<PAGE> 220
FINANCIAL STATEMENTS
FS-1
<PAGE> 221
TREASURY TAXADVANTAGE PORTFOLIO
INSTITUTIONAL CLASS
SCHEDULE OF INVESTMENTS
August 31, 1996
<TABLE>
<CAPTION>
MATURITY PAR (000) VALUE
<S> <C> <C> <C>
U.S. TREASURY SECURITIES - 99.76%
U.S. TREASURY BILLS(a) - 69.58%
5.215% 09/17/96 $ 49,680 $49,579,246
- -----------------------------------------------------------------
5.05% 09/19/96 2,984 2,976,465
- -----------------------------------------------------------------
5.04% 09/19/96 7,000 6,982,360
- -----------------------------------------------------------------
5.045% 09/19/96 4,670 4,658,220
- -----------------------------------------------------------------
5.065% 09/26/96 12,800 12,754,978
- -----------------------------------------------------------------
5.095% 09/26/96 9,765 9,730,450
- -----------------------------------------------------------------
5.06% 09/26/96 22,915 22,834,479
- -----------------------------------------------------------------
5.145% 10/03/96 44,995 44,789,224
- -----------------------------------------------------------------
5.10% 10/03/96 1,405 1,398,631
- -----------------------------------------------------------------
5.095% 10/03/96 540 537,555
- -----------------------------------------------------------------
5.115% 10/03/96 1,820 1,811,725
- -----------------------------------------------------------------
5.095% 10/03/96 3,000 2,986,413
- -----------------------------------------------------------------
5.155% 10/24/96 19,525 19,376,819
- -----------------------------------------------------------------
5.175% 10/24/96 20,025 19,872,434
- -----------------------------------------------------------------
5.18% 10/24/96 2,380 2,361,850
- -----------------------------------------------------------------
5.01% 11/07/96 23,000 22,785,544
- -----------------------------------------------------------------
4.975% 11/07/96 4,200 4,161,112
- -----------------------------------------------------------------
5.00% 11/07/96 11,185 11,080,917
- -----------------------------------------------------------------
4.995% 11/07/96 5,200 5,151,660
- -----------------------------------------------------------------
5.02% 11/14/96 13,000 12,865,854
- -----------------------------------------------------------------
5.04% 11/14/96 5,300 5,245,092
- -----------------------------------------------------------------
5.06% 11/14/96 8,000 7,916,791
- -----------------------------------------------------------------
5.01% 11/21/96 12,250 12,111,912
- -----------------------------------------------------------------
5.02% 11/21/96 4,700 4,646,914
- -----------------------------------------------------------------
5.03% 11/21/96 14,415 14,251,858
- -----------------------------------------------------------------
5.06% 11/21/96 2,200 2,174,953
- -----------------------------------------------------------------
5.095% 11/29/96 13,235 13,068,292
- -----------------------------------------------------------------
318,111,748
- -----------------------------------------------------------------
</TABLE>
FS-2
<PAGE> 222
<TABLE>
<CAPTION>
MATURITY PAR (000) VALUE
<S> <C> <C> <C>
US. TREASURY SECURITIES - (continued)
U.S. TREASURY NOTES - 30.18%
8.00% 10/15/96 $42,475 $ 42,605,929
- ----------------------------------------------------------------------------
6.875% 10/31/96 40,500 40,589,317
- ----------------------------------------------------------------------------
7.25% 11/15/96 24,505 24,593,717
- ----------------------------------------------------------------------------
7.50% 12/31/96 30,000 30,209,989
- ----------------------------------------------------------------------------
137,998,952
- ----------------------------------------------------------------------------
Total U.S. Treasury Securities 456,110,700
- ----------------------------------------------------------------------------
TOTAL INVESTMENTS -- 99.76% 456,110,700(b)
- ----------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES -- 0.24% 1,085,450
- ----------------------------------------------------------------------------
NET ASSETS -- 100.00% $457,196,150
============================================================================
</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) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
FS-3
<PAGE> 223
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments, at value (amortized cost) $456,110,700
- ----------------------------------------------------------------------
Cash 4,084
- ----------------------------------------------------------------------
RECEIVABLES FOR:
Interest 3,140,128
- ----------------------------------------------------------------------
Reimbursement from advisor 4,800
- ----------------------------------------------------------------------
Investments sold 49,603,992
- ----------------------------------------------------------------------
Investment for deferred compensation plan 13,600
- ----------------------------------------------------------------------
Other assets 11,168
- ----------------------------------------------------------------------
Total assets 508,888,472
- ----------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 49,579,246
- ----------------------------------------------------------------------
Dividends 1,966,957
- ----------------------------------------------------------------------
Deferred compensation 13,600
- ----------------------------------------------------------------------
Accrued advisory fees 55,963
- ----------------------------------------------------------------------
Accrued distribution fees 10,833
- ----------------------------------------------------------------------
Accrued transfer agent fees 3,541
- ----------------------------------------------------------------------
Accrued trustees' fees 1,297
- ----------------------------------------------------------------------
Accrued administrative services fees 2,545
- ----------------------------------------------------------------------
Accrued operating expenses 58,340
- ----------------------------------------------------------------------
Total liabilities 51,692,322
- ----------------------------------------------------------------------
NET ASSETS $457,196,150
======================================================================
NET ASSETS:
Institutional Class $407,218,040
======================================================================
Private Investment Class $ 49,978,110
======================================================================
Shares of beneficial interest, $.01 par value per share:
Institutional Class 407,107,656
======================================================================
Private Investment Class 49,964,561
======================================================================
NET ASSET VALUE PER SHARE:
Net asset value, offering and redemption price per share $ 1.00
======================================================================
</TABLE>
See Notes to Financial Statements.
FS-4
<PAGE> 224
STATEMENT OF OPERATIONS
For the year ended August 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $23,434,439
- --------------------------------------------------------------------------
EXPENSES:
Advisory fees 791,921
- --------------------------------------------------------------------------
Custodian fees 30,033
- --------------------------------------------------------------------------
Administrative services fees 30,056
- --------------------------------------------------------------------------
Trustees' fees and expenses 9,082
- --------------------------------------------------------------------------
Transfer agent fees 34,495
- --------------------------------------------------------------------------
Distribution fees (Note 2) 52,922
- --------------------------------------------------------------------------
Other 140,352
- --------------------------------------------------------------------------
Total expenses 1,088,861
- --------------------------------------------------------------------------
Less expenses assumed by advisor (141,726)
- --------------------------------------------------------------------------
Net expenses 947,135
- --------------------------------------------------------------------------
Net investment income 22,487,304
- --------------------------------------------------------------------------
Net realized gain on sales of investments 55,902
- --------------------------------------------------------------------------
Net increase in net assets resulting from operations $22,543,206
==========================================================================
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
For the years ended August 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 22,487,304 $ 20,447,888
- ----------------------------------------------------------------------------
Net realized gain on sales of investments 55,902 24,806
- ----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 22,543,206 20,472,694
- ----------------------------------------------------------------------------
Distributions to shareholders from net
investment income (22,487,304) (20,447,888)
- ----------------------------------------------------------------------------
Distributions to shareholders from net realized
gains on investments -- (12,244)
- ----------------------------------------------------------------------------
Share transactions-net 57,341,150 (4,095,169)
- ----------------------------------------------------------------------------
Net increase (decrease) in net assets 57,397,052 (4,082,607)
- ----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 399,799,098 403,881,705
- ----------------------------------------------------------------------------
End of period $457,196,150 $399,799,098
============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $457,072,217 $399,731,067
- ----------------------------------------------------------------------------
Undistributed net realized gain on sales of
investments 123,933 68,031
- ----------------------------------------------------------------------------
$457,196,150 $399,799,098
============================================================================
</TABLE>
See Notes to Financial Statements.
FS-5
<PAGE> 225
NOTES TO FINANCIAL STATEMENTS
August 31, 1996
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
Short-Term Investments Trust (the "Fund") is registered under the Investment
Company Act of 1940, as amended, as an open-end series, diversified management
investment company. The Fund is organized as a Delaware business trust
consisting of two different portfolios, each of which offers separate series of
shares: the Treasury Portfolio and the Treasury TaxAdvantage Portfolio, with
the assets, liabilities and operations of each portfolio accounted for
separately. Information presented in these financial statements pertains only
to the Treasury TaxAdvantage Portfolio (the "Portfolio"). The Portfolio
consists of two different classes of shares: the Institutional Class and the
Private Investment Class. Matters affecting each class are voted on exclusively
by such shareholders. The 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 following is a summary of the significant accounting policies followed by
the Portfolio in the preparation of its financial statements. The preparation
of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of these financial
statements and the reported amount of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
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 between them.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master advisory agreement, AIM
receives a monthly fee with respect to the Portfolio calculated by applying a
monthly rate, based upon the following annual rates, to the average daily net
assets of the Portfolio:
<TABLE>
<CAPTION>
Net Assets RATE
- --------------------------------------------------------------------------
<S> <C>
First $250 million 0.20%
- --------------------------------------------------------------------------
Over $250 million to $500 million 0.15%
- --------------------------------------------------------------------------
Over $500 million 0.10%
- --------------------------------------------------------------------------
</TABLE>
The Fund has entered into a master distribution agreement with Fund Management
Company ("FMC") for the distribution of shares of the Institutional Class and
the Private Investment Class. The Company has also adopted a distribution plan
(the "Plan") pursuant to Rule 12b-1 under the 1940 Act with respect to the
Private Investment Class. The Plan provides that the Private Investment Class
may pay up to a 0.50% maximum annual rate of the Private Investment Class'
average daily net assets. Of this amount, the Fund may pay an asset-based sales
charge to FMC and the Portfolio may pay a service fee of 0.25% of the average
daily net assets of the Private Investment Class to selected 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. Any amounts not paid as a service fee under such Plan
would constitute an asset-based sales charge. The Plan also
FS-6
<PAGE> 226
imposes a cap on the total amount of sales charges, including asset-based sales
charges, that may be paid by the Portfolio with respect to the Private
Investment Class. During the year ended August 31, 1996, the Private Investment
Class paid $52,922 as compensation under the Plan.
AIM will, if necessary, reduce its fee for any fiscal year to the extent
required so that the amount of ordinary expenses of the Portfolio (excluding
interest, taxes, brokerage commissions and extraordinary expenses) paid or
incurred by the Portfolio for such fiscal year does not exceed the applicable
expense limitations imposed by the state securities regulations in any state in
which the Portfolio's shares are qualified for sale. During the year ended
August 31, 1996, AIM voluntarily waived advisory fees of $116,126 on the
Portfolio and assumed expenses of $25,600.
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, 1996,
the Portfolio reimbursed AIM $30,056 for such services. During the year ended
August 31, 1996, the Portfolio paid A I M Institutional Fund Services, Inc.
("AIFS") $33,534 pursuant to a shareholder and transfer agency services
agreement.
Certain officers and trustees of the Fund are officers and directors of AIM,
FMC and AIFS.
The Portfolio paid legal fees of $3,900 for services rendered by Kramer,
Levin, Naftalis & Frankel as counsel to the Board of Trustees. A member of that
firm is a trustee of the Fund.
NOTE 3-TRUSTEES' FEES
Trustees' fees represent remuneration paid or accrued to each trustee who is
not an "interested person" of AIM. The Fund may invest trustees' fees, if so
elected by a trustee, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 4-SHARE INFORMATION
Changes in shares outstanding for the years ended August 31, 1996 and 1995 were
as follows:
<TABLE>
<CAPTION>
1996 1995
------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Sold:
Institutional Class 1,931,081,349 $ 1,931,081,349 1,566,228,552 $ 1,566,228,552
- -----------------------------------------------------------------------------------------
Private Investment
Class* 173,175,235 173,175,235 29,762,798 29,762,798
- -----------------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Institutional Class 279,901 279,901 255,484 255,484
- -----------------------------------------------------------------------------------------
Private Investment
Class* 215,983 215,983 211,779 211,779
- -----------------------------------------------------------------------------------------
Reacquired:
Institutional Class (1,918,562,346) (1,918,562,346) (1,576,001,520) (1,576,001,520)
- -----------------------------------------------------------------------------------------
Private Investment
Class* (128,848,972) (128,848,972) (24,552,262) (24,552,262)
- -----------------------------------------------------------------------------------------
Net increase (decrease) 57,341,150 $ 57,341,150 (4,095,169) $ (4,095,169)
=========================================================================================
</TABLE>
* The Private Investment Class commenced operations on December 21, 1994.
FS-7
<PAGE> 227
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share outstanding of
the Institutional Class during each of the years in the six-year period ended
August 31, 1996 and the period August 17, 1990 (date operations commenced)
through August 31, 1990.
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------- -------- -------- -------- -------- -------- -------- -------
Income from investment
operations:
Net investment income 0.05 0.05 0.03 0.03 0.04 0.07 0.003
- ----------------------- -------- -------- -------- -------- -------- -------- -------
Less distributions:
Dividends from net
investment income (0.05) (0.05) (0.03) (0.03) (0.04) (0.07) (0.003)
- ----------------------- -------- -------- -------- -------- -------- -------- -------
Net asset value, end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======================= ======== ======== ======== ======== ======== ======== =======
Total return 5.19% 5.35% 3.29% 2.96% 4.32% 6.70% 7.79%(a)
======================= ======== ======== ======== ======== ======== ======== =======
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $407,218 $394,376 $403,882 $434,693 $573,283 $403,846 $16,201
======================= ======== ======== ======== ======== ======== ======== =======
Ratio of expenses to
average net assets 0.20%(b)(c) 0.20%(c) 0.20%(c) 0.20% 0.17%(e) 0.14%(e) 0.10%(e)
======================= ======== ======== ======== ======== ======== ======== =======
Ratio of net investment
income to average net
assets 5.06%(b)(d) 5.21%(d) 3.23%(d) 2.93% 4.16%(f) 6.16%(f) 7.74%(f)
======================= ======== ======== ======== ======== ======== ======== =======
</TABLE>
(a) Annualized.
(b) Ratios are based on average net assets of $424,432,042.
(c) Ratios of expenses to average net assets prior to waiver of advisory fees
were 0.23% for the periods 1996-1994, respectively. Ratios are annualized
for periods less than one year.
(d) Ratios of net investment income to average net assets prior to waiver of
advisory fees were 5.04%, 5.18% and 3.20% for the periods 1996-1994,
respectively. Ratios are annualized for periods less than one year.
(e) Ratios of expenses to average net assets prior to waiver of advisory fees
and/or expense reimbursements were 0.21%, 0.25% and 1.24% for the periods
1992-1990, respectively. Ratios are annualized for periods less than one
year.
(f) Ratios of net investment income to average net assets prior to waiver of
advisory fees and/or expense reimbursements were 4.13%, 6.04% and 6.60% for
the periods 1992-1990, respectively. Ratios are annualized for periods less
than one year.
FS-8
<PAGE> 228
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders
Short-Term Investments Trust:
We have audited the accompanying statement of assets and liabilities of the
Treasury TaxAdvantage Portfolio (a series portfolio of Short-Term Investments
Trust), including the schedule of investments, as of August 31, 1996, 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 six-year period then
ended and the period August 17, 1990 (date operations commenced) through August
31, 1990. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
August 31, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Treasury TaxAdvantage Portfolio as of August 31, 1996, 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 six-year period then ended and the period August 17,
1990 (date operations commenced) through August 31, 1990 in conformity with
generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Houston, Texas
October 4, 1996
FS-9
<PAGE> 229
TREASURY TAXADVANTAGE PORTFOLIO
PRIVATE INVESTMENT CLASS
SCHEDULE OF INVESTMENTS
August 31, 1996
<TABLE>
<CAPTION>
MATURITY PAR (000) VALUE
<S> <C> <C> <C>
U.S. TREASURY SECURITIES - 99.76%
U.S. TREASURY BILLS(a) - 69.58%
5.215% 09/17/96 $ 49,680 $49,579,246
- -----------------------------------------------------------------
5.05% 09/19/96 2,984 2,976,465
- -----------------------------------------------------------------
5.04% 09/19/96 7,000 6,982,360
- -----------------------------------------------------------------
5.045% 09/19/96 4,670 4,658,220
- -----------------------------------------------------------------
5.065% 09/26/96 12,800 12,754,978
- -----------------------------------------------------------------
5.095% 09/26/96 9,765 9,730,450
- -----------------------------------------------------------------
5.06% 09/26/96 22,915 22,834,479
- -----------------------------------------------------------------
5.145% 10/03/96 44,995 44,789,224
- -----------------------------------------------------------------
5.10% 10/03/96 1,405 1,398,631
- -----------------------------------------------------------------
5.095% 10/03/96 540 537,555
- -----------------------------------------------------------------
5.115% 10/03/96 1,820 1,811,725
- -----------------------------------------------------------------
5.095% 10/03/96 3,000 2,986,413
- -----------------------------------------------------------------
5.155% 10/24/96 19,525 19,376,819
- -----------------------------------------------------------------
5.175% 10/24/96 20,025 19,872,434
- -----------------------------------------------------------------
5.18% 10/24/96 2,380 2,361,850
- -----------------------------------------------------------------
5.01% 11/07/96 23,000 22,785,544
- -----------------------------------------------------------------
4.975% 11/07/96 4,200 4,161,112
- -----------------------------------------------------------------
5.00% 11/07/96 11,185 11,080,917
- -----------------------------------------------------------------
4.995% 11/07/96 5,200 5,151,660
- -----------------------------------------------------------------
5.02% 11/14/96 13,000 12,865,854
- -----------------------------------------------------------------
5.04% 11/14/96 5,300 5,245,092
- -----------------------------------------------------------------
5.06% 11/14/96 8,000 7,916,791
- -----------------------------------------------------------------
5.01% 11/21/96 12,250 12,111,912
- -----------------------------------------------------------------
5.02% 11/21/96 4,700 4,646,914
- -----------------------------------------------------------------
5.03% 11/21/96 14,415 14,251,858
- -----------------------------------------------------------------
5.06% 11/21/96 2,200 2,174,953
- -----------------------------------------------------------------
5.095% 11/29/96 13,235 13,068,292
- -----------------------------------------------------------------
318,111,748
- -----------------------------------------------------------------
</TABLE>
FS-10
<PAGE> 230
<TABLE>
<CAPTION>
MATURITY PAR (000) VALUE
<S> <C> <C> <C>
US. TREASURY SECURITIES - (continued)
U.S. TREASURY NOTES - 30.18%
8.00% 10/15/96 $42,475 $ 42,605,929
- ----------------------------------------------------------------------------
6.875% 10/31/96 40,500 40,589,317
- ----------------------------------------------------------------------------
7.25% 11/15/96 24,505 24,593,717
- ----------------------------------------------------------------------------
7.50% 12/31/96 30,000 30,209,989
- ----------------------------------------------------------------------------
137,998,952
- ----------------------------------------------------------------------------
Total U.S. Treasury Securities 456,110,700
- ----------------------------------------------------------------------------
TOTAL INVESTMENTS -- 99.76% 456,110,700(b)
- ----------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES -- 0.24% 1,085,450
- ----------------------------------------------------------------------------
NET ASSETS -- 100.00% $457,196,150
============================================================================
</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) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
FS-11
<PAGE> 231
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments, at value (amortized cost) $456,110,700
- ----------------------------------------------------------------------
Cash 4,084
- ----------------------------------------------------------------------
Receivables For:
Interest 3,140,128
- ----------------------------------------------------------------------
Reimbursement from advisor 4,800
- ----------------------------------------------------------------------
Investments sold 49,603,992
- ----------------------------------------------------------------------
Investment for deferred compensation plan 13,600
- ----------------------------------------------------------------------
Other assets 11,168
- ----------------------------------------------------------------------
Total assets 508,888,472
- ----------------------------------------------------------------------
LIABILITIES:
Payables For:
Investments purchased 49,579,246
- ----------------------------------------------------------------------
Dividends 1,966,957
- ----------------------------------------------------------------------
Deferred compensation 13,600
- ----------------------------------------------------------------------
Accrued advisory fees 55,963
- ----------------------------------------------------------------------
Accrued distribution fees 10,833
- ----------------------------------------------------------------------
Accrued transfer agent fees 3,541
- ----------------------------------------------------------------------
Accrued trustees' fees 1,297
- ----------------------------------------------------------------------
Accrued administrative services fees 2,545
- ----------------------------------------------------------------------
Accrued operating expenses 58,340
- ----------------------------------------------------------------------
Total liabilities 51,692,322
- ----------------------------------------------------------------------
NET ASSETS $457,196,150
======================================================================
NET ASSETS:
Institutional Class $407,218,040
======================================================================
Private Investment Class $ 49,978,110
======================================================================
Shares of beneficial interest, $.01 par value per share:
Institutional Class 407,107,656
======================================================================
Private Investment Class 49,964,561
======================================================================
NET ASSET VALUE PER SHARE:
Net asset value, offering and redemption price per share $ 1.00
======================================================================
</TABLE>
See Notes to Financial Statements.
FS-12
<PAGE> 232
STATEMENT OF OPERATIONS
For the year ended August 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $23,434,439
- ------------------------------------------------------------------
EXPENSES:
Advisory fees 791,921
- ------------------------------------------------------------------
Custodian fees 30,033
- ------------------------------------------------------------------
Administrative services fees 30,056
- ------------------------------------------------------------------
Trustees' fees and expenses 9,082
- ------------------------------------------------------------------
Transfer agent fees 34,495
- ------------------------------------------------------------------
Distribution fees (Note 2) 52,922
- ------------------------------------------------------------------
Other 140,352
- ------------------------------------------------------------------
Total expenses 1,088,861
- ------------------------------------------------------------------
Less expenses assumed by advisor (141,726)
- ------------------------------------------------------------------
Net expenses 947,135
- ------------------------------------------------------------------
Net investment income 22,487,304
- ------------------------------------------------------------------
Net realized gain on sales of investments 55,902
- ------------------------------------------------------------------
Net increase in net assets resulting from operations $22,543,206
==================================================================
</TABLE>
See Notes to Financial Statements.
FS-13
<PAGE> 233
STATEMENT OF CHANGES IN NET ASSETS
For the years ended August 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 22,487,304 $ 20,447,888
- ----------------------------------------------------------------------------
Net realized gain on sales of investments 55,902 24,806
- ----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 22,543,206 20,472,694
- ----------------------------------------------------------------------------
Distributions to shareholders from net
investment income (22,487,304) (20,447,888)
- ----------------------------------------------------------------------------
Distributions to shareholders from net realized
gains on investments -- (12,244)
- ----------------------------------------------------------------------------
Share transactions-net 57,341,150 (4,095,169)
- ----------------------------------------------------------------------------
Net increase (decrease) in net assets 57,397,052 (4,082,607)
- ----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 399,799,098 403,881,705
- ----------------------------------------------------------------------------
End of period $457,196,150 $399,799,098
============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $457,072,217 $399,731,067
- ----------------------------------------------------------------------------
Undistributed net realized gain on sales of
investments 123,933 68,031
- ----------------------------------------------------------------------------
$457,196,150 $399,799,098
============================================================================
</TABLE>
See Notes to Financial Statements.
FS-14
<PAGE> 234
NOTES TO FINANCIAL STATEMENTS
August 31, 1996
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
Short-Term Investments Trust (the "Fund") is registered under the Investment
Company Act of 1940, as amended, as an open-end series, diversified management
investment company. The Fund is organized as a Delaware business trust
consisting of two different portfolios, each of which offers separate series of
shares: the Treasury Portfolio and the Treasury TaxAdvantage Portfolio, with
the assets, liabilities and operations of each portfolio accounted for
separately. Information presented in these financial statements pertains only
to the Treasury TaxAdvantage Portfolio (the "Portfolio"). The Portfolio
consists of two different classes of shares: the Institutional Class and the
Private Investment Class. Matters affecting each class are voted on exclusively
by such shareholders. The 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 following is a summary of the significant accounting policies followed by
the Portfolio in the preparation of its financial statements. The preparation
of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of these financial
statements and the reported amount of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
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 between them.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master advisory agreement, AIM
receives a monthly fee with respect to the Portfolio calculated by applying a
monthly rate, based upon the following annual rates, to the average daily net
assets of the Portfolio:
<TABLE>
<CAPTION>
Net Assets RATE
- ------------------------------------------------------------------------------
<S> <C>
First $250 million 0.20
- ------------------------------------------------------------------------------
Over $250 million to $500 million 0.15
- ------------------------------------------------------------------------------
Over $500 million 0.10
- ------------------------------------------------------------------------------
</TABLE>
The Fund has entered into a master distribution agreement with Fund Management
Company ("FMC") for the distribution of shares of the Institutional Class and
the Private Investment Class. The Company has also adopted a distribution plan
(the "Plan") pursuant to Rule 12b-1 under the 1940 Act with respect to the
Private Investment Class. The Plan provides that the Private Investment Class
may pay up to a 0.50% maximum annual rate of the Private Investment Class'
average daily net assets. Of this amount, the Fund may pay an asset-based sales
charge to FMC and the Portfolio may pay a service fee of 0.25% of the average
daily net assets of the Private Investment Class to selected 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. Any amounts not paid as a service fee under such Plan
would constitute an asset-based sales charge. The Plan also
FS-15
<PAGE> 235
imposes a cap on the total amount of sales charges, including asset-based sales
charges, that may be paid by the Portfolio with respect to the Private
Investment Class. During the year ended August 31, 1996, the Private Investment
Class paid $52,922 as compensation under the Plan.
AIM will, if necessary, reduce its fee for any fiscal year to the extent
required so that the amount of ordinary expenses of the Portfolio (excluding
interest, taxes, brokerage commissions and extraordinary expenses) paid or
incurred by the Portfolio for such fiscal year does not exceed the applicable
expense limitations imposed by the state securities regulations in any state in
which the Portfolio's shares are qualified for sale. During the year ended
August 31, 1996, AIM voluntarily waived advisory fees of $116,126 on the
Portfolio and assumed expenses of $25,600.
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, 1996,
the Portfolio reimbursed AIM $30,056 for such services. During the year ended
August 31, 1996, the Portfolio paid A I M Institutional Fund Services, Inc.
("AIFS") $33,534 pursuant to a shareholder and transfer agency services
agreement.
Certain officers and trustees of the Fund are officers and directors of AIM,
FMC and AIFS.
The Portfolio paid legal fees of $3,900 for services rendered by Kramer,
Levin, Naftalis & Frankel as counsel to the Board of Trustees. A member of that
firm is a trustee of the Fund.
NOTE 3-TRUSTEES' FEES
Trustees' fees represent remuneration paid or accrued to each trustee who is
not an "interested person" of AIM. The Fund may invest trustees' fees, if so
elected by a trustee, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 4-SHARE INFORMATION
Changes in shares outstanding for the years ended August 31, 1996 and 1995 were
as follows:
<TABLE>
<CAPTION>
1996 1995
------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Sold:
Institutional Class 1,931,081,349 $ 1,931,081,349 1,566,228,552 $ 1,566,228,552
- -----------------------------------------------------------------------------------------
Private Investment
Class* 173,175,235 173,175,235 29,762,798 29,762,798
- -----------------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Institutional Class 279,901 279,901 255,484 255,484
- -----------------------------------------------------------------------------------------
Private Investment
Class* 215,983 215,983 211,779 211,779
- -----------------------------------------------------------------------------------------
Reacquired:
Institutional Class (1,918,562,346) (1,918,562,346) (1,576,001,520) (1,576,001,520)
- -----------------------------------------------------------------------------------------
Private Investment
Class* (128,848,972) (128,848,972) (24,552,262) (24,552,262)
- -----------------------------------------------------------------------------------------
Net increase (decrease) 57,341,150 $ 57,341,150 (4,095,169) $ (4,095,169)
==========================================================================================
</TABLE>
* The Private Investment Class commenced operations on December 21, 1994.
FS-16
<PAGE> 236
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share outstanding of
the Private Investment Class for the year ended August 31, 1996 and the period
December 21, 1994 (date operations commenced) through August 31, 1995.
<TABLE>
<CAPTION>
1996 1995
------- ------
<S> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00
- ------------------------------------------------------- ------- ------
Income from investment operations:
Net investment income 0.05 0.04
- ------------------------------------------------------- ------- ------
Less distributions:
Dividends from net investment income (0.05) (0.04)
- ------------------------------------------------------- ------- ------
Net asset value, end of period $ 1.00 $ 1.00
======================================================= ======= ======
Total return 4.93% 5.32%(a)
======================================================= ======= ======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $49,978 $5,423
======================================================= ======= ======
Ratio of expenses to average net assets(b) 0.45%(c) 0.45%(a)
======================================================= ======= ======
Ratio of net investment income to average net assets(b) 4.72%(c) 5.21%(a)
======================================================= ======= ======
</TABLE>
(a) Annualized.
(b) After waiver of advisory fees, distribution fees and expense
reimbursements. Ratios of expenses and net investment income to average net
assets prior to waivers and expense reimbursements were 0.85% and 4.32% for
1996 and 1.02% and 4.64% for 1995.
(c) Ratios are based on average net assets of $21,111,080.
FS-17
<PAGE> 237
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders
Short-Term Investments Trust:
We have audited the accompanying statement of assets and liabilities of the
Treasury TaxAdvantage Portfolio (a series portfolio of Short-Term Investments
Trust), including the schedule of investments, as of August 31, 1996, 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 the year then ended and the period December
21, 1994 (date operations commenced) through August 31, 1995. 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, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Treasury TaxAdvantage Portfolio as of August 31, 1996, 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
the year then ended and the period December 21, 1994 (date operations
commenced) through August 31, 1995 in conformity with generally accepted
accounting principles.
/s/ KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Houston, Texas
October 4, 1996
FS-18
<PAGE> 238
PART C
OTHER INFORMATION
Item 24.
<TABLE>
<S> <C>
(a) Financial Statements
1. Treasury Portfolio - Cash Management Class
In Part A: Financial Highlights as of August 31,
1996 (audited)
In Part B: (1) Independent Auditors' Report
(2) Financial Statements as of
August 31, 1996 (audited)
In Part C: None
2. Treasury Portfolio - Institutional Class
In Part A: Financial Highlights as of August 31,
1996 (audited)
In Part B: (1) Independent Auditors' Report
(2) Financial Statements as of
August 31, 1996 (audited)
In Part C: None
3. Treasury Portfolio - Personal Investment Class
In Part A: Financial Highlights as of August 31,
1996 (audited)
In Part B: (1) Independent Auditors' Report
(2) Financial Statements as of
August 31, 1996 (audited)
In Part C: None
4. Treasury Portfolio - Private Investment Class
In Part A: Financial Highlights as of August 31,
1996 (audited)
In Part B: (1) Independent Auditors' Report
(2) Financial Statements as of
August 31, 1996 (audited)
In Part C: None
5. Treasury Portfolio - Resource Class
In Part A: Financial Highlights as of August 31,
1996 (audited)
In Part B: (1) Independent Auditors' Report
(2) Financial Statements as of August
31, 1996 (audited)
In Part C: None
</TABLE>
C-1
<PAGE> 239
<TABLE>
<S> <C>
6. Treasury TaxAdvantage Portfolio - Institutional Class
In Part A: Financial Highlights as of August 31,
1996 (audited)
In Part B: (1) Independent Auditors' Report
(2) Financial Statements as of August
31, 1996 (audited)
In Part C: None
7. Treasury TaxAdvantage Portfolio - Private Investment
Class
In Part A: Financial Highlights as of August 31,
1996 (audited)
In Part B: (1) Independent Auditors' Report
(2) Financial Statements as of August
31, 1996 (audited)
In Part C: None
(b) Exhibits
</TABLE>
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -------------------------------------------------------------
<S> <C>
(1) - (a) Certificate of Trust of Registrant was filed as an
exhibit to Registrant's Post-Effective Amendment No.
26 on October 15, 1993, and is filed electronically
herewith.
(b) Agreement and Declaration of Trust of Registrant was
filed as an exhibit to Registrant's Post-Effective
Amendment No. 26 on October 15, 1993, and was filed
electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 28 on November 13, 1995,
and is hereby incorporated by reference.
(c) First Amendment, dated September 11, 1993, to the
Registrant's Agreement and Declaration of Trust was
filed as an exhibit to Registrant's Post-Effective
Amendment No. 26 on October 15, 1993, and was filed
electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 28 on November 13, 1995,
and is hereby incorporated by reference.
(d) Second Amendment, dated August 4, 1994, to the
Registrant's Agreement and Declaration of Trust was
filed electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 28 on November 13, 1995,
and is hereby incorporated by reference.
(e) Third Amendment, dated September 19, 1995, to the
Registrant's Agreement and Declaration of Trust is
filed herewith electronically.
(2) - (a) By-Laws of Registrant was filed as an exhibit to
Registrant's Post-Effective Amendment No. 26 on
October 15, 1993, and was filed electronically as an
Exhibit to Registrant's Post-Effective Amendment No.
28 on November 13, 1995, and is hereby incorporated by
reference.
(b) Amendment to the By-Laws of Registrant, adopted
December 2, 1993, was filed electronically as an
Exhibit to Registrant's Post-Effective Amendment No.
28 on November 13, 1995, and is hereby incorporated by
reference.
</TABLE>
C-2
<PAGE> 240
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -------------------------------------------------------------
<S> <C>
(c) Second Amendment to the By-Laws of Registrant, dated
March 14, 1995, is filed electronically herewith.
(3) - Certain Voting Trust Agreements - None.
(4) - (a) Form of Specimen Certificate representing shares of
the Treasury TaxAdvantage Portfolio was filed as an
Exhibit to Registrant's Post-Effective Amendment No.
26 on October 15, 1993, and is hereby incorporated by
reference.
(b) Form of Specimen Certificate representing shares of
the Institutional Class of the Treasury Portfolio was
filed as an Exhibit to Registrant's Post-Effective
Amendment No. 26 on October 15, 1993, and is hereby
incorporated by reference.
(c) Form of Specimen Certificate representing shares of
the Personal Investment Class of the Treasury
Portfolio was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 26 on October 15, 1993,
and is hereby incorporated by reference.
(d) Form of Specimen Certificate representing shares of
the Private Investment Class of the Treasury Portfolio
was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 26 on October 15, 1993, and is hereby
incorporated by reference.
(e) Form of Specimen Certificate representing shares of
the Cash Management Class of the Treasury Portfolio
was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 26 on October 15, 1993, and is hereby
incorporated by reference.
(f) Form of Specimen Certificate representing shares of
the Private Investment Class of the Treasury
TaxAdvantage Portfolio was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 27 on
November 14, 1994, and is hereby incorporated by
reference.
(g) Form of Specimen Certificate representing shares of
the Resource Class of the Treasury Portfolio was filed
electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 28 on November 13, 1995,
and is hereby incorporated by reference.
(5) - (a) Master Investment Advisory Agreement, dated October
18, 1993, between A I M Advisors, Inc. and Registrant
with respect to the Treasury Portfolio and the
Treasury TaxAdvantage Portfolio was filed as an
Exhibit to Registrant's Post-Effective Amendment No.
27, on November 14, 1994, and is filed electronically
herewith.
(6) - (a) Master Distribution Agreement, dated October 18, 1993,
between Fund Management Company and Registrant with
respect to the Treasury and Treasury TaxAdvantage
Portfolio was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 27 on November 14, 1994,
and was filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 28 on
November 13, 1995, and is hereby incorporated by
reference.
(b) Amendment No. 1, dated December 8, 1994, to Master
Distribution Agreement, dated October 18, 1993,
between Fund Management Company and Registrant was
filed electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 28 on November 13, 1995,
and is hereby incorporated by reference.
</TABLE>
C-3
<PAGE> 241
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -------------------------------------------------------------
<S> <C>
(c) Amendment No. 2, dated September 19, 1995, to the
Master Distribution Agreement, dated October 18, 1993,
between Fund Management Company and Registrant is
filed herewith electronically.
(7) - (a) Retirement Plan for Eligible Directors/Trustees was
filed as an exhibit to Registrant's Post-Effective
Amendment No. 27 on November 14, 1994, and is filed
electronically herewith.
(b) Form of Deferred Compensation Agreement was filed as
an exhibit to Registrant's Post-Effective Amendment
No. 27 on November 14, 1994, and is hereby filed
electronically herewith
(8) - (a) Custodian Agreement, dated October 15, 1993, between
The Bank of New York and Registrant, was filed as an
Exhibit to Registrant's Post-Effective Amendment No.
27 on November 14, 1994 and is filed electronically
herewith.
(b) Amendment, dated July 30, 1996, to the Custodian
Agreement, dated October 15, 1993, between The Bank of
New York and Registrant is filed electronically
herewith.
(9) - (a) Transfer Agency and Service Agreement, dated September
16, 1994, between A I M Institutional Fund Services,
Inc. and Registrant was filed electronically as an
Exhibit to Registrant's Post-Effective Amendment No.
28 on November 13, 1995, and is hereby incorporated by
reference.
(b) Amendment No. 1, dated July 1, 1996, to the Transfer
Agency and Service Agreement, dated September 16,
1994, between A I M Institutional Fund Services, Inc.
and Registrant was filed electronically as an Exhibit
to Registrant's Post-Effective Amendment No. 28 on
November 13, 1995, and is hereby incorporated by
reference.
(c) Master Administrative Services Agreement, dated
October 18, 1993, between A I M Advisors, Inc. and
Registrant was filed as an exhibit to Registrant's
Post-Effective Amendment No. 27 on November 14, 1994,
and was filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 28 on
November 13, 1995, and is hereby incorporated by
reference.
(d) Amendment No. 1, dated November 2, 1995, to the Master
Administrative Services Agreement, dated October 18,
1993, between A I M Advisors, Inc. and Registrant is
filed electronically herewith.
(10) - (a) Opinion of Ballard Spahr Andrews & Ingersoll was filed
as an exhibit to Registrant's Rule 24f-2 Notice for
the fiscal year ending August 31, 1996.
(11) - (a) Consent of Ballard Spahr Andrews & Ingersoll is filed
electronically herewith.
(b) Consent of KPMG Peat Marwick LLP is filed
electronically herewith.
(12) - Other Financial Statements - None.
(13) - Agreement Concerning Initial Capitalization - None.
(14) - Retirement Plans - None.
</TABLE>
C-4
<PAGE> 242
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -------------------------------------------------------------
<S> <C>
(15) - (a) Master Distribution Plan pursuant to Rule 12b-1,
effective as of August 6, 1993, as amended as of
December 8, 1994, as further amended as of September
19, 1995, and as further amended as of December 5,
1995, and related forms of agreement with respect to
the Personal Investment Class, Private Investment
Class, Resource Class and the Cash Management Class of
the Treasury Portfolio and the Private Investment
Class of the Treasury TaxAdvantage Portfolio is filed
electronically herewith.
(16) - Schedules of Yield and Performance Quotations were filed as an
exhibit to Registrant's Post-Effective Amendment No. 14 on
October 31, 1988, and are hereby incorporated by reference.
(18) - Multiple Class (Rule 18f-3) Plan is filed electronically
herewith.
(27) - Financial Data Schedule is filed electronically herewith.
Item 25. Persons Controlled by or under Common Control with Registrant
-------------------------------------------------------------
</TABLE>
Furnish a list or diagram of all persons directly or
indirectly controlled by or under common control with the Registrant and as to
each such person indicate (1) if a company, the state or other sovereign power
under the laws of which it is organized, and (2) the percentage of voting
securities owned or other basis of control by the person, if any, immediately
controlling it.
None
Item 26. Number of Holders of Securities
State in substantially the tabular form indicated, as of a
specified date within 90 days prior to the date of filing, the number of record
holders of each class of securities of the Registrant.
<TABLE>
<CAPTION>
Number of Record Holders
Title Class December 1, 1996
------------------------ ----------------
<S> <C>
Treasury Portfolio
Cash Management Class 9
Institutional Class 67
Personal Investment Class 5
Private Investment Class 12
Resource Class 5
Treasury TaxAdvantage Portfolio
Institutional Class 19
Private Investment Class 5
</TABLE>
Item 27. Indemnification
State the general effect of any contract, arrangements or
statute under which any director, officer, underwriter or affiliated person of
the Registrant is insured or indemnified in any manner against any liability
which may be incurred in such capacity, other than insurance provided by any
director, officer, affiliated person or underwriter for their own protection.
C-5
<PAGE> 243
Under the terms of the Registrant's Agreement and Declaration of
Trust, the Registrant may indemnify any person who was or is a
trustee, officer or employee of the Registrant to the maximum extent
permitted by law; provided, however, that any such indemnification
(unless ordered by a court) shall be made by the Registrant only as
authorized in the specific case upon a determination that
indemnification of such persons is proper in the circumstances. Such
determination shall be made (i) by the Board of Trustees, by a
majority vote of a quorum which consists of trustees who are neither
"interested persons" of the Registrant, as defined in Section 2(a)(19)
of the Investment Company Act of 1940, nor parties to the proceeding,
or (ii) if the required quorum is not obtainable or, if a quorum of
such trustees so directs, by independent legal counsel in a written
opinion. No indemnification will be provided by the Registrant to any
trustee or officer of the Registrant for any liability to the
Registrant or shareholders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of duty.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to trustees, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a trustee, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person
in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by
the final adjudication of such issue. Insurance coverage is provided
under a joint Mutual Fund & Investment Advisory Professional and
Directors & Officers Liability Policy, issued by ICI Mutual Insurance
Company with a $15,000,000 limit of liability.
Item 28. Business and Other Connections of Investment Advisor
Describe any other business, profession, vocation or
employment of a substantial nature in which each investment advisor of the
Registrant, and each director, officer or partner of any such investment
advisor, is or has been, at any time during the past two fiscal years, engaged
for his own account or in the capacity of director, officer, employee, partner,
or trustee.
See each Statement of Additional Information, Part B under
headings "General Information About the Trust - Investment
Advisor" and "- Trustees and Officers" for information
concerning A I M Advisors, Inc.
Item 29. Principal Underwriters
(a) Fund Management Company, the Registrant's principal
underwriter of all of its shares also acts as a
principal underwriter to the following investment
companies:
AIM Equity Funds, Inc. (Institutional Classes)
AIM Investment Securities Funds (Limited Maturity
Treasury Portfolio -
Institutional Shares)
Short-Term Investments Co.
Tax-Free Investments Co.
(b) The following table sets forth information with
respect to each director, officer or partner of Fund
Management Company:
C-6
<PAGE> 244
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ---------------- -------------------------- ---------------
<S> <C> <C>
Charles T. Bauer Chairman of the Board of Chairman
Directors and Director
William H. Kleh Director None
J. Abbott Sprague President & Director Vice President
Robert H. Graham Senior Vice President & Director President
Mark D. Santero Senior Vice President None
John J. Arthur Vice President & Treasurer Senior Vice President
& Treasurer
Jesse H. Cole Vice President None
Melville B. Cox Vice President & Chief Vice President
Compliance Officer
Carol F. Relihan Vice President Senior Vice President &
& General Counsel Secretary
Stephen I. Winer Vice President, Assistant Secretary
Assistant General Counsel &
Assistant Secretary
Nancy A. Beck Assistant Vice President None
David E. Hessel Assistant Vice President, None
Assistant Treasurer &
Controller
Jeffrey L. Horne Assistant Vice President None
Robert Morris Assistant Vice President None
Margaret A. Reilly Assistant Vice President None
Dana R. Sutton Assistant Vice President & Vice President & Assistant
Assistant Treasurer Treasurer
Nicholas D. White Assistant Vice President None
</TABLE>
- -----------------------------------
* 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173
C-7
<PAGE> 245
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ---------------- -------------------------- ---------------
<S> <C> <C>
David L. Kite Assistant General Counsel & Assistant Secretary
Assistant Secretary
Nancy L. Martin Assistant General Counsel & Assistant Secretary
Assistant Secretary
Ofelia M. Mayo Assistant General Counsel & Assistant Secretary
Assistant Secretary
Samuel D. Sirko Assistant General Counsel & Assistant Secretary
Assistant Secretary
Kathleen J. Pflueger Secretary Assistant Secretary
</TABLE>
(c) Not Applicable
Item 30. Location of Accounts and Records
With respect to each account, book or other document required
to be maintained by Section 31(a) of the 1940 Act and the Rules (17 CFR
270.31a-1 to 31a-3) promulgated thereunder, furnish the name and address of
each person maintaining physical possession of each such account, book or other
document.
A I M Advisors, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas
77046-1173, will maintain physical possession of each such account,
book or other document of the Registrant at its principal executive
offices, except for those maintained by the Custodian, The Bank of New
York, 90 Washington Street, 11th Floor, New York, New York 10286; and
the Transfer Agent and Dividend Paying Agent, A I M Institutional Fund
Services, Inc., 11 Greenway Plaza, Suite 1919, Houston, TX
77046-1173.
Item 31. Management Services
Furnish summary of the substantive provisions of management
related service contract not discussed in Part I of this Form (because the
contract was not believed to be material to a purchaser of securities of
Registrant) under which services are provided to the Registrant, indicating the
parties to the contract, the total dollars paid and by whom, for the last three
fiscal years.
None.
Item 32. Undertakings
(a) None
(b) None.
- -----------------------------------
* 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173
C-8
<PAGE> 246
(c) The Registrant undertakes to furnish each person to whom
a prospectus is delivered with a copy of the applicable
Portfolio's latest annual report to shareholders, upon
request and without charge.
C-9
<PAGE> 247
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment
to its Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the city of Houston, Texas on the 17th day of
December, 1996.
Registrant: SHORT-TERM INVESTMENTS TRUST
By: /s/ Robert H. Graham
----------------------------
Robert H. Graham, President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/ Charles T. Bauer Chairman & Trustee December 17, 1996
----------------------
(Charles T. Bauer)
/s/ Robert H. Graham Trustee & President
---------------------- (Principal Executive Officer) December 17, 1996
(Robert H. Graham)
/s/ Bruce L. Crockett Trustee December 17, 1996
-----------------------
(Bruce L. Crockett)
/s/ Owen Daly II Trustee December 17, 1996
-------------------------
(Owen Daly II)
/s/ Carl Frischling Trustee December 17, 1996
-------------------------
(Carl Frischling)
/s/ John F. Kroeger Trustee December 17, 1996
-----------------------
(John F. Kroeger)
/s/ Lewis F. Pennock Trustee December 17, 1996
----------------------
(Lewis F. Pennock)
/s/ Ian W. Robinson Trustee December 17, 1996
----------------------
(Ian W. Robinson)
/s/ Louis S. Sklar Trustee December 17, 1996
-------------------------
(Louis S. Sklar)
/s/ John J. Arthur Senior Vice President &
------------------------- Treasurer (Principal Financial December 17, 1996
(John J. Arthur) and Accounting Officer)
</TABLE>
<PAGE> 248
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number
------
<S> <C>
1(a) Certificate of Trust of Registrant
1(e) Third Amendment to Agreement and Declaration of Trust, dated
September 19, 1995.
2(c) Second Amendment to the By-Laws of Registrant, dated March
14, 1995
5(a) Master Investment Advisory Agreement, dated October 18, 1993,
between A I M Advisors, Inc. and Registrant
6(c) Amendment No. 2, dated September 19, 1995, to Master
Distribution Agreement, dated October 18, 1993, between Fund
Management Company and Registrant
7(a) Retirement Plan for Eligible Directors/Trustees
7(b) Form of Deferred Compensation Agreement
8(a) Custodian Agreement, dated October 15, 1993, between The Bank
of New York and Registrant
8(b) Amendment, dated July 30, 1996, to the Custodian Agreement,
dated October 15, 1993, between The Bank of New York and
Registrant
9(d) Amendment No. 1, dated November 2, 1995, to Administrative
Services Agreement, dated October 18, 1993, between A I M
Advisors, Inc. and Registrant
11(a) Consent of Ballard Spahr Andrews & Ingersoll
11(b) Consent of KPMG Peat Marwick LLP
15(a) Master Distribution Plan and related forms of agreement
18 Multiple Class (Rule 18f-3) Plan
27 Financial Data Schedule
</TABLE>
10
<PAGE> 1
EXHIBIT 1(a)
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF BUSINESS
TRUST OF "SHORT-TERM INVESTMENTS TRUST" FILED IN THIS OFFICE ON THE FIFTH DAY
OF MAY, A.D. 1993, AT 11:05 O'CLOCK A.M.
* * * * * * * * * *
[SEAL] /s/ WILLIAM T. QUILLEN
--------------------------------------
William T. Quillen, Secretary of State
AUTHENTICATION: *4095244
DATE: 10/12/1993
<PAGE> 2
CERTIFICATE OF TRUST
OF
SHORT-TERM INVESTMENTS TRUST
This Certificate of Trust is being duly executed and filed on behalf
of the business trust formed hereby by the undersigned, all of the trustees of
the Trust, to form a business trust pursuant to the Delaware Business Trust Act
(12 Del. C. S 3801 et seq.).
ARTICLE I
The name of the business trust formed hereby is "Short-Term
Investments Trust" (the "Trust").
ARTICLE II
The Trust is, or will become prior to or within 180 days following the
first issuance of beneficial interests, a registered investment company under
the Investment Company Act of 1940, as amended (15 U.S.C. SS 80a-1 et seq.).
ARTICLE III
The address of the registered office of the Trust in the State of
Delaware is c/o The Corporation Trust Company, Corporation Trust Center, 1209
Orange Street, Wilmington, New Castle County, Delaware 19801.
ARTICLE IV
The address of the registered agent for service of process on the
Trust in the State of Delaware is The Corporation Trust Company, Corporation
Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware
19801. The name of the registered agent at such address is The Corporation
Trust Company.
ARTICLE V
The Trust Instrument relating to the Trust provides for the issuance
of one or more series of shares of beneficial interest in the Trust. Separate
and distinct records shall be maintained by the Trust for each series and the
assets associated solely with any such series shall be held and accounted for
separately from the assets of the Trust associated solely with any other
series. As provided in the Trust Instrument, the debts, liabilities,
obligations and expenses incurred, contracted for or otherwise existing with
respect to a particular series shall be enforceable against the assets of such
series only, and not against the assets of the Trust generally.
<PAGE> 3
ARTICLE VI
This Certificate of Trust shall become effective upon filing in the
Office of the Secretary of State of Delaware.
IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Trust as of this 5th day of May.
SHORT-TERM
INVESTMENTS TRUST
(THE "TRUST")
/s/ WILLIAM H. KLEH
----------------------------
William H. Kleh, as Trustee
/s/ CHARLES T. BAUER
----------------------------
Charles T. Bauer, as Trustee
/s/ ROBERT H. GRAHAM
----------------------------
Robert H. Graham, as Trustee
<PAGE> 4
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THAT THE CERTIFICATE OF BUSINESS TRUST OF THE "SHORT-TERM INVESTMENTS
TRUST", WAS RECEIVED AND FILED IN THIS OFFICE THE FIFTH DAY OF MAY, A.D. 1993,
AT 11:05 O'CLOCK A.M.
AND I DO HEREBY FURTHER CERTIFY THAT THE AFORESAID CERTIFICATES ARE
THE ONLY CERTIFICATES ON RECORD OF THE AFORESAID BUSINESS TRUST.
AND I DO HEREBY FURTHER CERTIFY THAT THE AFORESAID BUSINESS TRUST IS
DULY FORMED UNDER THE LAWS OF THE STATE OF DELAWARE AND IS IN GOOD STANDING AND
HAS A LEGAL EXISTENCE NOT HAVING BEEN CANCELED SO FAR AS THE RECORDS OF THIS
OFFICE SHOW AND IS DULY AUTHORIZED TO TRANSACT BUSINESS.
* * * * * * * * * *
[SEAL] /s/ WILLIAM T. QUILLEN
--------------------------------------
William T. Quillen, Secretary of State
AUTHENTICATION: *4100458
DATE: 10/14/1993
<PAGE> 1
EXHIBIT 1(e)
THIRD AMENDMENT
TO
AGREEMENT AND DECLARATION OF TRUST
OF
SHORT-TERM INVESTMENTS TRUST
THIS THIRD AMENDMENT TO AGREEMENT AND DECLARATION OF TRUST OF
SHORT-TERM INVESTMENTS TRUST (the "Amendment") is entered into as of the 19th
day of September, 1995, among Charles T. Bauer, Bruce L. Crockett, Owen Daly,
II, Carl Frischling, Robert H. Graham, John F. Kroeger, Lewis F. Pennock, Ian
W. Robinson, Louis S. Sklar, as trustees, and each person who became or becomes
a shareholder in accordance with the terms set forth in that certain Agreement
and Declaration of Trust of Short-Term Investments Trust entered into as of May
5, 1993, as amended (the "Agreement").
WHEREAS, Section 9.7 of the Agreement authorizes the Trustees without
shareholder vote to amend or otherwise supplement the Agreement by making an
amendment; and
WHEREAS, at a meeting duly called and held on the 19th day of
September, 1995, the Trustees have resolved to amend the Agreement as
hereinafter set forth.
NOW, THEREFORE, the Trustees hereby amend the Agreement as herein set
forth below:
1. Capitalized terms not specifically defined in this Amendment shall
have the meanings ascribed to them in the Agreement.
2. Section 2.3 of the Agreement is hereby deleted in its entirety and
the following new Section 2.3 is hereby substituted in lieu thereof:
"Section 2.3 Establishment of Portfolios and Classes. The Trust
shall be divided into two Portfolios, the Treasury Portfolio and the Treasury
TaxAdvantage Portfolio. The Treasury Portfolio shall contain five Classes, the
Institutional Class, the Private Investment Class, the Personal Investment
Class, the Cash Management Class and the Resource Class. The Treasury
TaxAdvantage Portfolio shall contain two Classes, the Institutional Class and
the Private Investment Class. The Treasury Portfolio, the Treasury
TaxAdvantage Portfolio and their respective Classes as set forth in this
Section 2.3 are collectively referred to as the "Portfolios". The
establishment and designation of any other Portfolio or Class thereof, or,
subject to Section 6.1 hereof, any change to the Portfolios, shall be effective
upon the adoption by a majority of the then Trustees of a resolution which sets
forth such establishment, designation or change."
3. With the exception of the amendment to Section 2.3 of the
Agreement as set forth in paragraph 2 of this Amendment, the Agreement, as
amended, shall in all other respects remain in full force and effect.
4. This Amendment may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together
shall constitute one and the same Amendment.
<PAGE> 2
IN WITNESS WHEREOF, the undersigned, being all of the Trustees of the
Trust, have executed this Third Amendment to Agreement and Declaration of Trust
of Short-Term Investments Trust as of the date first above written.
<TABLE>
<S> <C>
/s/ CHARLES T. BAUER /s/ BRUCE L. CROCKETT
- ----------------------- ----------------------------
Charles T. Bauer Bruce L. Crockett
Trustee Trustee
/s/ OWEN DALY, II /s/ CARL FRISCHLING
- ----------------------- ----------------------------
Owen Daly, II Carl Frischling
Trustee Trustee
/s/ ROBERT H. GRAHAM /s/ JOHN F. KROEGER
- ----------------------- ----------------------------
Robert H. Graham John F. Kroeger
Trustee Trustee
/s/ LEWIS F. PENNOCK /s/ IAN W. ROBINSON
- ----------------------- ----------------------------
Lewis F. Pennock Ian W. Robinson
Trustee Trustee
/s/ LOUIS S. SKLAR
- -----------------------
Louis S. Sklar
Trustee
</TABLE>
[THIS IS THE SIGNATURE PAGE FOR
THE THIRD AMENDMENT TO AGREEMENT AND DECLARATION OF TRUST
OF SHORT-TERM INVESTMENTS TRUST]
2
<PAGE> 1
EXHIBIT 2(c)
SHORT-TERM INVESTMENTS TRUST
SECOND AMENDMENT, DATED MARCH 14, 1995,
TO BY-LAWS
Article IV, Section 1 of the By-Laws of Short-Term Investments Trust
is hereby amended by deleting the sixth sentence of such Section, by
redesignating the fourth and fifth sentences of such Section as the sixth and
seventh sentences, and by deleting the third sentence of such Section and by
adding thereto three new sentences as the third, fourth and fifth sentence of
such Section, which sentences shall read in full as follows:
"At all meetings of the stockholders, every stockholder of
record entitled to vote thereat shall be entitled to vote at such
meeting either in person or by written proxy signed by the stockholder
or by his duly authorized attorney in fact. A stockholder may duly
authorize such attorney in fact through written, electronic,
telephonic, computerized, facsimile, telecommunication, telex or oral
communication or by any other form of communication. Unless a proxy
provides otherwise, such proxy is not valid more than eleven months
after its date."
<PAGE> 1
EXHIBIT 5(a)
SHORT-TERM INVESTMENTS TRUST
MASTER INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this 18th day of October, 1993, by and between
Short-Term Investments Trust, a Delaware trust (the "Company") and A I M
Advisors, Inc., a Delaware corporation (the "Advisor").
RECITALS
WHEREAS, the Company is registered under the Investment Company Act of
1940, as amended (the "1940 Act") as an open-end, diversified management
investment company, consisting of multiple series of investment portfolios;
WHEREAS, the Advisor is registered under the Investment Advisers Act of
1940, as amended (the "Advisers Act"), as an investment advisor and engages in
the business of acting as an investment advisor.
WHEREAS, the Company operates as a "series company" as contemplated by
Rule 18f-2 under the 1940 Act and is authorized to issue shares of beneficial
interest (the "Shares") in separate series with each such series representing
interests in a separate portfolio of securities and other assets; and
WHEREAS, the Company's Agreement and Declaration of Trust authorizes
the Board of Trustees of the Company to issue an unlimited number of shares of
beneficial interest of the Company and to establish additional series or
classes of shares from time to time and, as of the date of this Agreement, the
Company's Board of Trustees has authorized the issuance of two series of shares
representing interests in two investment portfolios: the Treasury Portfolio
(Institutional Class, Personal Investment Class, Private Investment Class and
Cash Management Class) and the Treasury TaxAdvantage Portfolio (Institutional
Class) (such portfolios and any other portfolios hereafter added to the Company
being referred to collectively herein as the "Portfolios");
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt whereof is
hereby acknowledged, the parties hereto agree as follows:
1. ADVISORY SERVICES. The Advisor shall act as investment advisor
for each Portfolio and shall, in such capacity, supervise all aspects of the
Portfolios' operations, including the investment and reinvestment of the cash,
securities or other properties comprising each Portfolio's assets, subject at
all times to the policies and control of the Company's Board of Trustees. The
Advisor shall give the Company and the Portfolios the benefit of its best
judgment, efforts and facilities in rendering its services as investment
advisor.
2. INVESTMENT ANALYSIS AND IMPLEMENTATION. In carrying out its
duties under Section 1 hereof, the Advisor shall:
(a) supervise all aspects of the operations of the Portfolios;
(b) obtain and evaluate pertinent information about
significant developments and economic, statistical and financial data,
domestic, foreign, or otherwise, whether affecting the economy
generally or the Company or the Portfolios, and whether concerning the
individual issuers whose securities are included in the assets of the
Portfolios or the activities in which such issuers engage, or with
respect to securities which the Advisor considers desirable for
inclusion in the Portfolios.
(c) determine which issuers and securities shall be
represented in the Portfolios and regularly report thereon to the
Company's Board of Trustees; and
(d) formulate and implement continuing programs for the
purchases and sales of the securities of such issuers, and regularly
report thereon to the Company's Board of Trustees;
and take, on behalf of the Company and the Portfolios, all actions which appear
to the Company and the Portfolios necessary to carry into effect such purchase
and sale programs and supervisory functions as aforesaid, including but not
limited to the placing of orders for the purchase and sale of securities of the
Portfolios.
3. DELEGATION OF RESPONSIBILITIES. Subject to the approval of the
Board of Trustees and the shareholders of the Portfolios, the Advisor may
delegate to a sub-advisor certain of its duties enumerated in Section 2 hereof,
provided that the Advisor shall continue to supervise the performance of any
such sub-advisor.
1
<PAGE> 2
4. CONTROL BY BOARD OF TRUSTEES. Any investment program
undertaken by the Advisor pursuant to this Agreement, as well as any other
activities undertaken by the Advisor on behalf of the Company, shall at all
times be subject to any directives of the Board of Trustees of the Company.
5. COMPLIANCE WITH APPLICABLE REQUIREMENTS. In performing its
duties hereunder, the Advisor shall at all times conform to:
(a) all applicable provisions of the 1940 Act and the Advisers
Act, and any rules and regulations adopted thereunder;
(b) the provisions of the registration statement of the
Company relating to the Portfolios, as the same may be amended from
time to time, under the Securities Act of 1933 and the 1940 Act;
(c) the provisions of the Agreement and Declaration of Trust
of the Company, as the same may be amended from time to time;
(d) the provisions of the by-laws of the Company, as the same
may be amended from time to time; and
(e) any other applicable provisions of state or federal law.
6. BROKER-DEALER RELATIONSHIPS. The Advisor shall be responsible
for all decisions to buy and sell securities for the Portfolios, broker-dealer
selection, and negotiation of brokerage commission rates. The Advisor's primary
consideration in effecting a security transaction shall be execution at the
most favorable price. In selecting a broker-dealer to execute each particular
transaction, the Advisor shall take the following into consideration: the best
net price available; the reliability, integrity and financial condition of the
broker-dealer; the size of and difficulty in executing the order; and the value
of the expected contribution of the broker-dealer to the investment performance
of the Portfolios on a continuing basis. Accordingly, the price to a Portfolio
in any transaction may be less favorable than that available from another
broker-dealer if the difference is reasonably justified by other aspects of the
portfolio execution services offered. Subject to such policies as the Board of
Trustees may from time to time determine, the Advisor shall not be deemed to
have acted unlawfully or to have breached any duty created by this Agreement or
otherwise solely by reason of its having caused a Portfolio to pay a broker or
dealer that provides brokerage and research services to the Advisor an amount
of commission for effecting a portfolio investment transaction in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction, if the Advisor determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer, viewed in terms of either
that particular transaction or the overall responsibilities of the Advisor with
respect to such Portfolio, other Portfolios of the Company, and other clients
of the Advisor as to which the Advisor exercises investment discretion. The
Advisor is further authorized to allocate the orders placed on behalf of the
Portfolios to brokers and dealers who also provide research or statistical
material, or other services to the Portfolios or the Advisor. Such allocation
shall be in such amounts and proportions as the Advisor shall determine, and
the Advisor shall report on said allocations regularly to the Board of Trustees
of the Company, indicating the brokers to whom such allocations have been made
and the basis therefor.
7. COMPENSATION. The Company shall pay the Advisor as
compensation for services rendered hereunder, an annual fee, payable monthly,
as set forth in Appendix A to this Agreement. The Company acknowledges that the
Advisor may from time to time pay a fee to any sub-advisor engaged pursuant to
Section 3 of this Agreement, according to a fee schedule set forth in the
applicable sub-advisory agreement.
The average daily net asset value of the Portfolios shall be
determined in the manner set forth in the Agreement and Declaration of Trust
and registration statement relating to the Portfolios, as amended from time to
time.
8. ADDITIONAL SERVICES. Upon the request of the Company's Board
of Trustees, the Advisor may perform (or arrange for the performance of)
certain accounting, shareholder servicing or other administrative services on
behalf of the Portfolios which are not required by this Agreement. Such
services will be performed on behalf of the Portfolios, and the Advisor may
receive from the Portfolios such reimbursement for costs or reasonable
compensation for such services as may be agreed upon between the Advisor and
the Company's Board of Trustees based on a finding by the Board of Trustees,
that the provision of such services by the Advisor is in the best interests of
a Portfolio and its shareholders. Payment or assumption by the Advisor of any
Portfolio expense that the Advisor is not otherwise required to pay or assume
under this Agreement shall not relieve the Advisor of any of its
2
<PAGE> 3
obligations to such Portfolio nor obligate the Advisor to pay or assume any
similar Portfolio expense on any subsequent occasion. Such additional services
may include, but are not limited to:
(a) the services of a principal financial officer of the
Company (including related office space, facilities and equipment)
whose normal duties consist of maintaining the financial accounts and
books and records of the Company and the Portfolios, including the
review and calculation of daily net asset value and the preparation of
tax returns; the services (including related office space, facilities
and equipment) of any of the personnel operating under the direction of
such principal financial officer;
(b) the services of staff to respond to shareholder inquiries
concerning the status of their accounts; providing assistance to
shareholders in exchanges among the mutual funds managed or advised by
the Advisor; changing account designations or changing addresses;
assisting in the purchase or redemption of shares; supervising the
operations of the custodian, transfer agent(s) or dividend disbursing
agent(s) for the Portfolios; or otherwise providing services to
shareholders of the Portfolios; and
(c) such other administrative services as may be furnished
from time to time by the Advisor to the Company or a Portfolio at the
request of the Company's Board of Trustees.
9. EXPENSES OF THE PORTFOLIO. All of the ordinary business
expenses incurred in the operations of a Portfolio and the offering of its
shares shall be borne by the Portfolios unless specifically provided otherwise
in this Agreement. These expenses borne by the Portfolios include but are not
limited to brokerage commissions, taxes, legal, accounting, auditing, or
governmental fees, the cost of preparing share certificates, custodian,
transfer and shareholder service agent costs, expenses of issue, sale,
redemption and repurchase of shares, expenses of registering and qualifying
shares for sale, expenses relating to trustees and shareholder meetings, the
cost of preparing and distributing reports and notices to shareholders, the
fees and other expenses incurred by the Company on behalf of the Portfolios in
connection with membership in investment company organizations and the cost of
printing copies of prospectuses and statements of additional information
distributed to the Portfolios' shareholders.
10. EXPENSE LIMITATION. If, for any fiscal year of the Company, the
total of all ordinary business expenses of the Portfolios, including all
investment advisory fees, but excluding brokerage commissions and fees, taxes,
interest and extraordinary expenses, such as litigation costs, would exceed the
applicable expense limitations imposed by state securities regulations in any
state in which the Portfolios' shares are qualified for sale, as such
limitations may be raised or lowered from time to time, the aggregate of all
such investment advisory fees shall be reduced by the amount of such excess. The
amount of any such reduction to be borne by the Advisor shall be deducted from
the monthly investment advisory fee otherwise payable to the Advisor during such
fiscal year. If required pursuant to such state securities regulations, the
Advisor will, not later than the last day of the first month of the next
succeeding fiscal year, reimburse the Portfolios for any such annual operating
expenses (after reduction of all investment advisory fees in excess of such
limitation). For the purposes of this Section, the term "fiscal year" shall
exclude the portion of the current fiscal year which shall have elapsed prior to
the date hereof and shall include the portion of the then current fiscal year
which shall have elapsed at the date of termination of this Agreement. The
application of expense limitations shall be applied to each Portfolio of the
Company separately unless the laws or regulations of any state shall require
that the expense limitations be imposed with respect to the Company as a whole.
11. NON-EXCLUSIVITY. The services of the Advisor to the Company
and the Portfolios are not to be deemed to be exclusive, and the Advisor shall
be free to render investment advisory and administrative or other services to
others (including other investment companies) and to engage in other
activities. It is understood and agreed that officers or directors of the
Advisor may serve as officers or trustees of the Company, and that officers or
trustees of the Company may serve as officers or directors of the Advisor to
the extent permitted by law; and that the officers and directors of the Advisor
are not prohibited from engaging in any other business activity or from
rendering services to any other person, or from serving as partners, officers,
directors or trustees of any other firm or trust, including other investment
advisory companies.
12. TERM AND APPROVAL. This Agreement shall become effective if
approved by the shareholders of the Portfolios, and if so approved, this
Agreement shall thereafter continue in force and effect until June 30, 1994,
and may be continued from year to year thereafter, provided that the
continuation of the Agreement is specifically approved at least annually:
(a)(i) by the Company's Board of Trustees or (ii) by the vote
of "a majority of the outstanding voting securities" of each Portfolio
(as defined in Section 2(a)(42) of the 1940 Act); and
3
<PAGE> 4
(b) by the affirmative vote of a majority of the trustees of
the Company who are not parties to this Agreement or "interested
persons" (as defined in the 1940 Act) of a party to this Agreement
(other than as Company trustees), by votes cast in person at a meeting
specifically called for such purpose.
13. TERMINATION. This Agreement may be terminated as to any
Portfolio at any time, without the payment of any penalty, by vote of the
Company's Board of Trustees or by vote of a majority of such Portfolio's
outstanding voting securities, or by the Advisor, on sixty (60) days' written
notice to the other party. The notice provided for herein may be waived by
either party. This Agreement shall automatically terminate in the event of its
"assignment" (as defined under Section 2(a)(4) of the 1940 Act).
14. LIABILITY OF ADVISOR AND INDEMNIFICATION. In the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties hereunder on the part of the Advisor or any of its
officers, directors or employees, the Advisor shall not be subject to liability
to the Company, any Portfolio or to any shareholder of any Portfolio for any
act or omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase, holding or
sale of any security.
15. LIABILITY OF SHAREHOLDERS. Copies of the Agreement and
Declaration of Trust establishing the Company are on file with the Secretary of
State of the State of Delaware, and notice is hereby given that, as provided by
applicable law, the obligations of or arising out of this agreement are not
binding upon any of the shareholders of the Company individually but are
binding only upon the assets and property of the Company and that the
shareholders shall be entitled, to the fullest extent permitted by applicable
law, to the same limitation on personal liability as stockholders of private
corporations for profit.
16. NOTICES. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Company
and that of the Advisor shall be Eleven Greenway Plaza, Suite 1919, Houston,
Texas, 77046.
17. QUESTIONS OF INTERPRETATION. Any question of interpretation of
any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act or the Advisers Act shall be
resolved by reference to such term or provision of the 1940 Act or the Advisers
Act and to interpretations thereof, if any, by the United States Courts, or in
the absence of any controlling decision of any such court, by rules,
regulations or orders of the Securities and Exchange Commission issued pursuant
to said Acts. In addition, where the effect of a requirement of the 1940 Act or
the Advisers Act reflected in any provision of the Agreement is revised by
rule, regulation or order of the Securities and Exchange Commission, such
provision shall be deemed to incorporate the effect of such rule, regulation
or order. Subject to the foregoing, this Agreement shall be governed by and
construed in accordance with the laws (without reference to conflicts of law
provisions) of the State of Texas.
18. LICENSE AGREEMENT. The Company shall be entitled to use the
names "Treasury Portfolio and Treasury TaxAdvantage Portfolio" to designate
its classes of shares only so long as A I M Advisors, Inc. serves as
investment manager or advisor to the Portfolios.
4
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in duplicate by their respective officers on the day and year first
written above.
SHORT-TERM INVESTMENTS TRUST
Attest: (a Delaware Trust)
/s/ NANCY L. MARTIN By: /s/CHARLES T. BAUER
- ---------------------- ----------------------------
Assistant Secretary President
(SEAL) A I M ADVISORS, INC.
Attest:
/s/ NANCY L. MARTIN By: /s/ ROBERT H. GRAHAM
- ---------------------- ----------------------------
Assistant Secretary President
(SEAL)
5
<PAGE> 6
APPENDIX A TO MASTER INVESTMENT ADVISORY AGREEMENT
OF
SHORT-TERM INVESTMENTS TRUST
The Company shall pay the Advisor as full compensation for all
services rendered and all facilities furnished hereunder, a management fee for
each Portfolio by applying the following annual rates to the average daily net
assets of each Portfolio for the calendar year, computed in the manner used for
the determination of the offering price of shares of the Portfolio.
<TABLE>
<CAPTION>
TREASURY PORTFOLIO
<S> <C>
Net Assets Rate
- ---------- ----
First $300 million.................................. 0.15%
Over $300 million up to and including $1.5 billion.. 0.06%
Over $1.5 billion................................... 0.05%
TREASURY TAXADVANTAGE PORTFOLIO
New Assets Rate
- ---------- ----
First $250 million.................................. 0.20%
Over $250 million up to an including $500 million... 0.15%
Over $500 million................................... 0.10%
</TABLE>
6
<PAGE> 1
EXHIBIT 6(c)
AMENDMENT NO. 2
MASTER DISTRIBUTION AGREEMENT
The Master Distribution Agreement (the "Agreement"), dated October 18,
1993, as amended December 8, 1994, by and between Short-Term Investments Trust,
a Delaware business trust, and Fund Management Company, a Texas corporation, is
hereby amended as follows:
Appendix A of the Agreement is hereby deleted in its entirety and
replaced with the following:
"APPENDIX A
Treasury Portfolio
Institutional Class
Personal Investment Class
Private Investment Class
Cash Management Class
Resource Class
Treasury TaxAdvantage Portfolio
Institutional Class
Private Investment Class"
All other terms and provisions of the Agreement not amended herein
shall remain in full force and effect.
Dated: September 19, 1995
SHORT-TERM INVESTMENTS TRUST
Attest: /s/ STEPHEN I. WINER By: /s/ ROBERT H. GRAHAM
--------------------------- ---------------------------
Assistant Secretary President
(SEAL)
FUND MANAGEMENT COMPANY
Attest: /s/ STEPHEN I. WINER By: /s/ J. ABBOTT SPRAGUE
--------------------------- ---------------------------
Assistant Secretary President
(SEAL)
<PAGE> 1
EXHIBIT 7(a)
AIM FUNDS
RETIREMENT PLAN FOR ELIGIBLE
DIRECTORS/TRUSTEES
Effective as of March 8, 1994
As Restated September 18, 1995
<PAGE> 2
AIM FUNDS
RETIREMENT PLAN FOR ELIGIBLE
DIRECTORS/TRUSTEES
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITION OF TERMS AND CONSTRUCTION . . . . . . . . . 1
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 1
(a) Accrued Benefit . . . . . . . . . . . . . . . . . . . 1
(b) Actuary . . . . . . . . . . . . . . . . . . . . . . . 1
(c) Administrator . . . . . . . . . . . . . . . . . . . . 1
(d) AIM Funds . . . . . . . . . . . . . . . . . . . . . . 1
(e) Board of Directors . . . . . . . . . . . . . . . . . 1
(f) Code . . . . . . . . . . . . . . . . . . . . . . . . 2
(g) Compensation . . . . . . . . . . . . . . . . . . . . 2
(h) Deferred Retirement Date . . . . . . . . . . . . . . 2
(i) Director . . . . . . . . . . . . . . . . . . . . . . 2
(j) Disability . . . . . . . . . . . . . . . . . . . . . 2
(k) Effective Date . . . . . . . . . . . . . . . . . . . 2
(l) Fund . . . . . . . . . . . . . . . . . . . . . . . . 2
(m) Normal Retirement Date . . . . . . . . . . . . . . . 2
(n) Participant . . . . . . . . . . . . . . . . . . . . . 2
(o) Plan . . . . . . . . . . . . . . . . . . . . . . . . 2
(p) Plan Year . . . . . . . . . . . . . . . . . . . . . . 2
(q) Retirement . . . . . . . . . . . . . . . . . . . . . 2
(r) Retirement Benefit . . . . . . . . . . . . . . . . . 3
(s) Service . . . . . . . . . . . . . . . . . . . . . . . 3
(t) Year of Service . . . . . . . . . . . . . . . . . . . 3
1.2 Plurals and Gender . . . . . . . . . . . . . . . . . . . . . . 3
1.3 Directors/Trustees . . . . . . . . . . . . . . . . . . . . . . 3
1.4 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II PARTICIPATION . . . . . . . . . . . . . . . . . . . . . 4
2.1 Commencement of Participation . . . . . . . . . . . . . . . . 4
2.2 Termination of Participation . . . . . . . . . . . . . . . . . 4
2.3 Resumption of Participation . . . . . . . . . . . . . . . . . 4
2.4 Determination of Eligibility . . . . . . . . . . . . . . . . . 4
-i-
<PAGE> 3
Page
----
ARTICLE III BENEFITS UPON RETIREMENT AND OTHER
TERMINATION OF SERVICE. . . . . . . . . . . . . . . . . 4
3.1 Retirement. . .. . . . . . . . . . . . . . . . . . . . . . . . 4
3.2 Termination of Service Before Retirement . . . . . . . . . . . 5
3.3 Termination of Service by Reason of Death. . . . . . . . . . . 5
3.4 Benefits Calculated in the Aggregate for all of the AIM Funds. 5
ARTICLE IV DEATH BENEFITS. . . . . . . . . . . . . . . . . . . . . 5
4.1 Death Prior to Commencement of Benefits . . . . . . . . . . . 5
4.2 Death Subsequent to Commencement of Benefits . . . . . . . . 5
4.3 Death of Spouse . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE V SUSPENSION OF BENEFITS, ETC. . . . . . . . . . . . . . 6
5.1 Suspension of Benefits Upon Resumption of Service . . . . . . 6
5.2 Payments Due Missing Persons . . . . . . . . . . . . . . . . . 6
ARTICLE VI ADMINISTRATOR . . . . . . . . . . . . . . . . . . . . 7
6.1 Appointment of Administrator . . . . . . . . . . . . . . . . . 7
6.2 Powers and Duties of Administrator . . . . . . . . . . . . . . 7
6.3 Action by Administrator . . . . . . . . . . . . . . . . . . . 8
6.4 Participation by Administrators . . . . . . . . . . . . . . . 8
6.5 Agents and Expenses. . . . . . . . . . . . . . . . . . . . . . 8
6.6 Allocation of Duties . . . . . . . . . . . . . . . . . . . . . 8
6.7 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . 9
6.8 Administrator's Action Conclusive . . . . . . . . . . . . . . 9
6.9 Records and Reports . . . . . . . . . . . . . . . . . . . . . 9
6.10 Information from the AIM Funds . . . . . . . . . . . . . . . . 9
6.11 Reservation of Rights by Boards of Directors . . . . . . . . . 9
6.12 Liability and Indemnification. . . . . . . . . . . . . . . . . 9
ARTICLE VII AMENDMENTS AND TERMINATION . . . . . . . . . . . . . . 10
7.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.2 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 10
8.1 Rights of Creditors . . . . . . . . . . . . . . . . . . . . . 10
8.2 Liability Limited. . . . . . . . . . . . . . . . . . . . . . . 11
8.3 Incapacity . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.4 Cooperation of Parties . . . . . . . . . . . . . . . . . . . . 11
8.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 11
8.6 Nonguarantee of Directorship . . . . . . . . . . . . . . . . . 12
8.7 Counsel . . . . . . . . . . . . . . . .. . . . . . . . . . . . 12
8.8 Spendthrift Provision . . . . . . . . . . . . . . . . . . . . 12
8.9 Forfeiture for Cause . . . . . . . . . . . . . . . . . . . . . 12
-ii-
<PAGE> 4
Page
----
ARTICLE IX CLAIMS PROCEDURE . . . . . . . . . . . . . . . . . . . . . 12
9.1 Notice of Denial . . . . . . . . . . . . . . . . . . . . . . . 12
9.2 Right to Reconsideration . . . . . . . . . . . . . . . . . . . 13
9.3 Review of Documents. . . . . . . . . . . . . . . . . . . . . . 13
9.4 Decision by Administrator. . . . . . . . . . . . . . . . . . . 13
9.5 Notice by Administrator. . . . . . . . . . . . . . . . . . . . 13
-iii-
<PAGE> 5
AIM FUNDS
RETIREMENT PLAN FOR ELIGIBLE
DIRECTORS/TRUSTEES
PREAMBLE
Effective as of March 8, 1994, the regulated investment
companies managed, administered and/or distributed by AIM Advisors, Inc. or its
affiliates (the "AIM Funds") have adopted THE AIM FUNDS RETIREMENT PLAN FOR
ELIGIBLE DIRECTORS/TRUSTEES (the "Plan") for the benefit of each of the
directors and trustees of each of the AIM Funds who is not an employee of any
of the AIM Funds, A I M Management Group Inc. or any of their affiliates. As
the Plan does not benefit any employees of the AIM Funds, it is not intended to
be classified as an employee benefit plan within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
ARTICLE I
DEFINITION OF TERMS AND CONSTRUCTION
------------------------------------
1.1 Definitions.
------------
Unless a different meaning is plainly implied by the context,
the following terms as used in this Plan shall have the following meanings:
(a) "Accrued Benefit" shall mean, as of any date prior to
a Participant's Normal Retirement Date, his Retirement Benefit commencing on
his Normal Retirement Date, but based upon his Compensation and Years of
Service computed as of such date of determination.
(b) "Actuary" shall mean the independent actuary selected
by the Administrator.
(c) "Administrator" shall mean the administrative
committee provided for in Article VI.
(d) "AIM Funds" shall mean the regulated investment
companies managed, administered or distributed by A I M Advisors, Inc. or its
affiliates.
(e) "Board of Directors" shall mean the Board of
Directors of each of the AIM Funds.
<PAGE> 6
(f) "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time, or any successor statute.
(g) "Compensation" shall mean, for any Director, the
amount of the retainer paid or accrued by the AIM Funds for such Director
during the twelve month period immediately preceding the Director's Retirement,
including amounts deferred under a separate agreement between the AIM Funds and
the Director. The amount of such retainer Compensation shall be as determined
by the Administrator.
(h) "Deferred Retirement Date" shall mean the first day
of the month coincident with or next following the date on which a Participant
terminated Service after his Normal Retirement Date.
(i) "Director" shall mean an individual who is a director
or trustee of one or more of the AIM Funds which have adopted the Plan but who
is not an employee of any of the AIM Funds, A I M Management Group Inc. or any
of their affiliates.
(j) "Disability" shall mean the inability of the
Participant to participate in meetings of the Board of Directors, either in
person or by telephone, for a period of at least nine (9) months.
(k) "Effective Date" shall mean March 8, 1994.
(l) "Fund" shall mean an AIM Fund which has adopted this
Plan.
(m) "Normal Retirement Date" shall mean, the date on
which a Participant has both attained age 65 (or at least age 55 in the event
of the Director's termination of Service by reason of death or Disability) and
has completed at least five continuous and non-forfeited Years of Service (and
thirty months of Service with one or more of the AIM Funds).
(n) "Participant" shall mean a Director who has met all
of the eligibility requirements of the Plan and who is currently included in
the Plan as provided in Article II hereof.
(o) "Plan" shall mean the "AIM Funds Retirement Plan for
Eligible Directors/Trustees" as described herein or as hereafter amended from
time to time.
(p) "Plan Year" shall mean the calendar year.
(q) "Retirement" shall mean a Director's termination of
his active Service with the AIM Funds on or after his Normal Retirement Date,
due to his death, Disability, or voluntary or involuntary termination of his
Service.
(r) "Retirement Benefit" shall mean the benefit described
under Section 3.1 hereof.
-2-
<PAGE> 7
(s) "Service" shall mean an individual's serving as a
Director of one or more of the AIM Funds. Furthermore, any unbroken service
provided by a Participant (i) to an AIM Fund immediately prior to its being
managed or administered by A I M Advisors, Inc. (or any of its affiliates) or
(ii) to a predecessor of an AIM Fund immediately prior to its being merged into
such AIM Fund, will be taken into account in determining such Participant's
Years of Service, subject to all restrictions and other forfeiture provisions
contained herein.
(t) "Year of Service" shall mean a twelve consecutive
month period of Service. For all purposes in this Plan, if a Participant's
Service terminates prior to his Retirement, he shall forfeit credit for all
Years of Service completed prior to such termination unless (a) he again
becomes a Director and (b) the number of Years of Service he accumulated prior
to such termination exceeded the number of years in which he did not serve as a
Director.
1.2 Plurals and Gender.
Where appearing in the Plan, the masculine gender shall
include the feminine and neuter genders, and the singular shall include the
plural, and vice versa, unless the context clearly indicates a different
meaning.
1.3 Directors/Trustees.
Where appropriate, the term "director" shall refer to
"trustee", "directorship" shall refer to "trusteeship" and "Board of Directors"
shall refer to "Board of Trustees."
1.4 Headings.
The headings and sub-headings in this Plan are inserted for
the convenience of reference only and are to be ignored in any construction of
the provisions hereof.
1.5 Severability.
In case any provision of this Plan shall be held illegal or
void, such illegality or invalidity shall not affect the remaining provisions
of this Plan, but shall be fully severable, and the Plan shall be construed and
enforced as if said illegal or invalid provisions had never been inserted
herein.
-3-
<PAGE> 8
ARTICLE II
PARTICIPATION
-------------
2.1 Commencement of Participation.
------------------------------
Each Director shall become a Participant hereunder on the date
his directorship of one or more of the AIM Funds commences.
2.2 Termination of Participation.
-----------------------------
After commencement or resumption of his participation, a
Director shall remain a Participant until the earliest of the following dates:
(a) His actual Retirement date;
(b) His date of death;
(c) The date on which he otherwise incurs a termination
of Service; or
(d) The effective date of the termination of the Plan.
2.3 Resumption of Participation.
----------------------------
Any Participant whose Service terminates and who thereafter
again becomes a Director shall resume participation immediately upon again
becoming a Director except that, as provided in Section 1.1(t) hereof, if his
Service is terminated prior to his Normal Retirement Date, for all purposes of
this Plan he shall forfeit credit for all Years of Service completed prior to
such termination of his Service.
2.4 Determination of Eligibility.
-----------------------------
The Administrator shall determine the eligibility of Directors
in accordance with the provisions of this Article.
ARTICLE III
BENEFITS UPON
-------------
RETIREMENT AND OTHER TERMINATION OF SERVICE
-------------------------------------------
3.1 Retirement.
-----------
Upon Retirement a Participant shall be entitled to receive an
annual benefit from the AIM Funds commencing on the first day of the calendar
quarter coincident with or next following his date of Retirement, payable in
quarterly installments for a period of no more than
-4-
<PAGE> 9
ten (10) years (or, if less, the number of his Years of Service) equal
to seventy-five percent (75%) of his Compensation.
3.2 Termination of Service Before Retirement.
-----------------------------------------
In the event that a Participant's Service terminates by reason
of death, Disability or removal by the Board for cause (as defined in Section
8.9) prior to his Normal Retirement Date, he shall not be entitled to receive
any benefits hereunder. If a Participant's Service terminates for any other
reason and he has accumulated at least five (5) continuous and non-forfeited
Years of Service, he shall be entitled to receive his Accrued Benefit
determined as of such date of termination.
3.3 Termination of Service by Reason of Death.
------------------------------------------
No benefits will be paid under this Plan with respect to a
Participant after his death other than as provided in Article IV.
3.4 Benefits Calculated in the Aggregate for all of the AIM Funds.
--------------------------------------------------------------
With respect to each Participant, the benefits payable
hereunder shall be based on the aggregate Compensation paid by the AIM Funds
and on the Participant's non-forfeited Years of Service. Each Fund's share of
the obligation to provide such benefits shall be determined by use of
accounting methods adopted by the Administrator.
ARTICLE IV
DEATH BENEFITS
--------------
4.1 Death Prior to Commencement of Benefits.
----------------------------------------
In the event of a Participant's death subsequent to his Normal
Retirement Date, but prior to the commencement of his Retirement Benefits under
Article III hereof, the surviving spouse (if any) of such Participant shall be
entitled to receive a quarterly survivor's benefit for a period of no more than
ten (10) years (or, if less, the number of the Participant's Years of Service)
beginning on the first day of the calendar quarter next following the date of
the Participant's death equal to fifty percent (50%) of the amount of the
quarterly installments of Retirement Benefits that would have been paid to the
Participant under Sections 3.1 or 3.2 hereof had his Retirement occurred on his
date of death.
4.2 Death Subsequent to Commencement of Benefits.
---------------------------------------------
In the event a Participant dies after the commencement of his
Retirement Benefit under Article III, but prior to the cessation of the payment
of such Retirement Benefits, the surviving spouse (if any) of such Participant
shall be entitled to receive survivor's benefits equal to fifty percent (50%)
of the amount of the annual Retirement Benefit payable to the Participant
-5-
<PAGE> 10
under Article III hereunder, paid at such times, and for such period, as such
Retirement Benefit would have continued to have been paid to the Participant
had he not died.
4.3 Death of Spouse.
----------------
(a) In the event a Participant is not survived by a
spouse, no benefits will be paid hereunder upon the Participant's death.
(b) If a deceased Participant's surviving spouse dies
while receiving survivor's benefits hereunder, any installments not paid at the
time of the surviving spouse's death shall be forfeited.
ARTICLE V
SUSPENSION OF BENEFITS, ETC.
----------------------------
5.1 Suspension of Benefits Upon Resumption of Service.
--------------------------------------------------
In the case of a Participant who, at a time when he is
receiving Retirement Benefits under Article III of this Plan, resumes Service
with any AIM Fund, such Retirement Benefits shall be suspended until his
subsequent Retirement, termination of Service or death. Subject to the Years
of Service limitations of Section 3.1 hereof, in the event of his Retirement
or termination of Service following such a suspension, the quarterly amount of
his remaining Retirement Benefits shall thereafter be adjusted, if
appropriate, to reflect any additional Years of Service completed by, or a
higher rate of Compensation received by, such Participant.
5.2 Payments Due Missing Persons.
-----------------------------
The Administrator shall make a reasonable effort to locate all
persons entitled to benefits (including Retirement Benefits and survivor's
benefits for spouses) under the Plan; however, notwithstanding any provisions
of this Plan to the contrary, if, after a period of 5 years from the date any
of such benefits first become due, any such persons entitled to benefits have
not been located, their rights under the Plan shall stand suspended. Before
this provision becomes operative, the Administrator shall send a certified
letter to all such persons (if any) at their last known address advising them
that their benefits under the Plan shall be suspended. Any such suspended
amounts shall be held by the AIM Funds for a period of 3 additional years (or a
total of 8 years from the time the benefits first became payable) and
thereafter such amounts shall be forfeited.
-6-
<PAGE> 11
ARTICLE VI
ADMINISTRATOR
-------------
6.1 Appointment of Administrator.
-----------------------------
This Plan shall be administered by the Nominating and
Compensation Committees of the Boards of Directors of the AIM Funds. The
members of such committees are not "interested persons" (within the meaning of
Section 2(a)(19) of the Investment Company Act of 1940) of any of the AIM
Funds. The term "Administrator" as used in this Plan shall refer to the
members of such committees, either individually or collectively, as
appropriate.
6.2 Powers and Duties of Administrator.
-----------------------------------
Except as provided below, the Administrator shall have the
following duties and responsibilities in connection with the administration of
this Plan:
(a) To promulgate and enforce such rules, regulations and
procedures as shall be proper for the efficient administration of the Plan;
(b) To determine all questions arising in the
administration, interpretation and application of the Plan, including questions
of eligibility and of the status and rights of Participants and any other
persons hereunder;
(c) To decide any dispute arising hereunder; provided,
however, that no Administrator shall participate in any matter involving any
questions relating solely to his own participation or benefits under this Plan;
(d) To advise the Boards of Directors of the AIM Funds
regarding the known future need for funds to be available for distribution;
(e) To correct defects, supply omissions and reconcile
inconsistencies to the extent necessary to effectuate the Plan;
(f) To compute the amount of benefits and other payments
which shall be payable to any Participant or surviving spouse in accordance
with the provisions of the Plan and to determine the person or persons to whom
such benefits shall be paid;
(g) To make recommendations to the Boards of Directors of
the AIM Funds with respect to proposed amendments to the Plan;
(h) To file all reports with government agencies,
Participants and other parties as may be required by law, whether such reports
are initially the obligation of the AIM Funds, or the Plan;
-7-
<PAGE> 12
(i) To engage the Actuary of the Plan and to cause the
liabilities of the Plan to be evaluated by the Actuary; and
(j) To have all such other powers as may be necessary to
discharge its duties hereunder.
6.3 Action by Administrator.
------------------------
The Administrator may elect a Chairman and Secretary from
among its members and may adopt rules for the conduct of its business. A
majority of the members then serving shall constitute a quorum for the
transacting of business. All resolutions or other action taken by the
Administrator shall be by vote of a majority of those present at such meeting
and entitled to vote. Resolutions may be adopted or other action taken without
a meeting upon written consent signed by at least a majority of the members.
All documents, instruments, orders, requests, directions, instructions and
other papers shall be executed on behalf of the Administrator by either the
Chairman or the Secretary of the Administrator, if any, or by any member or
agent of the Administrator duly authorized to act on the Administrator's
behalf.
6.4 Participation by Administrators.
--------------------------------
No Administrator shall be precluded from becoming a
Participant in the Plan if he would be otherwise eligible, but he shall not be
entitled to vote or act upon matters or to sign any documents relating
specifically to his own participation under the Plan, except when such matters
or documents relate to benefits generally. If this disqualification results in
the lack of a quorum, then the Boards of Directors, by majority vote of the
members of a majority of such Boards of Directors (a "Majority Vote"), shall
appoint a sufficient number of temporary Administrators, who shall serve for
the sole purpose of determining such a question.
6.5 Agents and Expenses.
--------------------
The Administrator may employ agents and provide for such
clerical, legal, actuarial, accounting, medical, advisory or other services as
it deems necessary to perform its duties under this Plan. The cost of such
services and all other expenses incurred by the Administrator in connection
with the administration of the Plan shall be allocated to each Fund pursuant to
the method utilized under Section 3.4 hereof with respect to costs related to
benefit accruals. For purposes of the preceding sentence, if an individual
serves as a Director for more than one Fund, he shall be deemed to be a
separate Director for each such Fund in determining the aggregate number of
Directors of the AIM Funds.
6.6 Allocation of Duties.
---------------------
The duties, powers and responsibilities reserved to the
Administrator may be allocated among its members so long as such allocation is
pursuant to written procedures adopted by the Administrator, in which case no
Administrator shall have any liability, with respect to any duties, powers or
responsibilities not allocated to him, for the acts or omissions of any other
Administrator.
-8-
<PAGE> 13
6.7 Delegation of Duties.
---------------------
The Administrator may delegate any of its duties to employees
of A I M Advisors, Inc. or any of its affiliates or to any other person or
firm, provided that the Administrator shall prudently choose such agents and
rely in good faith on their actions.
6.8 Administrator's Action Conclusive.
----------------------------------
Any action on matters within the discretion of the
Administrator shall be final and conclusive.
6.9 Records and Reports.
--------------------
The Administrator shall maintain adequate records of its
actions and proceedings in administering this Plan and shall file all reports
and take all other actions as it deems appropriate in order to comply with any
federal or state law.
6.10 Information from the AIM Funds.
-------------------------------
The AIM Funds shall promptly furnish all necessary information
to the Administrator to permit it to perform its duties under this Plan. The
Administrator shall be entitled to rely upon the accuracy and completeness of
all information furnished to it by the AIM Funds, unless it knows or should
have known that such information is erroneous.
6.11 Reservation of Rights by Boards of Directors.
---------------------------------------------
When rights are reserved in this plan to the Boards of
Directors, such rights shall be exercised only by Majority Vote of the Boards
of Directors, except where the Boards of Directors, by unanimous written
resolution, delegate any such rights to one or more persons or to the
Administrator. Subject to the rights reserved to the Boards of Directors as
set forth in this Plan, no member of the Boards of Directors shall have any
duties or responsibilities under this Plan, except to the extent he shall be
acting in the capacity of an Administrator.
6.12 Liability and Indemnification.
------------------------------
(a) The Administrator shall perform all duties required
of it under this Plan in a prudent manner. The Administrator shall not be
responsible in any way for any action or omission of the AIM Funds or their
employees in the performance of their duties and obligations as set forth in
this Plan. The Administrator also shall not be responsible for any act or
omission of any of its agents provided that such agents were prudently chosen
by the Administrator and that the Administrator relied in good faith upon the
action of such agents.
(b) Except for its own gross negligence, willful
misconduct or willful breach of the terms of this Plan, the Administrator shall
be indemnified and held harmless by the AIM Funds against any and all
liability, loss, damages, cost and expense which may arise, occur by reason of,
or be based upon, any matter connected with or related to this Plan or its
-9-
<PAGE> 14
administration (including, but not limited to, any and all expenses whatsoever
reasonably incurred in investigating, preparing or defending any litigation,
commenced or threatened, or in settlement of any such claim).
ARTICLE VII
AMENDMENTS AND TERMINATION
--------------------------
7.1 Amendments.
-----------
The Boards of Directors reserve the right at any time and from
time to time, and retroactively if deemed necessary or appropriate by them, to
amend in whole or in part by Majority Vote any or all of the provisions of this
Plan, provided that:
(a) No amendment shall make it possible for any part of a
Participant's or former Participant's Retirement Benefit to be used for, or
diverted to, purposes other than for the exclusive benefit of such Participant
or surviving spouse, except to the extent otherwise provided in this Plan;
(b) No amendment may reduce any Participant's or former
Participant's Retirement Benefit as of the effective date of the amendment;
Amendments may be made in the form of Board of Directors'
resolutions or separate written document.
7.2 Termination.
------------
Except as provided below, the Boards of Directors reserve the
right to terminate this Plan at any time by Majority Vote by giving to the
Administrator notice in writing of such desire to terminate. The Plan shall
terminate upon the date of receipt of such notice and the rights of all
Participants to their Retirement Benefits (determined as of the date the Plan
is terminated) shall become payable upon the effective date of the termination
of the Plan in quarterly installments or in an actuarially equivalent lump sum
as determined by the Administrator.
ARTICLE VIII
MISCELLANEOUS
-------------
8.1 Rights of Creditors.
--------------------
(a) The Plan is unfunded. Neither the Participants nor
any other persons shall have any interest in any fund or in any specific asset
or assets of any of the AIM Funds by
-10-
<PAGE> 15
reason of any Accrued or Retirement Benefit hereunder, nor any rights to
receive distribution of any Retirement Benefit except and as to the extent
expressly provided hereunder.
(b) The Accrued and Retirement Benefits of each
Participant are unsecured and shall be subject to the claims of the general
creditors of the AIM Funds.
8.2 Liability Limited.
------------------
Neither the AIM Funds, the Administrator, nor any agents,
employees, officers, directors or shareholders of any of them, nor any other
person shall have any liability or responsibility with respect to this Plan,
except as expressly provided herein.
8.3 Incapacity.
-----------
If the Administrator shall receive evidence satisfactory to it
that a Participant or surviving spouse entitled to receive any benefit under
the Plan is, at the time when such benefit becomes payable, physically or
mentally incompetent to receive such benefit and to give a valid release
therefor, and that another person or an institution is then maintaining or has
custody of such Participant or surviving spouse and that no guardian, committee
or other representative of the estate of such Participant or surviving spouse
shall have been duly appointed, the Administrator may make payment of such
benefit otherwise payable to such Participant or surviving spouse to such other
person or institution, and the release of such other person or institution
shall be a valid and complete discharge for the payment of such benefit.
8.4 Cooperation of Parties.
-----------------------
All parties to this Plan and any person claiming any interest
hereunder agree to perform any and all acts and execute any and all documents
and papers which are necessary or desirable for carrying out this Plan or any
of its provisions.
8.5 Governing Law.
--------------
All rights under the Plan shall be governed by and construed
in accordance with rules of Federal law applicable to such plans and, to the
extent not preempted, by the laws of the State of Texas without regard to
principles of conflicts of law. No action shall be brought by or on behalf of
any Participant for or with respect to benefits due under this Plan unless the
person bringing such action has timely exhausted the Plan's claim review
procedure. Any such action must be commenced within three years. This
three-year period shall be computed from the earlier of (a) the date a final
determination denying such benefit, in whole or in part, is issued under the
Plan's claim review procedure or (b) the date such individual's cause of action
first accrued. Any dispute, controversy or claim arising out of or in
connection with this Plan (including the applicability of this arbitration
provision) and not resolved pursuant to the Plan's claim review procedure shall
be determined and settled by arbitration conducted by the American Arbitration
Association ("AAA") in the County and State of the Funds' principal place of
business and in accordance with the then existing rules, regulations, practices
and procedures of the AAA. Any award in such arbitration shall be final,
conclusive and binding upon the
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<PAGE> 16
parties to the arbitration and may be enforced by either party in any court of
competent jurisdiction. Each party to the arbitration will bear its own costs
and fees (including attorney's fees).
8.6 Nonguarantee of Directorship.
-----------------------------
Nothing contained in this Plan shall be construed as a
guaranty or right of any Participant to be continued as a Director of one or
more of the AIM Funds (or of a right of a Director to any specific level of
Compensation) or as a limitation of the right of the AIM Funds to remove any of
its directors.
8.7 Counsel.
--------
The Administrator may consult with legal counsel, who may be
counsel for one or more of the Boards of Directors of the AIM Funds and for the
Administrator, with respect to the meaning or construction of this Plan, its
obligations or duties hereunder or with respect to any action or proceeding or
any question of law, and they shall be fully protected with respect to any
action taken or omitted by them in good faith pursuant to the advice of legal
counsel.
8.8 Spendthrift Provision.
----------------------
A Participant's interest in his Accrued Benefit or Retirement
Benefit may not be transferred, alienated, assigned nor become subject to
execution, garnishment or attachment, and any attempt to do so will render
benefits hereunder immediately forfeitable.
8.9 Forfeiture for Cause.
---------------------
Notwithstanding any other provision of this Plan to the
contrary, any benefits to which a Participant (or his surviving spouse) may
otherwise be entitled hereunder will be forfeited in the event the
Administrator, in its sole discretion, determines that a Participant's
termination of Service is due to such Participant's willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Director.
ARTICLE IX
CLAIMS PROCEDURE
----------------
9.1 Notice of Denial.
-----------------
If a Participant is denied any Retirement Benefit (or a
surviving spouse is denied a survivor's benefit) under this Plan, either in
total or in an amount less than the full Retirement Benefit to which he would
normally be entitled, the Administrator shall advise the Participant (or
surviving spouse) in writing of the amount of his Retirement Benefit (or
survivor's benefit), if any, and the specific reasons for the denial. The
Administrator shall also furnish the Participant (or surviving spouse) at that
time with a written notice containing:
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<PAGE> 17
(a) A specific reference to pertinent Plan provisions.
(b) A description of any additional material or
information necessary for the Participant (or surviving spouse) to perfect his
claim, if possible, and an explanation of why such material or information is
needed.
(c) An explanation of the Plan's claim review procedure.
9.2 Right to Reconsideration.
-------------------------
Within 60 days of receipt of the information stated in Section
9.1 above, the Participant (or surviving spouse) shall, if he desires further
review, file a written request for reconsideration with the Administrator.
9.3 Review of Documents.
--------------------
So long as the Participant's (or surviving spouse's) request
for review is pending (including the 60 day period in 9.2 above), the
Participant (or surviving spouse) or his duly authorized representative may
review pertinent Plan documents and may submit issues and comments in writing
to the Administrator.
9.4 Decision by Administrator.
--------------------------
A final and binding decision shall be made by the
Administrator within 60 days of the filing by the Participant (or surviving
spouse) of his request for reconsideration, provided, however, that if the
Administrator, in its discretion, feels that a hearing with the Participant (or
surviving spouse) or his representative present is necessary or desirable, this
period shall be extended an additional 60 days.
9.5 Notice by Administrator.
------------------------
The Administrator's decision shall be conveyed to the
Participant (or surviving spouse) in writing and shall include specific reasons
for the provisions on which the decision is based.
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<PAGE> 1
EXHIBIT 7(b)
THE AIM GROUP OF FUNDS
DEFERRED COMPENSATION PLAN
FOR ELIGIBLE DIRECTORS/TRUSTEES
<PAGE> 2
DEFERRED COMPENSATION AGREEMENT
SUMMARY
Your Deferred Compensation Agreement (the "Agreement") allows
you to defer some or all of your annual trustee's fees otherwise payable by the
Funds. Deferred fees are deemed invested in certain mutual funds selected by
you. The deferral is pre-tax, and the deferred amount and the credited gains,
losses and income are not subject to tax until paid out to you.
Your deferrals (and investment experience) are posted to a
bookkeeping account maintained by the Funds in your name. In order for you to
enjoy the tax deferral, the payments due under the Agreement will be paid from
the Funds' general assets, and you are considered a general unsecured creditor
of the Funds; you may not transfer your right to receive payments under the
Agreement to any other person, nor may you pledge that right to secure any debt
or other obligation; finally, an election to defer must be made in writing
before the first day of the calendar year for which the fees are earned (the
"Election Date") and elections can be changed only prospectively, effective for
the next calendar year.
An important change has been made to your Agreement to give
you greater flexibility to select the time of payment of amounts that you
defer: for amounts previously deferred and for future elections you now
designate a specific Payment Date.
PAYMENT DATE ELECTION
Deferred fees (and the income, gains and losses credited
during the deferral period) will be paid out in a single sum in cash within 30
days of the Payment Date elected for that deferral. (For payments in
connection with your termination of service as a trustee, see below.)
Deferrals must be for a minimum three year period (unless the
your retirement date under the Retirement Plan is earlier). Thus, the Payment
Date may be the first day of any calendar quarter that follows the third
anniversary of the applicable Election Date or your retirement date. For your
first Payment Date election that applies to previously deferred fees, the
Election Date is considered to be January 1, 1996. Thus, fees previously
deferred and fees payable for the calendar year beginning January 1, 1996 may
be deferred to the first day of any calendar quarter in any year from 1999.
EXTENDING A PAYMENT DATE
One year prior to any Payment Date, you will have a one-time
opportunity to extend that Date, provided that the additional period of
deferral satisfies the requirements described above.
<PAGE> 3
TERMINATION OF SERVICE
Upon your death, your account under the Agreement will be paid
out in a single sum in cash as soon as practicable. Payment will be made to
your designated Beneficiary or Beneficiaries or to your estate if there is no
surviving Beneficiary.
Upon termination of your service as trustee for any reason
other than death or your retirement (as defined in the Retirement Plan), your
account will be paid to you as a single sum (or in installments if you had
elected that method) in cash within three months following the end of the
fiscal year in which you terminate, regardless of the Payment Dates you
elected.
<PAGE> 4
ARTICLE Page
------- ----
1. Definitions of Terms and Construction 1
2. Period During Which Compensation Deferrals are Permitted 2
3. Compensation Deferrals 2
4. Distributions from Deferral Account 4
5. Amendments and Termination 5
6. Miscellaneous
<PAGE> 5
DEFERRED COMPENSATION AGREEMENT
-------------------------------
AGREEMENT, made on this __ day of _______, 19__, by and
between the registered open-end investment companies listed on Appendix A
hereto (the "Funds"), and
________________________________________________________________ (the
"Director") residing at ___________________________________________________.
WHEREAS, the Funds and the Director have entered into
agreements pursuant to which the Director will serve as a director/trustee of
the Funds; and
WHEREAS, the Funds and the Director have previously entered
into an additional agreement whereby the Funds will provide to the Director a
vehicle under which the Director can defer receipt of directors' fees payable
by the Funds and now desire to amend and restate such agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations set forth in this Agreement, the Funds and the Director hereby
agree as follows:
1. DEFINITION OF TERMS AND CONSTRUCTION
------------------------------------
1.1 Definitions. Unless a different meaning is plainly implied by
the context, the following terms as used in this Agreement shall have the
following meanings:
(a) "Beneficiary" shall mean such person or persons
designated pursuant to Section 4.3 hereof to receive benefits after the death
of the Director.
(b) "Boards of Directors" shall mean the respective
Boards of Directors of the Funds.
(c) "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time, or any successor statute.
(d) "Compensation" shall mean the amount of directors'
fees paid by each of the Funds to the Director during a Deferral Year prior to
reduction for Compensation Deferrals made under this Agreement.
(e) "Compensation Deferral" shall mean the amount or
amounts of the Director's Compensation deferred under the provisions of Section
3 of this Agreement.
-1-
<PAGE> 6
(f) "Deferral Accounts" shall mean the accounts
maintained to reflect the Director's Compensation Deferrals made pursuant to
Section 3 hereof and any other credits or debits thereto.
(g) "Deferral Year" shall mean each calendar year during
which the Director makes, or is entitled to make, Compensation Deferrals under
Section 3 hereof.
(h) "Retirement" shall have the same meaning as set forth
under the Retirement Plan.
(i) "Retirement Plan" shall mean the "AIM Funds
Retirement Plan for Eligible Directors/Trustees."
(j) "Valuation Date" shall mean the last business day of
each calendar year and any other day upon which the Funds makes valuations of
the Deferral Accounts.
1.2 Plurals and Gender. Where appearing in this Agreement the
singular shall include the plural and the masculine shall include the feminine,
and vice versa, unless the context clearly indicates a different meaning.
1.3 Directors and Trustees. Where appearing in this Agreement,
"Director" shall also refer to "Trustee" and "Board of Directors" shall also
refer to "Board of Trustees."
1.4 Headings. The headings and sub-headings in this Agreement are
inserted for the convenience of reference only and are to be ignored in any
construction of the provisions hereof.
1.5 Separate Agreement for Each Fund. This Agreement is drafted,
and shall be construed, as a separate agreement between the Director and each
of the Funds.
2. PERIOD DURING WHICH COMPENSATION DEFERRALS ARE PERMITTED
--------------------------------------------------------
2.1 Commencement of Compensation Deferrals. The Director may
elect, on a form provided by, and submitted to, the Presidents of the
respective Funds, to commence Compensation Deferrals under Section 3 hereof for
the period beginning on the later of (i) the date this Agreement is executed or
(ii) the date such form is submitted to the Presidents of the Funds.
2.2 Termination of Deferrals. The Director shall not be eligible
to make Compensation Deferrals after the earliest of the following dates:
(a) The date on which he ceases to serve as a Director of
all of the Funds; or
(b) The effective date of the termination of this
Agreement.
-2-
<PAGE> 7
3. COMPENSATION DEFERRALS
----------------------
3.1 Compensation Deferral Elections.
(a) On or prior to the first day of any Deferral Year,
the Director may elect, on the form described in Section 2.1 hereof, to defer
the receipt of all or a portion of his Compensation for such Deferral Year.
Such writing shall set forth the amount of such Compensation Deferral (in whole
percentage amounts). Such election shall continue in effect for all subsequent
Deferral Years unless it is canceled or modified as provided below.
(b) Compensation Deferrals shall be withheld from each
payment of Compensation by the Funds to the Director based upon the percentage
amount elected by the Director under Section 3.1(a) hereof.
(c) The Director may cancel or modify the amount of his
Compensation Deferrals on a prospective basis by submitting to the Presidents
of the Funds a revised Compensation Deferral election form. Such change will
be effective as of the first day of the Deferral Year following the date such
revision is submitted to the Presidents of the Funds.
3.2 Valuation of Deferral Account.
(a) Each Fund shall establish a bookkeeping Deferral
Account to which will be credited an amount equal to the Director's
Compensation Deferrals under this Agreement made with respect to Compensation
earned from each such Fund. Compensation Deferrals shall be allocated to the
Deferral Accounts on the first business day following the date such
Compensation Deferrals are withheld from the Director's Compensation. As of
the date of this Agreement, the Deferral Accounts also shall be credited with
the amounts credited to the Director under each other outstanding elective
deferred compensation agreement entered into by and between the Funds and the
Director which is superseded by this Agreement pursuant to Section 6.11 hereof.
The Deferral Accounts shall be debited to reflect any distributions from such
Accounts. Such debits shall be allocated to the Deferral Accounts as of the
date such distributions are made.
(b) As of each Valuation Date, income, gain and loss
equivalents (determined as if the Deferral Accounts are invested in the manner
set forth under Section 3.3, below) attributable to the period following the
next preceding Valuation Date shall be credited to and/or deducted from the
Director's Deferral Accounts.
3.3 Investment of Deferral Account Balances.
(a) (1) The Director may select, from various options
made available by the Funds, the investment media in which all or part of his
Deferral Accounts shall be deemed to be invested.
-3-
<PAGE> 8
(2) The Director shall make an investment
designation on a form provided by the Presidents of the Funds which shall
remain effective until another valid direction has been made by the Director as
herein provided. The Director may amend his investment designation as of the
end of each calendar quarter by giving written direction to the Presidents of
the Funds at least thirty (30) days prior to the end of such calendar quarter.
A timely change to a Director's investment designation shall become effective
on the first day of the calendar quarter following receipt by the Presidents of
the Funds.
(3) The investment media deemed to be made
available to the Director, and any limitation on the maximum or minimum
percentages of the Director's Deferral Accounts that may be invested any
particular medium, shall be the same as from time-to-time communicated to the
Director by the Presidents of the Funds.
(b) Except as provided below, the Director's Deferral
Accounts shall be deemed to be invested in accordance with his investment
designations, provided such designations conform to the provisions of this
Section. If -
(1) the Director does not furnish the Presidents
of the Funds with complete, written investment instructions, or
(2) the written investment instructions from the
Director are unclear,
then the Director's election to make Compensation Deferrals hereunder shall be
held in abeyance and have no force or effect until such time as the Director
shall provide the Presidents of the Funds with complete investment
instructions. Notwithstanding the above, the Boards of Directors, in their
sole discretion, may disregard the Director's election and determine that all
Compensation Deferrals shall be deemed to be invested in a fund determined by
the Boards of Directors. In the event that any fund under which any portion of
the Director's Deferral Accounts is deemed to be invested ceases to exist, such
portion of the Deferral Accounts thereafter shall be held in the successor to
such fund, subject to subsequent deemed investment elections.
The Fund shall provide an annual statement to the Director
showing such information as is appropriate, including the aggregate amount in
the Deferral Accounts, as of a reasonably current date.
-4-
<PAGE> 9
4. DISTRIBUTIONS FROM DEFERRAL ACCOUNTS
------------------------------------
4.1 Payment Date and Methods.
(a) Designation of Date. Each deferral direction given
pursuant to Section 3.1 shall include designation of the Payment Date for the
value of the amount deferred. Such Payment Date shall be the first day of any
calendar quarter, subject to the limitation set forth in paragraph 4.1(c).
(b) Extension Date. One year before the Payment Date
initially designated pursuant to paragraph 4.1(a) above, the Participant may
irrevocably elect to extend such Payment Date to the first day of any calendar
quarter, subject to the limitation set forth in paragraph 4.1(c).
(c) Limitation. The Director shall select a Payment Date
(or extended Payment Date) that is no sooner than the earlier of (i) the
January 1 that follows the third anniversary of the Participant's deferral
election made pursuant to paragraph 4.1(a) or (b) or (ii) the January 1 of the
year after the Participant's Retirement.
(d) Methods of Payment. Distributions from the
Director's Deferral Accounts shall be paid in cash. A Participant may elect,
at the time a Payment Date is selected, to receive the amount which will become
payable as of such Payment Date in generally equal quarterly installments over
a period not to exceed ten (10) years. Except as may be elected pursuant to
this paragraph, all amounts becoming payable under this Plan shall be paid in a
single sum.
(e) Irrevocability. Except as provided in paragraph
4.1(b), a designation of a Payment Date and an election of installment payments
shall be irrevocable; provided, however, that payment shall be made or begin on
a different date as follows:
(1) Upon the Director's death, payment shall be
made in accordance with Section 4.2,
(2) Upon the Director's ceasing to serve as a
director of all of the Funds for reasons other than death or Retirement,
payment shall be made or begin within three months after the end of the
calendar year in which such termination occurs in accordance with the method
elected by the Director pursuant to paragraph 4.1(d), except that the Boards of
Directors, in their sole discretion, may accelerate the distribution of such
Deferral Accounts,
(3) Upon termination of this Agreement, payment
shall be made in accordance with Section 5.2, and
(4) In the event of the liquidation, dissolution
or winding up of a Fund or the distribution of all or substantially all of a
Fund's assets and property relating to one or
-5-
<PAGE> 10
more series of its shares to the shareholders of such series (for this purpose
a sale, conveyance or transfer of a Fund's assets to a trust, partnership,
association or corporation in exchange for cash, shares or other securities
with the transfer being made subject to, or with the assumption by the
transferee of, the liabilities of the Fund shall not be deemed a termination of
the Fund or such a distribution), all unpaid balances of the Deferral Accounts
related to such Fund as of the effective date thereof shall be paid in a lump
sum on such effective date.
4.2 Death Prior to Complete Distribution of Deferral Accounts.
Upon the death of the Director prior to the commencement of the distribution of
the amounts credited to his Deferral Accounts, the balance of such Accounts
shall be distributed to his Beneficiary in a lump sum as soon as practicable
after the Director's death. In the event of the death of the Director after
the commencement of such distribution, but prior to the complete distribution
of his Deferral Accounts, the balance of the amounts credited to his Deferral
Accounts shall be distributed to his Beneficiary over the remaining period
during which such amounts were distributable to the Director under Section 4.1
hereof. Notwithstanding the above, the Boards of Directors, in their sole
discretion, may accelerate the distribution of the Deferral Accounts.
4.3 Designation of Beneficiary. For purposes of Section 4.2
hereof, the Director's Beneficiary shall be the person or persons so designated
by the Director in a written instrument submitted to the Presidents of the
Funds. In the event the Director fails to properly designate a Beneficiary,
his Beneficiary shall be the person or persons in the first of the following
classes of successive preference Beneficiaries surviving at the death of the
Director: the Director's (1) surviving spouse or (2) estate.
4.4 Payments Due Missing Persons. The Funds shall make a
reasonable effort to locate all persons entitled to benefits under this
Agreement. However, notwithstanding any provisions of this Agreement to the
contrary, if, after a period of five (5) years from the date such benefit shall
be due, any such persons entitled to benefits have not been located, their
rights under this Agreement shall stand suspended. Before this provision
becomes operative, the Funds shall send a certified letter to all such persons
to their last known address advising them that their benefits under this
Agreement shall be suspended. Any such suspended amounts shall be held by the
Funds for a period of three (3) additional years (or a total of eight (8) years
from the time the benefits first become payable) and thereafter, if unclaimed,
such amounts shall be forfeited.
5. AMENDMENTS AND TERMINATION
--------------------------
5.1 Amendments.
(a) The Funds and the Director may, by a written
instrument signed by, or on behalf of, such parties, amend this Agreement at
any time and in any manner.
-6-
<PAGE> 11
(b) The Funds reserve the right to amend, in whole or in
part, and in any manner, any or all of the provisions of this Agreement by
action of their Boards of Directors for the purposes of complying with any
provision of the Code or any other technical or legal requirements, provided
that:
(1) No such amendment shall make it possible for
any part of the Director's Deferral Accounts to be used for, or diverted to,
purposes other than for the exclusive benefit of the Director or his
Beneficiaries, except to the extent otherwise provided in this Agreement;
and
(2) No such amendment may reduce the amount of
the Director's Deferral Accounts as of the effective date of such amendment.
5.2 Termination. The Director and the Funds may, by written
instrument signed by, or on behalf of, such parties, terminate this Agreement
at any time. In the event of the termination of this Agreement, the Boards of
Directors, in their sole discretion, may choose to pay out the Director's
Deferral Accounts prior to the designated Payment Dates. Otherwise, following
a termination of the Plan, such Accounts shall continue to be maintained in
accordance with the provisions of this Plan until the time they are paid out.
6. MISCELLANEOUS.
--------------
6.1 Rights of Creditors.
(a) This Agreement is unfunded. Neither the Director nor
any other persons shall have any interest in any specific asset or assets of
the Funds by reason of any Deferral Accounts hereunder, nor any rights to
receive distribution of his Deferral Accounts except and as to the extent
expressly provided hereunder. The Funds shall not be required to purchase,
hold or dispose of any investments pursuant to this Agreement; however, if in
order to cover their obligations hereunder the Funds elect to purchase any
investments the same shall continue for all purposes to be a part of the
general assets and property of the Funds, subject to the claims of their
general creditors and no person other than the Funds shall by virtue of the
provisions of this Agreement have any interest in such assets other than an
interest as a general creditor.
(b) The rights of the Director and the Beneficiaries to
the amounts held in the Deferral Accounts are unsecured and shall be subject to
the creditors of the Funds. With respect to the payment of amounts held under
the Deferral Accounts, the Director and his Beneficiaries have the status of
unsecured creditors of the Funds. This Agreement is executed on behalf of the
Funds by an officer, or other representative, of the Funds as such and not
individually. Any obligation of the Funds hereunder shall be an unsecured
obligation of the Funds and not of any other person.
-7-
<PAGE> 12
6.2 Agents. The Funds may employ agents and provide for such
clerical, legal, actuarial, accounting, advisory or other services as it deems
necessary to perform their duties under this Agreement. The Funds shall bear
the cost of such services and all other expenses they incur in connection with
the administration of this Agreement.
6.3 Liability and Indemnification. Except for their own gross
negligence, willful misconduct or willful breach of the terms of this
Agreement, the Funds shall be indemnified and held harmless by the Director
against liability or losses occurring by reason of any act or omission of the
Funds or any other person.
6.4 Incapacity. If the Funds shall receive evidence satisfactory
to them that the Director or any Beneficiary entitled to receive any benefit
under the Agreement is, at the time when such benefit becomes payable, a minor,
or is physically or mentally incompetent to receive such benefit and to give a
valid release therefor, and that another person or an institution is then
maintaining or has custody of the Director or Beneficiary and that no guardian,
committee or other representative of the estate of the Director or Beneficiary
shall have been duly appointed, the Funds may make payment of such benefit
otherwise payable to the Director or Beneficiary to such other person or
institution, including a custodian under a Uniform Gifts to Minors Act, or
corresponding legislation (who shall be an adult, a guardian of the minor or a
trust company), and the release of such other person or institution shall be a
valid and complete discharge for the payment of such benefit.
6.5 Cooperation of Parties. All parties to this Agreement and any
person claiming any interest hereunder agree to perform any and all acts and
execute any and all documents and papers which are necessary or desirable for
carrying out this Agreement or any of its provisions.
6.6 Governing Law. This Agreement is made and entered into in the
State of Texas and all matters concerning its validity, construction and
administration shall be governed by the laws of the State of Texas.
6.7 Nonguarantee of Directorship. Nothing contained in this
Agreement shall be construed as a contract or guarantee of the right of the
Director to be, or remain as, a director of any of the Funds or to receive any,
or any particular rate of, Compensation from any of the Funds.
6.8 Counsel. The Funds may consult with legal counsel with
respect to the meaning or construction of this Agreement, their obligations or
duties hereunder or with respect to any action or proceeding or any question of
law, and they shall be fully protected with respect to any action taken or
omitted by them in good faith pursuant to the advice of legal counsel.
6.9 Spendthrift Provision. The Director's and Beneficiaries'
interests in the Deferral Accounts may not be anticipated, sold, encumbered,
pledged, mortgaged, charged, transferred,
-8-
<PAGE> 13
alienated, assigned nor become subject to execution, garnishment or
attachment and any attempt to do so by any person shall render the Deferral
Accounts immediately forfeitable.
6.10 Notices. For purposes of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered personally or mailed by
United States registered or certified mail, return receipt requested, postage
prepaid, or by nationally recognized overnight delivery service providing for a
signed return receipt, addressed to the Director at the home address set forth
in the Funds' records and to the Funds at the address set forth on the first
page of this Agreement, provided that all notices to the Funds shall be
directed to the attention of the Presidents of the Funds or to such other
address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
6.11 Entire Agreement. This Agreement contains the entire
understanding between the Funds and the Director with respect to the payment of
non-qualified elective deferred compensation by the Fund to the Director.
Effective as of the date hereof, this Agreement replaces, and supersedes, all
other non-qualified elective deferred compensation agreements by and between
the Director and the Funds.
6.12 Interpretation of Agreement. Interpretations of, and
determinations (including factual determinations) related to, this Agreement
made by the Funds in good faith, including any determinations of the amounts of
the Deferral Accounts, shall be conclusive and binding upon all parties; and
the Funds shall not incur any liability to the Director for any such
interpretation or determination so made or for any other action taken by it in
connection with this Agreement in good faith.
6.13 Successors and Assigns. This Agreement shall be binding upon,
and shall inure to the benefit of, the Funds and their successors and assigns
and to the Director and his heirs, executors, administrators and personal
representatives.
6.14 Severability. In the event any one or more provisions of this
Agreement are held to be invalid or unenforceable, such illegality or
unenforceability shall not affect the validity or enforceability of the other
provisions hereof and such other provisions shall remain in full force and
effect unaffected by such invalidity or unenforceability.
6.15 Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original,
but all of which together shall constitute one and the same instrument.
-9-
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
The Funds
________________________ By:_________________________
Witness Name:
Title:
________________________ ____________________________
Witness Director
-10-
<PAGE> 15
APPENDIX A
----------
AIM EQUITY FUNDS, INC.
AIMS FUNDS GROUP
AIM INTERNATIONAL FUNDS, INC.
AIM INVESTMENT SECURITIES FUNDS
AIM STRATEGIC INCOME FUND, INC.
AIM SUMMIT FUND, INC.
AIM TAX-EXEMPT FUNDS, INC.
AIM VARIABLE INSURANCE FUNDS, INC.
SHORT-TERM INVESTMENTS CO.
SHORT-TERM INVESTMENTS TRUST
TAX-FREE INVESTMENTS CO.
<PAGE> 16
DEFERRED COMPENSATION AGREEMENT
DEFERRAL ELECTION FORM
-------------------------------
TO: Presidents of the AIM Funds
FROM:
DATE:
With respect to the Deferred Compensation agreement (the
"Agreement") dated as of ________________ by and between the undersigned and
the AIM Funds, I hereby make the following elections:
Deferral of Compensation
------------------------
Starting with Compensation to be paid to me with respect to
services provided by me to the AIM Funds after the date this election Form is
received by the AIM Funds, I hereby elect that ______ percent (_____%) of my
Compensation (as defined under the Agreement) be reduced and that the Fund
establish a bookkeeping account credited with amounts equal to the amount so
reduced (the "Deferral Account"). The Deferral Account shall be further
credited with income equivalents as provided under the Agreement. I understand
that this election will remain in effect with respect to Compensation I earn in
subsequent years unless I modify or revoke it. I further understand that such
modification or revocation will be effective only prospectively and will apply
commencing with the Compensation I earn in the calendar year that begins after
the change is received by you.
Payment Date
------------
I hereby designate ________ 1 (select the first month in any
calendar quarter) in the year ______ (select a year that is at least four years
after the year this election is made) as the Payment Date for the amounts
credited to my Deferral Account pursuant to the election made above. If my
Retirement (as defined in the Agreement) occurs sooner, I o do o do not (check
the appropriate box) want payment of such amounts to commence effective the
January 1 following my Retirement. I understand that amounts credited to my
Deferral Account may be paid to me prior to the Payment Date as provided in the
Agreement.
Payment Method
--------------
I hereby elect to receive the amounts credited to my Deferral
Account in (check one)
o a single payment in cash
o annual installments for a period of ____ (select no more than 10
years)
-12-
<PAGE> 17
beginning within 30 days following the payment date selected above.
I understand that the amounts credited to my Deferral Account
shall remain the general assets of the AIM Funds and that, with respect to the
payment of such amounts, I am merely a general creditor of the AIM Funds. I
may not sell, encumber, pledge, assign or otherwise alienate the amounts
credited to my Deferral Account.
I hereby agree that the terms of the Agreement are
incorporated herein and are made a part hereof. Dated as of the day and year
first above written.
WITNESS: DIRECTOR:
_________________________ ______________________________
WITNESS: RECEIVED:
_________________________ AIM Funds
By:___________________________
Date:_________________________
-13-
<PAGE> 18
DEFERRED COMPENSATION AGREEMENT
INVESTMENT DIRECTION FORM
-------------------------------
TO: Presidents of the AIM Funds
FROM:
DATE:
With respect to the Deferred Compensation Agreement (the
"Agreement") dated as of ________________ by and between the undersigned and
the AIM Funds, I hereby elect that my Deferral Account under the Agreement be
considered to be invested as follows (in multiples of 10%):
AIM WEINGARTEN FUND ____________%
AIM CONSTELLATION FUND ____________%
AIM HIGH YIELD FUND ____________%
AIM INTERNATIONAL EQUITY FUND ____________%
AIM AGGRESSIVE GROWTH EQUITY FUND __________%
AIM LIMITED MATURITY TREASURY SHARES FUND __________%
AIM VALUE FUND _____________%
AIM MONEY MARKET FUND ___________%
AIM BALANCED FUND ____________%
AIM CHARTER FUND _____________%
I acknowledge that I may amend this Investment Agreement in
the manner, and at such time, as permitted under the Agreement. Furthermore, I
acknowledge that, pursuant to Section 3.3(b) of the Agreement, the Fund has
reserved the right to disregard the elections made above to consider my
Deferral Account to be deemed to be invested in a fund of its choosing.
WITNESS: DIRECTOR:
_________________________ ______________________________
WITNESS: RECEIVED:
_________________________ AIM Funds
By:___________________________
Date:_________________________
<PAGE> 19
DEFERRED COMPENSATION AGREEMENT
BENEFICIARY DESIGNATION FORM
-------------------------------
TO: Presidents of the AIM Funds
FROM:
DATE:
With respect to the Deferred Compensation Agreement (the
"Agreement") dated as of _____________ by and between the undersigned and the
AIM Funds, I hereby make the following beneficiary designations:
I. Primary Beneficiary
-------------------
I hereby appoint the following as my Primary Beneficiary(ies)
to receive at my death the amounts credited to my Deferral Account under the
Agreement. In the event I am survived by more than one Primary Beneficiary,
such Primary Beneficiaries shall share equally in such amounts unless I
indicate otherwise on an attachment to this form:
_________________________________________________________________
Name Relationship
_________________________________________________________________
Address
_________________________________________________________________
City State Zip
<PAGE> 20
II. Secondary Beneficiary
---------------------
In the event I am not survived by any Primary Beneficiary, I
hereby appoint the following as Secondary Beneficiary(ies) to receive death
benefits under the Agreement. In the event I am survived by more than one
Secondary Beneficiary, such Secondary Beneficiaries shall share equally unless
I indicate otherwise on an attachment to this form:
_________________________________________________________________
Name Relationship
_________________________________________________________________
Address
_________________________________________________________________
City State Zip
I understand that I may revoke or amend the above designations
at any time. I further understand that if I am not survived by a Primary or
Secondary Beneficiary, my Beneficiary shall be as set forth under the
Agreement.
WITNESS: DIRECTOR:
_________________________ ______________________________
WITNESS: RECEIVED:
_________________________ AIM Funds
By:___________________________
Date:_________________________
-2-
<PAGE> 21
INITIAL PAYMENT DATE ELECTION FORM
FOR PREVIOUSLY DEFERRED COMPENSATION
------------------------------------
TO: Presidents of the AIM Funds
FROM:
DATE:
With respect to the Deferred Compensation agreement (the
"Agreement") dated as of ________________ by and between the undersigned and
the AIM Funds, pursuant to which I have previously elected to defer
Compensation, I hereby designate ________ 1 (select the first month in any
calendar quarter) in the year ______ (select a year that is at least four years
after the year this election is made) as the Payment Date for the amounts
previously credited to my Deferral Account and amounts subsequently credited
thereto. If my Retirement (as defined in the Agreement) occurs sooner, I o do
o do not (check the appropriate box) want payment of such amounts to commence
effective the January 1 following my Retirement. I understand that amounts
credited to my Deferral Account may be paid to me prior to the Payment Date as
provided in the Agreement.
I understand that I may amend this Investment Agreement in the
manner, and at such time, as permitted under the Agreement.
WITNESS: DIRECTOR:
_________________________ ______________________________
WITNESS: RECEIVED:
_________________________ AIM Funds
By:___________________________
Date:_________________________
-3-
<PAGE> 1
EXHIBIT 8(a)
ASSIGNMENT AND ACCEPTANCE OF ASSIGNMENT
OF
CUSTODY AGREEMENT
DATED OCTOBER 15, 1993
SHORT-TERM INVESTMENTS CO., a Massachusetts business trust, on behalf
of its Prime Portfolio, Treasury Portfolio, Limited Maturity Treasury
Portfolio, and Treasury TaxAdvantage Portfolio, ("ASSIGNOR") does hereby assign
all of its rights and obligations under the Custody Agreement dated June 16,
1987, as amended, between ASSIGNOR and The Bank of New York (the "Custody
Agreement") to SHORT-TERM INVESTMENTS CO., a Maryland corporation, on behalf of
its Prime Portfolio, to SHORT-TERM INVESTMENTS TRUST, a Delaware business
trust, on behalf of its Treasury Portfolio and Treasury TaxAdvantage Portfolio,
and to AIM INVESTMENT SECURITIES FUNDS, a Delaware business trust, on behalf of
its Limited Maturity Treasury Portfolio (individually, an "ASSIGNEE" and
collectively, the "ASSIGNEES").
ASSIGNEE does hereby accept this assignment and warrants that:
a. ASSIGNEE is a trust/corporation duly organized and existing
and in good standing under the laws in which it is duly
organized.
b. ASSIGNEE is empowered under applicable laws and by its Charter
and By-Laws to enter into and perform the Custody Agreement.
c. All corporate proceedings required by said Charter and By-Laws
have been taken to authorize ASSIGNEE to enter into and
perform the Custody Agreement.
d. ASSIGNEE is an open-end, diversified management investment
company registered under the Investment Company Act of 1940,
as amended.
e. A registration statement under the Securities Act of 1933, as
amended on behalf of ASSIGNEE'S shares if currently effective
and will remain effective, and appropriate state securities
law filings have been made and will continue to be made, with
respect to all ASSIGNEE'S shares being offered for sale.
<PAGE> 2
IN WITNESS WHEREOF the Parties have caused this Assignment and
Acceptance thereof to be executed as of this 19th day of Oct., 1994.
SHORT-TERM INVESTMENTS CO.
(A Massachusetts business trust)
ASSIGNOR
Attest: /s/ CAROL F. RELIHAN By: /s/ CHARLES T. BAUER
-------------------------------- ----------------------------------
Title: Asst. Secretary Title: Chairman CEO
-------------------------------- -------------------------------
SHORT-TERM INVESTMENTS CO.
(a Maryland corporation)
ASSIGNEE
Attest: /s/ CAROL F. RELIHAN By: /s/ CHARLES T. BAUER
-------------------------------- ----------------------------------
Title: Asst. Secretary Title: Chairman CEO
-------------------------------- -------------------------------
SHORT-TERM INVESTMENTS CO.
(a Delaware business trust)
ASSIGNEE
Attest: /s/ CAROL F. RELIHAN By: /s/ CHARLES T. BAUER
-------------------------------- ----------------------------------
Title: Asst. Secretary Title: Chairman CEO
-------------------------------- -------------------------------
AIM INVESTMENT SECURITIES FUNDS
(a Delaware business trust)
ASSIGNEE
Attest: /s/ CAROL F. RELIHAN By: /s/ CHARLES T. BAUER
-------------------------------- ----------------------------------
Title: Asst. Secretary Title: Chairman CEO
-------------------------------- -------------------------------
<PAGE> 3
CONSENT TO ASSIGNMENT
THE BANK OF NEW YORK
By: ILLEGIBLE
--------------------------------
Title: Senior Vice President
--------------------------------
Attest: /s/ JOSEPH F. KEENAN
--------------------------------
Title: Assistant Vice President
--------------------------------
<PAGE> 4
[THE BANK OF NEW YORK LETTERHEAD]
DOMESTIC CUSTODIAN FEE SCHEDULE
FOR
SHORT TERM INVESTMENT COMPANY
PRIME, TREASURY & LIMITED MATURITY PORTFOLIOS
SAFEKEEPING/INCOME COLLECTION/REPORTING VIA LASER
1/2 of a basis point per annum on the first $9 billion in aggregate
net assets of all the portfolios' securities.
3/8 of a basis point on the excess.
SECURITY TRANSACTION CHARGES
$ 6 - Book-Entry settlements - DTC/FRB/PTC
$25 - Physicals, options, and futures
$ 5 - Futures maintenance margins
FED WIRE CHARGES
$8 - Per manually initiated transaction
$4 - Per micro/CA$H initiated transaction
OUT-OF-POCKET EXPENSES
None
APPROVED BY: /s/ ROBERT H. GRAHAM
-----------------------
DATE: January 1, 1992
---------------------
<PAGE> 5
SECOND AMENDED AND RESTATED
CUSTODY AGREEMENT
---------------------------
Agreement made as of this 16th day of June,1987, between SHORT-TERM INVESTMENTS
CO., a Massachusetts business trust organized and existing under the laws of
the Commonwealth of Texas, having its principal office and place of business at
Eleven Greenway Plaza, Suite 1919, Houston, Texas 77046 (hereinafter called the
"Fund"), and THE BANK OF NEW YORK, a New York corporation authorized to do a
banking business, having its principal office and place of business at 48 Wall
Street, New York, New York 10015 (hereinafter called the "Custodian").
W I T N E S S E T H:
that for and in consideration of the mutual promises hereinafter set forth the
Fund and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
1. "Authorized Person" shall be deemed to include any person,
whether or not such person is an Officer or employee of the Fund, duly
authorized by the Board of Trustees of the Fund to give Oral Instructions and
Written Instructions on behalf of the Fund and listed in the Certificate
annexed hereto as Appendix A or such other Certificate as may be received by
the Custodian from time to time.
2. "Book-Entry System" shall mean the Federal Reserve/Treasury book-
entry system for United States and federal agency securities, its successor or
successors and its nominee or nominees.
<PAGE> 6
3. "Call Option" shall mean an exchange traded option with respect
to Securities other than Stock Index Options, Futures Contracts, and Futures
Contract Options entitling the holder, upon timely exercise and payment of the
exercise price, as specified therein, to purchase from the writer thereof the
specified underlying Securities.
4. "Certificate" shall mean any notice, instruction, or other
instrument in writing, authorized or required by this Agreement to be given to
the Custodian which is actually received by the Custodian and signed on behalf
of the Fund by any two Officers.
5. "Clearing Member" shall mean a registered broker-dealer which is
a clearing member under the rules of O.C.C. and a member of a national
securities exchange qualified to act as a custodian for an investment company,
or any broker-dealer reasonably believed by the Custodian to be such a clearing
member.
6. "Collateral Account" shall mean a segregated account so
denominated which is specifically allocated to a Series and pledged to the
Custodian as security for, and in consideration of, the Custodian's issuance of
(a) any Put Option guarantee letter or similar document described in paragraph
8 of Article V herein, or (b) any receipt described in Article V or VIII
herein.
7. "Covered Call Option" shall mean an exchange traded option
entitling the holder, upon timely exercise and payment of the exercise price,
as specified therein, to purchase from the writer thereof the specified
underlying Securities (excluding Futures Contracts) which are owned by the
writer thereof and subject to appropriate restrictions.
8. "Depository" shall mean The Depository Trust Company ("DTC"), a
clearing agency registered with the Securities and Exchange Commission, its
successor or successors and its nominee or nominees. The term "Depository"
shall further mean and include any other person authorized to act as a
depository under the Investment Company Act of 1940, its successor or
successors and its nominee or nominees,, specifically identified in a certified
copy of a resolution of the Fund's Board of Trustees specifically approving
deposits therein by the Custodian.
9. "Financial Futures Contract" shall mean the firm commitment to
buy or sell fixed income securities including, without limitation, U.S.
Treasury Bills, U.S. Treasury Notes, U.S. Treasury Bonds, domestic bank
certificates of deposit, and Eurodollar certificates of deposit, during a
specified month at an agreed upon price.
- 2 -
<PAGE> 7
10. "Futures Contract" shall mean a Financial Futures Contract and/or
Stock Index Futures Contracts.
11. "Futures Contract Option" shall mean an option with respect to a
Futures Contract.
12. "Margin Account" shall mean a segregated account in the name of a
broker, dealer, futures commission merchant, or a Clearing Member, or in the
name of the Fund for the benefit of a broker, dealer, futures commission
merchant, or Clearing Member, or otherwise, in accordance with an agreement
between the Fund, the Custodian and a broker, dealer, futures commission
merchant or a Clearing Member (a "Margin Account Agreement), separate and
distinct from the custody account, in which certain Securities and/or money of
the Fund shall be deposited and withdrawn from time to time in connection with
such transactions as the Fund may from time to time determine. Securities held
in the Book-Entry System or the Depository shall be deemed to have been
deposited in, or withdrawn from, a Margin Account upon the Custodian's
effecting an appropriate entry in its books and records.
13. "Money Market Security" shall be deemed to include, without
limitation, certain Reverse Repurchase Agreements, debt obligations issued or
guaranteed as to interest and principal by the government of the United States
or agencies or instrumentalities thereof, any tax, bond or revenue anticipation
note issued by any state or municipal government or public authority,
commercial paper, certificates of deposit and bankers' acceptances, repurchase
agreements with respect to the same and bank time deposits, where the purchase
and sale of such securities normally requires settlement in federal funds on
the same day as such purchase or sale.
14. "O.C.C." shall mean the Options Clearing Corporation, a clearing
agency registered under Section 17A of the Securities Exchange Act of 1934, its
successor or successors, and its nominee or nominees.
15. "Officers" shall be deemed to include the President, any Vice
President, the Secretary, the Clerk, the Treasurer, the Controller, any
Assistant Secretary, any Assistant Clerk, any Assistant Treasurer, and any
other person or persons, whether or not any such other person is an officer of
the Fund, duly authorized by the Board of Trustees of the Fund to execute any
Certificate, instruction, notice or other instrument on behalf of the Fund and
listed in the Certificate annexed hereto as Appendix B or such
- 3 -
<PAGE> 8
other Certificate as may be received by the Custodian from time to time.
16. "Option" shall mean a Call option, Covered Call option, Stock
Index option and/or a Put Option.
17. "Oral Instructions" shall mean verbal instructions actually
received by the Custodian from an Authorized Person or from a person reasonably
believed by the Custodian to be an Authorized Person.
18. "Put Option" shall mean an exchange traded option with respect to
Securities other than Stock Index Options, Futures Contracts, and Futures
Contract Options entitling the holder, upon timely exercise and tender of the
specified underlying Securities, to sell such Securities to the writer thereof
for the exercise price.
19. "Reverse Repurchase Agreement" shall mean an agreement pursuant
to which the Fund sells Securities and agrees to repurchase such Securities at
a described or specified date and price.
20. "Security" shall be deemed to include, without limitation, Money
Market Securities, Call Options, Put Options, Stock Index Options, Stock Index
Futures Contracts, Stock Index Futures Contract Options, Financial Futures
Contracts, Financial Futures Contract Options, Reverse Repurchase Agreements,
common stocks and other securities having characteristics similar to common
stocks, preferred stocks, debt obligations issued by state or municipal
governments and by public authorities, (including, without limitation, general
obligation bonds, revenue bonds and industrial bonds and industrial development
bonds), bonds, debentures, notes, mortgages or other obligations, and any
certificates, receipts, warrants or other instruments representing rights to
receive, purchase, sell or subscribe for the same, or evidencing or
representing any other rights or interest therein, or any property or assets.
21. "Senior Security Account" shall mean an account maintained and
specifically allocated to a Series under the terms of this Agreement as a
segregated account, by recordation or otherwise, within the custody account in
which certain Securities and/or other assets of the Fund specifically allocated
to such Series shall be deposited and withdrawn from time to time in accordance
with Certificates received by the Custodian in connection with such
transactions as the Fund may from time to time determine.
- 4 -
<PAGE> 9
22. "Series" shall mean the various portfolios, if any, of the Fund as
described from time to time in the current and effective prospectus for the
Fund.
23. "Shares" shall mean the shares of beneficial interest of the
Fund, each of which is in the case of a Fund having Series allocated to a
particular Series.
24. "Stock Index Futures Contract" shall mean a bilateral agreement
pursuant to which the parties agree to take or make delivery of an amount of
cash equal to a specified dollar amount times the difference between the value
of a particular stock index at the close of the last business day of the
contract and the price at which the futures contract is originally struck.
25. "Stock Index Option" shall mean an exchange traded option
entitling the holder, upon timely exercise, to receive an amount of cash
determined by reference to the difference between the exercise price and the
value of the index on the date of exercise.
26. "Written Instructions" shall mean written communications actually
received by the Custodian from an Authorized Person or from a person reasonably
believed by the Custodian to be an Authorized Person by telex or any other such
system whereby the receiver of such communications is able to verify by codes
or otherwise with a reasonable degree of certainty the identity of the sender
of such communication.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the Custodian as
custodian of the Securities and moneys at any time owned by the Fund during the
period of this Agreement.
2. The Custodian hereby accepts appointment as such custodian and
agrees to perform the duties thereof as hereinafter set forth.
- 5 -
<PAGE> 10
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in paragraph 7 of this Article and
in Article VIII, the Fund will deliver or cause to be delivered to the
Custodian all Securities and all moneys owned by it, at any time during the
period of this Agreement, and shall specify with respect to such Securities and
money the Series to which the same are specifically allocated. The Custodian
shall segregate, keep and maintain the assets of the Series separate and apart.
The Custodian will not be responsible for any Securities and moneys not
actually received by it. The Custodian will be entitled to reverse any credits
made on the Fund's behalf where such credits have been previously made and
moneys are not finally collected. The Fund shall deliver to the Custodian a
certified resolution of the Board of Trustees of the Fund, substantially in the
form of Exhibit A hereto, approving, authorizing and instructing the Custodian
on a continuous and on-going basis to deposit in the Book-Entry System all
Securities eligible for deposit therein, regardless of the Series to which the
same are specifically allocated and to utilize the Book-Entry System to the
extent possible in connection with its performance hereunder, including,
without limitation, in connection with settlements of purchases and sales of
Securities, loans of Securities, and deliveries and returns of Securities
collateral. Prior to a deposit of Securities specifically allocated to a Series
in the Depository, the Fund shall deliver to the Custodian a certified
resolution of the Board of Trustees of the Fund, substantially in the form of
Exhibit B hereto, approving, authorizing and instructing the Custodian on a
continuous and ongoing basis until instructed to the contrary by a Certificate
actually received by the Custodian to deposit in the Depository all Securities
specifically allocated to such Series eligible for deposit therein, and to
utilize the Depository to the extent possible with respect to such Securities
in connection with its performance hereunder, including, without limitation, in
connection with settlements of purchases and sales of Securities, loans of
Securities, and deliveries and returns of Securities collateral. Securities and
moneys deposited in either the Book-Entry System or the Depository will be
represented in accounts which include only assets held by the Custodian for
customers, including, but not limited to, accounts in which the Custodian acts
in a fiduciary or representative capacity and will be specifically allocated on
the Custodian's books to the separate account for the applicable Series. Prior
to the Custodian's accepting, utilizing and acting with respect to Clearing
Member confirmations for Options and transac-
- 6 -
<PAGE> 11
tions in Options for a Series as provided in this Agreement, the Custodian
shall have received a certified resolution of the Fund's Board of Trustees,
substantially in the form of Exhibit C hereto, approving, authorizing and
instructing the Custodian on a continuous and on-going basis, until instructed
to the contrary by a Certificate actually received by the Custodian, to accept,
utilize and act in accordance with such confirmations as provided in this
Agreement with respect to such Series.
2. The Custodian shall establish and maintain separate accounts, in
the name of each Series, and shall credit to the separate account for each
Series all moneys received by it for the account of the Fund with respect to
such Series. Money credited to a separate account for a Series shall be
disbursed by the Custodian only:
(a) As hereinafter provided;
(b) Pursuant to Certificates setting forth the name and
address of the person to whom the payment is to be made, the Series account
from which payment is to be made, and the purpose for which payment is to be
made; or
(c) In payment of the fees and in reimbursement of the
expenses and liabilities of the Custodian attributable to such Series.
3. Promptly after the close of business on each day the Custodian
shall furnish the Fund with confirmations and a summary, on a per Series basis,
of all transfers to or from the account of the Fund for a Series, either
hereunder or with any co-custodian or sub-custodian appointed in accordance
with this Agreement during said day. Where Securities are transferred to the
account of the Fund for a Series, the Custodian shall also by book-entry or
otherwise identify as belonging to such Series a quantity of Securities in a
fungible bulk of Securities registered in the name of the Custodian (or its
nominee) or shown on the Custodian's account on the books of the Book-Entry
System or the Depository. At least monthly and from time to time, the
Custodian shall furnish the Fund with a detailed statement, on a per Series
basis, of the Securities and moneys held by the Custodian for the Fund.
4. Except as otherwise provided in paragraph 7 of this Article and
in Article VIII, all Securities held by the Custodian hereunder, which are
issued or issuable only in bearer form, except such Securities as are held in
the Book-Entry System, shall be held by the Custodian in that form; all other
Securities held hereunder may be registered in the name of the Fund, in the
name of any duly appointed
- 7 -
<PAGE> 12
registered nominee of the Custodian as the Custodian may from time to time
determine, or in the name of the Book-Entry System or the Depository or their
successor or successors, or their nominee or nominees. The Fund agrees to
furnish to the Custodian appropriate instruments to enable the Custodian to
hold or deliver in proper form for transfer, or to register in the name of its
registered nominee or in the name of the Book-Entry System or the Depository
any Securities which it may hold hereunder and which may from time to time be
registered in the name of the Fund. The Custodian shall hold all such
Securities specifically allocated to a Series which are not held in the Book-
Entry System or in the Depository in a separate account in the name of such
Series physically segregated at all times from those of any other person or
persons.
5. Except as otherwise provided in this Agreement and unless
otherwise instructed to the contrary by a Certificate, the Custodian by itself,
or through the use of the Book-Entry System or the Depository with respect to
Securities held hereunder and therein deposited, shall with respect to all
Securities held for the Fund hereunder in accordance with preceding
paragraph 4:
(a) Collect all income due or payable;
(b) Present for payment and collect the amount payable upon
such Securities which are called, but only if either (i) the Custodian receives
a written notice of such call, or (ii) notice of such call appears in one or
more of the publications listed in Appendix C annexed hereto, which may be
amended at any time by the Custodian without the prior notification or consent
of the Fund;
(c) Present for payment and collect the amount payable upon
all Securities which mature;
(d) Surrender Securities in temporary form for definitive
Securities;
(e) Execute, as custodian, any necessary declarations or
certificates of ownership under the Federal Income Tax Laws or the laws or
regulations of any other taxing authority now or hereafter in effect; and
(f) Hold directly, or through the Book-Entry System or the
Depository with respect to Securities therein deposited, for the account of a
Series, all rights and similar securities issued with respect to any Securities
held by the Custodian for such Series hereunder.
- 8 -
<PAGE> 13
6. Upon receipt of a Certificate and not otherwise, the Custodian,
directly or through the use of the Book-Entry System or the Depository, shall:
(a) Execute and deliver to such persons as may be designated
in such Certificate proxies, consents, authorizations, and any other
instruments whereby the authority of the Fund as owner of any Securities held
by the Custodian hereunder for the Series specified in such Certificate may be
exercised;
(b) Deliver any Securities held by the Custodian hereunder for
the Series specified in such Certificate in exchange for other Securities or
cash issued or paid in connection with the liquidation, reorganization,
refinancing, merger, consolidation or recapitalization of any corporation, or
the exercise of any conversion privilege and receive and hold hereunder
specifically allocated to such Series any cash or other Securities received in
exchange;
(c) Deliver any Securities held by the Custodian hereunder for
the Series specified in such Certificate to any protective committee,
reorganization committee or other person in connection with the reorganization,
refinancing, merger, consolidation, recapitalization or sale of assets of any
corporation, and receive and hold hereunder specifically allocated to such
Series such certificates of deposit, interim receipts or other instruments or
documents as may be issued to it to evidence such delivery;
(d) Make such transfers or exchanges of the assets of the
Series specified in such Certificate, and take such other steps as shall be
stated in such Certificate to be for the purpose of effectuating any duly
authorized plan of liquidation, reorganization, merger, consolidation or
recapitalization of the Fund; and
(e) Present for payment and collect the amount payable upon
Securities not described in preceding paragraph 5(b) of this Article which may
be called as specified in the Certificate.
7. Notwithstanding any provision elsewhere contained herein, the
Custodian shall not be required to obtain possession of any instrument or
certificate representing any Futures Contract, any Option, or any Futures
Contract Option until after it shall have determined, or shall have received a
Certificate from the Fund stating, that any such instruments or certificates
are available. The Fund shall deliver to the Custodian such a Certificate no
later than the business day preceding the availability of any such instrument
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<PAGE> 14
or certificate. Prior to such availability, the Custodian shall comply with
Section 17(f) of the Investment Company Act of 1940, as amended, in connection
with the purchase, sale, settlement, closing out or writing of Futures
Contracts, Options, or Futures Contract Options by making payments or
deliveries specified in Certificates received by the Custodian in connection
with any such purchase, sale, writing, settlement or closing out upon its
receipt from a broker, dealer, or futures commission merchant of a statement or
confirmation reasonably believed by the Custodian to be in the form customarily
used by brokers, dealers, or future commission merchants with respect to such
Futures Contracts, Options, or Futures Contract Options, as the case may be,
confirming that such Security is held by such broker, dealer or futures
commission merchant, in book-entry form or otherwise, in the name of the
Custodian (or any nominee of the Custodian) as custodian for the Fund,
provided, however, that payments to or deliveries from the Margin Account shall
be made in accordance with the terms and conditions of the Margin Account
Agreement. Whenever any such instruments or certificates are available, the
Custodian shall, notwithstanding any provision in this Agreement to the
contrary, make payment for any Futures Contract, Option, or Futures Contract
Option for which such instruments or such certificates are available only
against the delivery to the Custodian of such instrument or such certificate,
and deliver any Future Contract, Option or Futures Contract Option for which
such instruments or such instruments or such certificates are available only
against receipt by the Custodian of payment therefor. Any such instrument or
certificate delivered to the Custodian shall be held by the Custodian hereunder
in accordance with, and subject to, the provisions of this Agreement.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
OTHER THAN OPTIONS, FUTURES CONTRACTS AND
FUTURES CONTRACT OPTIONS
1. Promptly after each purchase of Securities by the Fund, other
than a purchase of an Option, a Futures Contract, or a Futures Contract Option,
the Fund shall deliver to the Custodian (i) with respect to each purchase of
Securities which are not Money Market Securities, a Certificate, and (ii) with
respect to each purchase of Money Market Securities, a Certificate, Oral
Instructions or Written Instructions, specifying with respect to each such
purchase:
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<PAGE> 15
(a) the Series to which such Securities are to be specifically allocated; (b)
the name of the issuer and the title of the Securities; (c) the number of
shares or the principal amount purchased and accrued interest, if any; (d) the
date of purchase and settlement; (e) the purchase price per unit; (f) the total
amount payable upon such purchase; (g) the name of the person from whom or the
broker through whom the purchase was made, and the name of the clearing broker,
if any; and (h) the name of the broker to whom payment is to be made. The
Custodian shall, upon receipt of Securities purchased by or for the Fund, pay
to the broker specified in the Certificate out of the moneys held for the
account of such Series the total amount payable upon such purchase, provided
that the same conforms to the total amount payable as set forth in such
Certificate, Oral Instructions or Written Instructions.
2. Promptly after each sale of Securities by the Fund, other than a
sale of any Option, Futures Contract, Futures Contract Option, or any Reverse
Repurchase Agreement, the Fund shall deliver to the Custodian (i) with respect
to each sale of Securities which are not Money Market Securities, a
Certificate, and (ii) with respect to each sale of Money Market Securities, a
Certificate, Oral Instructions or Written Instructions, specifying with respect
to each such sale: (a) the Series to which such Securities were specifically
allocated; (b) the name of the issuer and the title of the Security; (c) the
number of shares or principal amount sold, and accrued interest, if any; (d)
the date of sale; (e) the sale price per unit; (f) the total amount payable to
the Fund upon such sale; (g) the name of the broker through whom or the person
to whom the sale was made, and the name of the clearing broker, if any; and (h)
the name of the broker to whom the Securities are to be delivered. The
Custodian shall deliver the Securities specifically allocated to such Series to
the broker specified in the Certificate upon the total amount payable to the
Fund upon such sale, provided that the same conforms to the total amount
payable as set forth in such Certificate, Oral Instructions or Written
Instructions.
ARTICLE V
OPTIONS
1. Promptly after the purchase of any Option by the Fund, the Fund
shall deliver to the Custodian a Certificate specifying with respect to each
Option purchased: (a) the
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<PAGE> 16
Series to which such Option is specifically allocated; (b) the type of Option
(put or call); (c) the name of the issuer and the title and number of shares
subject to such Option or, in the case of a Stock Index Option, the stock index
to which such option relates and the number of Stock Index Options purchased;
(d) the expiration date; (e) the exercise price; (f) the dates of purchase and
settlement; (g) the total amount payable by the Fund in connection with such
purchase; (h) the name of the Clearing Member through whom such Option was
purchased; and (i) the name of the broker to whom payment is to be made. The
Custodian shall pay, upon receipt of a Clearing Member's statement confirming
the purchase of such Option held by such Clearing Member for the account of the
Custodian (or any duly appointed and registered nominee of the Custodian) as
custodian for the Fund, out of moneys held for the account of the Series to
which such Option is to be specifically allocated, the total amount payable
upon such purchase to the Clearing Member through whom the purchase was made,
provided that the same conforms to the total amount payable as set forth in
such Certificate.
2. Promptly after the sale of any Option purchased by the Fund
pursuant to paragraph 1 hereof, the Fund shall deliver to the Custodian a
Certificate specifying with respect to each such sale: (a) the Series to which
such option was specifically allocated; (b) the type of Option (put or call);
(c) the name of the issuer and the title and number of shares subject to such
Option or, in the case of a Stock Index Option, the stock index to which such
Option relates and the number of Stock Index Options sold; (d) the date of
sale; (e) the sale price; (f) the date of settlement; (g) the total amount
payable to the Fund upon such sale; and (h) the name of the Clearing Member
through whom the sale was made. The Custodian shall consent to the delivery of
the Option sold by the Clearing Member which previously supplied the
confirmation described in preceding paragraph 1 of this Article with respect to
such Option against payment to the Custodian of the total amount payable to the
Fund, provided that the same conforms to the total amount payable as set forth
in such Certificate.
3. Promptly after the exercise by the Fund of any Call Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to
the Custodian a Certificate specifying with respect to such Call Option: (a)
the Series to which such Call Option was specifically allocated; (b) the name
of the issuer and the title and number of shares subject to the Call Option;
(c) the expiration date; (d) the date of exercise and settlement; (e) the
exercise price per share; (f) the total amount to be paid by the
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<PAGE> 17
Fund upon such exercise; and (g) the name of the Clearing Member through whom
such Call option was exercised. The Custodian shall, upon receipt of the
Securities underlying the Call Option which was exercised, pay out of the
moneys held for the account of the Series to which such Call Option was
specifically allocated the total amount payable to the Clearing Member through
whom the Call Option was exercised, provided that the same conforms to the
total amount payable as set forth in such Certificate.
4. Promptly after the exercise by the Fund of any Put option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to
the Custodian a Certificate specifying with respect to such Put Option: (a) the
Series to which such Put option was specifically allocated; (b) the name of the
issuer and the title and number of shares subject to the Put Option; (c) the
expiration date; (d) the date of exercise and settlement; (e) the exercise
price per share; (f) the total amount to be paid to the Fund upon such
exercise; and (g) the name of the Clearing Member through whom such Put option
was exercised. The Custodian shall, upon receipt of the amount payable upon the
exercise of the Put Option, deliver or direct the Depository to deliver the
Securities specifically allocated to such Series, provided the same conforms to
the amount payable to the Fund as set forth in such Certificate.
5. Promptly after the exercise by the Fund of any Stock Index Option
purchased by the Fund pursuant to paragraph 1 hereof, the Fund shall deliver to
the Custodian a Certificate specifying with respect to such Stock Index Option:
(a) the Series to which such Stock Index Option was specifically allocated; (b)
the type of Stock Index Option (put or call); (c) the number of options being
exercised; (d) the stock index to which such option relates; (e) the expiration
date; (f) the exercise price; (g) the total amount to be received by the Fund
in connection with such exercise; and (h) the Clearing Member from whom such
payment is to be received.
6. Whenever the Fund writes a Covered Call Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to such
Covered Call Option: (a) the Series for which such Covered Call option was
written; (b) the name of the issuer and the title and number of shares for
which the Covered Call Option was written and which underlie the same; (c) the
expiration date; (d) the exercise price; (e) the premium to be received by the
Fund; (f) the date such Covered Call Option was written; and (g) the name of
the Clearing Member through whom the premium is to be received. The Custodian
shall deliver or cause to
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<PAGE> 18
be delivered, in exchange for receipt of the premium specified in the
Certificate with respect to such Covered Call Option, such receipts as are
required in accordance with the customs prevailing among Clearing Members
dealing in Covered Call Options and shall impose, or direct the Depository to
impose, upon the underlying Securities specified in the Certificate
specifically allocated to such Series such restrictions as may be required by
such receipts. Notwithstanding the foregoing, the Custodian has the right, upon
prior written notification to the Fund, at any time to refuse to issue any
receipts for Securities in the possession of the Custodian and not deposited
with the Depository underlying a Covered Call Option.
7. Whenever a Covered Call Option written by the Fund and described
in the preceding paragraph of this Article is exercised, the Fund shall
promptly deliver to the Custodian a Certificate instructing the Custodian to
deliver, or to direct the Depository to deliver, the Securities subject to such
Covered Call Option and specifying: (a) the Series for which such Covered Call
Option was written; (b) the name of the issuer and the title and number of
shares subject to the Covered Call Option; (c) the Clearing Member to whom the
underlying Securities are to be delivered; and (d) the total amount payable to
the Fund upon such delivery. Upon the return and/or cancellation of any
receipts delivered pursuant to paragraph 6 of this Article, the Custodian shall
deliver, or direct the Depository to deliver, the underlying Securities as
specified in the Certificate for the amount to be received as set forth in such
Certificate.
8. Whenever the Fund writes a Put Option, the Fund shall promptly
deliver to the Custodian a Certificate specifying with respect to such Put
Option: (a) the Series for which such Put option was written; (b) the name of
the issuer and the title and number of shares for which the Put Option is
written and which underlie the same; (c) the expiration date; (d) the exercise
price; (e) the premium to be received by the Fund; (f) the date such Put Option
is written; (g) the name of the Clearing Member through whom the premium is to
be received and to whom a Put Option guarantee letter is to be delivered; (h)
the amount of cash, and/or the amount and kind of Securities, if any,
specifically allocated to such Series to be deposited in the Senior Security
Account for such Series; and (i) the amount of cash and/or the amount and kind
of Securities specifically allocated to such Series to be deposited into the
Collateral Account for such Series. The Custodian shall, after making the
deposits into the Collateral Account specified in the Certificate, issue a Put
Option guarantee letter substantially in the form utilized by the Custodian
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<PAGE> 19
on the date hereof, and deliver the same to the Clearing Member specified in
the Certificate against receipt of the premium specified in said Certificate.
Notwithstanding the foregoing, the Custodian shall be under no obligation to
issue any Put option guarantee letter or similar document if it is unable to
make any of the representations contained therein.
9. Whenever a Put option written by the Fund and described in the
preceding paragraph is exercised, the Fund shall promptly deliver to the
Custodian a Certificate specifying: (a) the Series to which such Put Option was
written; (b) the name of the issuer and title and number of shares subject to
the Put Option; (c) the Clearing Member from whom the underlying Securities are
to be received; (d) the total amount payable by the Fund upon such delivery;
(e) the amount of cash and/or the amount and kind of Securities specifically
allocated to such Series to be withdrawn from the Collateral Account for such
Series and (f) the amount of cash and/or the amount and kind of Securities,
specifically allocated to such Series, if any, to be withdrawn from the Senior
Security Account. Upon the return and/or cancellation of any Put Option
guarantee letter or similar document issued by the Custodian in connection with
such Put Option, the Custodian shall pay out of the moneys held for the account
of the Series to which such Put Option was specifically allocated the total
amount payable to the Clearing Member specified in the Certificate as set forth
in such Certificate, and shall make the withdrawals specified in such
Certificate.
10. Whenever the Fund writes a Stock Index Option the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to such
Stock Index Option: (a) the Series for which such Stock Index Option was
written; (b) whether such Stock Index Option is a put or a call (c) the number
of options written; (d) the stock index to which such Option relates; (e) the
expiration date; (f) the exercise price; (g) the Clearing Member through whom
such Option was written; (h) the premium to be received by the Fund; (i) the
amount of cash and/or the amount and kind of Securities, if any, specifically
allocated to such Series to be deposited in the Senior Security Account for
such Series; (j) the amount of cash and/or the amount and kind of Securities,
if any, specifically allocated to such Series to be deposited in the Collateral
Account for such Series; and (k) the amount of cash and/or the amount and kind
of Securities, if any, specifically allocated to such Series to be deposited in
a Margin Account, and the name in which such account is to be or has been
established. The Custodian shall, upon receipt of the premium specified in the
Certificate, make
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<PAGE> 20
the deposits, if any, into the Senior Security Account specified in the
Certificate, and either (1) deliver such receipts, if any, which the Custodian
has specifically agreed to issue, which are in accordance with the customs
prevailing among Clearing members in Stock Index Options and make the deposits
into the Collateral Account specified in the Certificate, or (2) make the
deposits into the Margin Account specified in the Certificate.
11. Whenever a Stock Index Option written by the Fund and described
in the preceding paragraph of this Article is exercised, the Fund shall
promptly deliver to the Custodian a Certificate specifying with respect to such
Stock Index Option: (a) the Series for which such Stock Index Option was
written; (b) such information as may be necessary to identify the Stock Index
Option being exercised; (c) the Clearing Member through whom such Stock Index
Option is being exercised; (d) the total amount payable upon such exercise, and
whether such amount is to be paid by or to the Fund; (e) the amount of cash
and/or amount and kind of Securities, if any, to be withdrawn from the Margin
Account; and (f) the amount of cash and/or amount and kind of Securities, if
any, to be withdrawn from the Senior Security Account for such Series; and the
amount of cash and/or the amount and kind of Securities, if any, to be
withdrawn from the Collateral Account for such Series. Upon the return and/or
cancellation of the receipt, if any, delivered pursuant to the preceding
paragraph of this Article, the Custodian shall pay out of the moneys held for
the account of the Series to which such Stock Index Option was specifically
allocated to the Clearing Member specified in the Certificate the total amount
payable, if any, as specified therein.
12. Whenever the Fund purchases any option identical to a previously
written Option described in paragraphs, 6, 8 or 10 of this Article in a
transaction expressly designated as a "Closing Purchase Transaction" in order to
liquidate its position as a writer of an option, the Fund shall promptly
deliver to the Custodian a Certificate specifying with respect to the option
being purchased: (a) that the transaction is a Closing Purchase Transaction;
(b) the Series for which the Option was written; (c) the name of the issuer and
the title and number of shares subject to the option, or, in the case of a
Stock Index Option, the stock index to which such Option relates and the number
of Options held; (d) the exercise price; (e) the premium to be paid by the
Fund; (f) the expiration date; (g) the type of Option (put or call) (h) the
date of such purchase; (i) the name of the Clearing Member to whom the premium
is to be paid; and (j) the amount of cash and/or the amount and kind of
Securities, if any, to be withdrawn from the Collateral Account, a
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<PAGE> 21
specified Margin Account, or the Senior Security Account for such Series. Upon
the Custodian's payment of the premium and the return and/or cancellation of
any receipt issued pursuant to paragraphs 6, 8 or 10 of this Article with
respect to the option being liquidated through the Closing Purchase
Transaction, the Custodian shall remove, or direct the Depository to remove,
the previously imposed restrictions on the Securities underlying the Call
Option.
13. Upon the expiration, exercise or consummation of a Closing
Purchase Transaction with respect to, any Option purchased or written by the
Fund and described in this Article, the Custodian shall delete such Option from
the statements delivered to the Fund pursuant to paragraph 3 Article III
herein, and upon the return and/or cancellation of any receipts issued by the
Custodian, shall make such withdrawals from the Collateral Account, and the
Margin Account and/or the Senior Security Account as may be specified in a
Certificate received in connection with such expiration, exercise, or
consummation.
ARTICLE VI
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a Futures Contract, the Fund
shall deliver to the Custodian a Certificate specifying with respect to such
Futures Contract, (or with respect to any number of identical Futures
Contract(s)): (a) the Series for which the Futures Contract is being entered;
(b) the category of Futures Contract (the name of the underlying stock index or
financial instrument); (c) the number of identical Futures Contracts entered
into; (d) the delivery or settlement date of the Futures Contract(s); (e) the
date the Futures Contract(s) was (were) entered into and the maturity date; (f)
whether the Fund is buying (going long) or selling (going short) on such
Futures Contract(s); (g) the amount of cash and/or the amount and kind of
Securities, if any, to be deposited in the Senior Security Account for such
Series; (h) the name of the broker, dealer, or futures commission merchant
through whom the Futures Contract was entered into; and (i) the amount of fee
or commission, if any, to be paid and the name of the broker, dealer, or
futures commission merchant to whom such amount is to be paid. The Custodian
shall make the deposits, if any, to the Margin Account in accordance with the
terms and conditions of the Margin Account Agreement. The Custodian shall make
payment out of the moneys specifically allocated to such
- 17 -
<PAGE> 22
Series of the fee or commission, if any, specified in the Certificate and
deposit in the Senior Security Account for such Series the amount of cash
and/or the amount and kind of Securities specified in said Certificate.
2. (a) Any variation margin payment or similar payment required to
be made by the Fund to a broker, dealer, or futures commission merchant with
respect to an outstanding Futures Contract, shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account Agreement.
(b) Any variation margin payment or similar payment from a
broker, dealer, or futures commission merchant to the Fund with respect to an
outstanding Futures Contract, shall be received and dealt with by the Custodian
in accordance with the terms and conditions of the Margin Account Agreement.
3. Whenever a Futures Contract held by the Custodian hereunder is
retained by the Fund until delivery or settlement is made on such Futures
Contract, the Fund shall deliver to the Custodian a Certificate specifying: (a)
the Futures Contract and the Series to which the same relates; (b) with respect
to a Stock Index Futures Contract, the total cash settlement amount to be paid
or received, and with respect to a Financial Futures Contract, the Securities
and/or amount of cash to be delivered or received; (c) the broker, dealer, or
futures commission merchant to or from whom payment or delivery is to be made
or received; and (d) the amount of cash and/or Securities to be withdrawn from
the Senior Security Account for such Series. The Custodian shall make the
payment or delivery specified in the Certificate, and delete such Futures
Contract from the statements delivered to the Fund pursuant to paragraph 3 of
Article III herein.
4. Whenever the Fund shall enter into a Futures Contract to offset a
Futures Contract held by the Custodian hereunder, the Fund shall deliver to the
Custodian a Certificate specifying: (a) the items of information required in a
Certificate described in paragraph 1 of this Article, and (b) the Futures
Contract being offset. The Custodian shall make payment out of the money
specifically allocated to such Series of the fee or commission, if any,
specified in the Certificate and delete the Futures Contract being offset from
the statements delivered to the Fund pursuant to paragraph 3 of Article III
herein, and make such withdrawals from the Senior Security Account for such
Series as may be specified in such Certificate. The withdrawals, if any, to be
made from the Margin Account shall be made by the Custodian in accordance with
the terms and conditions of the Margin Account Agreement.
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<PAGE> 23
ARTICLE VII
FUTURES CONTRACT OPTIONS
1. Promptly after the purchase of any Futures Contract Option by the
Fund, the Fund shall promptly deliver to the Custodian a Certificate specifying
with respect to such Futures Contract Option: (a) the Series to which such
option is specifically allocated; (b) the type of Futures Contract Option (put
or call); (c) the type of Futures Contract and such other information as may be
necessary to identify the Futures Contract underlying the Futures Contract
Option purchased; (d) the expiration date; (e) the exercise price; (f) the
dates of purchase and settlement; (g) the amount of premium to be paid by the
Fund upon such purchase; (h) the name of the broker or futures commission
merchant through whom such option was purchased; and (i) the name of the
broker, or futures commission merchant, to whom payment is to be made. The
Custodian shall pay out of the moneys specifically allocated to such Series the
total amount to be paid upon such purchase to the broker or futures commissions
merchant through whom the purchase was made, provided that the same conforms to
the amount set forth in such Certificate.
2. Promptly after the sale of any Futures Contract option purchased
by the Fund pursuant to paragraph 1 hereof, the Fund shall promptly deliver to
the Custodian a Certificate specifying with respect to each such sale: (a)
Series to which such Futures Contract Option was specifically allocated; (b)
the type of Future Contract Option (put or call); (c) the type of Futures
Contract and such other information as may be necessary to identify the Futures
Contract underlying the Futures Contract Option; (d) the date of sale; (e) the
sale price; (f) the date of settlement; (g) the total amount payable to the
Fund upon such sale; and (h) the name of the broker of futures commission
merchant through whom the sale was made. The Custodian shall consent to the
cancellation of the Futures Contract Option being closed against payment to the
Custodian of the total amount payable to the Fund, provided the same conforms
to the total amount payable as set forth in such Certificate.
3. Whenever a Futures Contract option purchased by the Fund pursuant
to paragraph 1 is exercised by the Fund, the Fund shall promptly deliver to the
Custodian a Certificate specifying: (a) the Series to which such Futures
Contract
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<PAGE> 24
Option was specifically allocated; (b) the particular Futures Contract option
(put or call) being exercised; (c) the type of Futures Contract underlying the
Futures Contract Option; (d) the date of exercise; (e) the name of the broker
or futures commission merchant through whom the Futures Contract Option is
exercised; (f) the net total amount, if any, payable by the Fund; (g) the
amount, if any, to be received by the Fund; and (h) the amount of cash and/or
the amount and kind of Securities to be deposited in the Senior Security
Account for such Series. The Custodian shall make, out of the moneys and
Securities specifically allocated to such Series, the payments, if any, and the
deposits, if any, into the Senior Security Account as specified in the
Certificate. The deposits, if any, to be made to the Margin Account shall be
made by the Custodian in accordance with the terms and conditions of the Margin
Account Agreement.
4. Whenever the Fund writes a Futures Contract Option, the Fund
shall promptly deliver to the Custodian a Certificate specifying with respect
to such Futures Contract option: (a) the Series for which such Futures Contract
Option was written; (b) the type of Futures Contract Option (put or call); (c)
the type of Futures Contract and such other information as may be necessary to
identify the Futures Contract underlying the Futures Contract Option; (d) the
expiration date; (e) the exercise price; (f) the premium to be received by the
Fund; (g) the name of the broker or futures commission merchant through whom
the premium is to be received; and (h) the amount of cash and/or the amount and
kind of Securities, if any, to be deposited in the Senior Security Account for
such Series. The Custodian shall, upon receipt of the premium specified in the
Certificate, make out of the moneys and Securities specifically allocated to
such Series the deposits into the Senior Security Account, if any, as specified
in the Certificate. The deposits, if any, to be made to the Margin Account
shall be made by the Custodian in accordance with the terms and conditions of
the Margin Account Agreement.
5. Whenever a Futures Contract option written by the Fund which is a
call is exercised, the Fund shall promptly deliver to the Custodian a
Certificate specifying: (a) the Series to which such Futures Contract Option
was specifically allocated; (b) the particular Futures Contract Option
exercised; (c) the type of Futures Contract underlying the Futures Contract
Option; (d) the name of the broker or futures commission merchant through whom
such Futures Contract option was exercised; (e) the net total amount, if any,
payable to the Fund upon such exercise; (f) the net total amount, if any,
payable by the Fund upon such exer-
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<PAGE> 25
cise; and (g) the amount of cash and/or the amount and kind of Securities to be
deposited in the Senior Security Account for such Series. The Custodian shall,
upon its receipt of the net total amount payable to the Fund, if any, specified
in such Certificate make the payments, if any, and the deposits, if any, into
the Senior Security Account as specified in the Certificate. The deposits, if
any, to be made to the Margin Account shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account Agreement.
6. Whenever a Futures Contract Option which is written by the Fund
and which is a put is exercised, the Fund shall promptly deliver to the
Custodian a Certificate specifying: (a) the Series to which such Option was
specifically allocated; (b) the particular Futures Contract Option exercised;
(c) the type of Futures Contract underlying such Futures Contract Option; (d)
the name of the broker or futures commission merchant through whom such Futures
Contract Option is exercised; (e) the net total amount, if any, payable to the
Fund upon such exercise; (f) the net total amount, if any, payable by the Fund
upon such exercise; and (g) the amount and kind of Securities and/or cash to be
withdrawn from or deposited in, the Senior Security Account for such Series, if
any. The Custodian shall, upon its receipt of the net total amount payable to
the Fund, if any, specified in the Certificate, make out of the moneys and
Securities specifically allocated to such Series, the payments, if any, and the
deposits, if any, into the Senior Security Account as specified in the
Certificate. The deposits to and/or withdrawals from the Margin Account, if
any, shall be made by the Custodian in accordance with the terms and conditions
of the Margin Account Agreement.
7. Whenever the Fund purchases any Futures Contract Option identical
to a previously written Futures Contract Option described in this Article in
order to liquidate its position as a writer of such Futures Contract Option,
the Fund shall promptly deliver to the Custodian a Certificate specifying with
respect to the Futures Contract Option being purchased: (a) the Series to which
such Option is specifically allocated; (b) that the transaction is a closing
transaction; (c) the type of Future Contract and such other information as may
be necessary to identify the Futures Contract underlying the Futures Option
Contract; (d) the exercise price; (e) the premium to be paid by the Fund; (f)
the expiration date; (g) the name of the broker or futures commission merchant
to whom the premium is to be paid; and (h) the amount of cash and/or the amount
and kind of Securities, if any, to be withdrawn from the Senior Security
Account for such Series. The Custodian shall effect the
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<PAGE> 26
withdrawals from the Senior Security Account specified in the Certificate. The
withdrawals, if any, to be made from the Margin Account shall be made by the
Custodian in accordance with the terms and conditions of the Margin Account
Agreement.
8. Upon the expiration, exercise, or consummation of a closing
transaction with respect to, any Futures Contract Option written or purchased
by the Fund and described in this Article, the Custodian shall (a) delete such
Futures Contract Option from the statements delivered to the Fund pursuant to
paragraph 3 of Article III herein and, (b) make such withdrawals from and/or in
the case of an exercise such deposits into the Senior Security Account as may
be specified in a Certificate. The deposits to and/or withdrawals from the
Margin Account, if any, shall be made by the Custodian in accordance with the
terms and conditions of the Margin Account Agreement.
9. Futures Contracts acquired by the Fund through the exercise of a
Futures Contract Option described in this Article shall be subject to Article
VI hereof.
ARTICLE VIII
SHORT SALES
1. Promptly after any short sales by any Series of the Fund, the
Fund shall promptly deliver to the Custodian a Certificate specifying: (a) the
Series for which such short sale was made; (b) the name of the issuer and the
title of the Security; (c) the number of shares or principal amount sold, and
accrued interest or dividends, if any; (d) the dates of the sale and
settlement; (e) the sale price per unit; (f) the total amount credited to the
Fund upon such sale, if any, (g) the amount of cash and/or the amount and kind
of Securities, if any, which are to be deposited in a Margin Account and the
name in which such Margin Account has been or is to be established; (h) the
amount of cash and/or the amount and kind of Securities, if any, to be
deposited in a Senior Security Account, and (i) the name of the broker through
whom such short sale was made. The Custodian shall upon its receipt of a
statement from such broker confirming such sale and that the total amount
credited to the Fund upon such sale, if any, as specified in the Certificate is
held by such broker for the account of the Custodian (or any nominee of the
Custodian) as custodian of the Fund, issue a receipt or make the deposits into
the Margin Account and the Senior Security Account specified in the
Certificate.
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<PAGE> 27
2. In connection with the closing-out of any short sale, the Fund
shall promptly deliver to the Custodian a Certificate specifying with respect
to each such closing-out: (a) the Series for which such transaction is being
made; (b) the name of the issuer and the title of the Security; (c) the number
of shares or the principal amount, and accrued interest or dividends, if any,
required to effect such closing-out to be delivered to the broker; (d) the
dates of closing-out and settlement; (e) the purchase price per unit; (f) the
net total amount payable to the Fund upon such closing-out; (g) the net total
amount payable to the broker upon such closing-out; (h) the amount of cash and
the amount and kind of Securities to be withdrawn, if any, from the Margin
Account; (i) the amount of cash and/or the amount and kind of Securities, if
any, to be withdrawn from the Senior Security Account; and (j) the name of the
broker through whom the Fund is effecting such closing-out. The Custodian
shall, upon receipt of the net total amount payable to the Fund upon such
closing-out, and the return and/ or cancellation of the receipts, if any,
issued by the Custodian with respect to the short sale being closed-out, pay
out of the moneys held for the account of the Fund to the broker the net total
amount payable to the broker, and make the withdrawals from the Margin Account
and the Senior Security Account, as the same are specified in the Certificate.
ARTICLE IX
REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund enters a Reverse Repurchase Agreement
with respect to Securities and money held by the Custodian hereunder, the Fund
shall deliver to the Custodian a Certificate or in the event such Reverse
Repurchase Agreement is a Money Market Security, a Certificate, Oral
Instructions, or Written Instructions specifying: (a) the Series for which the
Reverse Repurchase Agreement is entered; (b) the total amount payable to the
Fund in connection with such Reverse Repurchase Agreement and specifically
allocated to such Series; (c) the broker or dealer through or with whom the
Reverse Repurchase Agreement is entered; (d) the amount and kind of Securities
to be delivered by the Fund to such broker or dealer; (e) the date of such
Reverse Repurchase Agreement; and (f) the amount of cash and/or the amount and
kind of Securities, if any, specifically allocated to such series to be
deposited in a Senior Security
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<PAGE> 28
Account for such Series in connection with such Reverse Repurchase Agreement.
The Custodian shall, upon receipt of the total amount payable to the Fund
specified in the Certificate, Oral Instructions, or Written Instructions make
the delivery to the broker or dealer, and the deposits, if any, to the Senior
Security Account, specified in such Certificate, Oral Instructions, or Written
Instructions.
2. Upon the termination of a Reverse Repurchase Agreement described
in preceding paragraph 1 of this Article, the Fund shall promptly deliver a
Certificate or, in the event such Reverse Repurchase Agreement is a Money
Market Security, a Certificate, Oral Instructions, or Written Instructions to
the Custodian specifying: (a) the Reverse Repurchase Agreement being terminated
and the Series for which same was entered; (b) the total amount payable by the
Fund in connection with such termination; (c) the amount and kind of Securities
to be received by the Fund and specifically allocated to such Series in
connection with such termination; (d) the date of termination; (e) the name of
the broker or dealer with or through whom the Reverse Repurchase Agreement is
to be terminated; and (f) the amount of cash and/or the amount and kind of
Securities to be withdrawn from the Senior Securities Account for such Series.
The Custodian shall, upon receipt of the amount and kind of Securities to be
received by the Fund specified in the Certificate, Oral Instructions, or
Written Instructions, make the payment to the broker or dealer, and the
withdrawals, if any, from the Senior Security Account, specified in such
Certificate; Oral Instructions, or Written Instructions.
ARTICLE X
LOAN OF PORTFOLIO SECURITIES OF THE FUND
1. Promptly after each loan of portfolio Securities specifically
allocated to a Series held by the Custodian hereunder, the Fund shall deliver
or cause to be delivered to the Custodian a Certificate specifying with respect
to each such loan: (a) the Series to which the loaned Securities are
specifically allocated; (b) the name of the issuer and the title of the
Securities, (c) the number of shares or the principal amount loaned, (d) the
date of loan and delivery, (e) the total amount to be delivered to the
Custodian against the loan of the Securities, including the amount of cash
collateral and the premium, if any, separately identified, and (f) the name of
the broker, dealer, or financial institution to which the loan was made. The
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<PAGE> 29
Custodian shall deliver the Securities thus designated to the broker, dealer or
financial institution to which the loan was made upon receipt of the total
amount designated as to be delivered against the loan of Securities. The
Custodian may accept payment in connection with a delivery otherwise than
through the Book-Entry System or Depository only in the form of a certified or
bank cashier's check payable to the order of the Fund or the Custodian drawn on
New York Clearing House funds and may deliver Securities in accordance with the
customs prevailing among dealers in securities.
2. Promptly after each termination of the loan of Securities by the
Fund, the Fund shall deliver or cause to be delivered to the Custodian a
Certificate specifying with respect to each such loan termination and return of
Securities: (a) the Series to which the loaned Securities are specifically
allocated; (b) the name of the issuer and the title of the Securities to be
returned, (c) the number of shares or the principal amount to be returned, (d)
the date of termination, (e) the total amount to be delivered by the Custodian
(including the cash collateral for such Securities minus any offsetting credits
as described in said Certificate), and (f) the name of the broker, dealer, or
financial institution from which the Securities will be returned. The Custodian
shall receive all Securities returned from the broker, dealer, or financial
institution to which such Securities were loaned and upon receipt thereof shall
pay, out of the moneys held for the account of the Fund, the total amount
payable upon such return of Securities as set forth in the Certificate.
ARTICLE XI
CONCERNING MARGIN ACCOUNTS, SENIOR SECURITY
ACCOUNTS, AND COLLATERAL ACCOUNTS
1. The Custodian shall, from time to time, make such deposits to, or
withdrawals from, a Senior Security Account as specified in a Certificate
received by the Custodian. Such Certificate shall specify the Series for which
such deposit or withdrawal is to be made, and the amount of cash and/or the
amount and kind of Securities specifically allocated to such Series to be
deposited in, or withdrawn from, such Senior Security Account for such Series.
In the event that the Fund fails to specify in a Certificate the Series, the
name of the issuer, the title and the number of shares or the principal amount
of any particular Securities to be
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<PAGE> 30
deposited by the Custodian into, or withdrawn from, a Senior Securities
Account, the Custodian shall be under no obligation to make any such deposit or
withdrawal and shall so notify the Fund.
2. The Custodian shall make deliveries or payments from a Margin
Account to the broker, dealer, futures commission merchant or Clearing Member
in whose name, or for whose benefit, the account was established as specified
in the Margin Account Agreement.
3. Amounts received by the Custodian as payments or distributions
with respect to Securities deposited in any Margin Account shall be dealt with
in accordance with the terms and conditions of the Margin Account Agreement.
4. The Custodian shall have a continuing lien and security interest
in and to any property at any time held by the Custodian in any Collateral
Account described herein. In accordance with applicable law the Custodian may
enforce its lien and realize on any such property whenever the Custodian has
made payment or delivery pursuant to any Put Option guarantee letter or similar
document or any receipt issued hereunder by the Custodian. In the event the
Custodian should realize on any such property net proceeds which are less than
the Custodian's obligations under any Put Option guarantee letter or similar
document or any receipt, such deficiency shall be a debt owed the Custodian by
the Fund within the scope of Article XIV herein.
5. On each business day the Custodian shall furnish the Fund with a
statement with respect to each Margin Account in which money or Securities are
held specifying as of the close of business on the previous business day: (a)
the name of the Margin Account; (b) the amount and kind of Securities held
therein; and (c) the amount of money held therein. The Custodian shall make
available upon request to any broker, dealer, or futures commission merchant
specified in the name of a Margin Account a copy of the statement furnished the
Fund with respect to such Margin Account.
6. Promptly after the close of business on each business day in
which cash and/or Securities are maintained in a Collateral Account for any
Series, the Custodian shall furnish the Fund with a Statement with respect to
such Collateral Account specifying the amount of cash and/or the amount and
kind of Securities held therein. No later than the close of business next
succeeding the delivery to the Fund of such statement, the Fund shall furnish
to the
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<PAGE> 31
Custodian a Certificate or Written Instructions specifying the then market
value of the Securities described in such statement. In the event such then
market value is indicated to be less than the Custodian's obligation with
respect to any outstanding Put Option guarantee letter or similar document, the
Fund shall promptly specify in a Certificate the additional cash and/or
Securities to be deposited in such Collateral Account to eliminate such
deficiency.
ARTICLE XII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall furnish to the Custodian a copy of the resolution
of the Board of Trustees of the Fund, certified by the Secretary, the Clerk,
any Assistant Secretary or any Assistant Clerk, either (i) setting forth with
respect to the Series specified therein the date of the declaration of a
dividend or distribution, the date of payment thereof, the record date as of
which shareholders entitled to payment shall be determined, the amount payable
per Share of such Series to the shareholders of record as of that date and the
total amount payable to the Dividend Agent and any sub-dividend agent or co-
dividend agent of the Fund on the payment date, or (ii) authorizing with
respect to the Series specified therein the declaration of dividends and
distributions on a daily basis and authorizing the Custodian to rely on Oral
Instructions, Written Instructions or a Certificate setting forth the date of
the declaration of such dividend or distribution, the date of payment thereof,
the record date as of which shareholders entitled to payment shall be
determined, the amount payable per Share of such Series to the shareholders of
record as of that date and the total amount payable to the Dividend Agent on
the payment date.
2. Upon the payment date specified in such resolution, Oral
Instructions, Written Instructions or Certificate, as the case may be, the
Custodian shall pay out of the moneys held for the account of each Series the
total amount payable to the Dividend Agent, and any sub-dividend agent or co-
dividend agent of the Fund with respect to such Series.
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<PAGE> 32
ARTICLE XIII
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any Shares, it shall deliver to the
Custodian a Certificate duly specifying:
(a) The Series, the number of Shares sold, trade date, and
price; and
(b) The amount of money to be received by the Custodian for
the sale of such Shares and specifically allocated to the separate account in
the name of such Series.
2. Upon receipt of such money from the Transfer Agent, the Custodian
shall credit such money to the separate account in the name of the Series for
which such money was received.
3. Upon issuance of any Shares of any Series described in the
foregoing provisions of this Article, the Custodian shall pay, out of the money
held for the account of such Series, all original issue or other taxes required
to be paid by the Fund in connection with such issuance upon the receipt of a
Certificate specifying the amount to be paid.
4. Except as provided hereinafter, whenever the Fund desires the
Custodian to make payment out of the money held by the Custodian hereunder in
connection with a redemption of any Shares, it shall furnish to the Custodian
a Certificate specifying:
(a) The number and Series of Shares redeemed; and
(b) The amount to be paid for such Shares.
5. Upon receipt from the Transfer Agent of an advice setting forth
the Series and number of Shares received by the Transfer Agent for redemption
and that such Shares are in good form for redemption, the Custodian shall make
payment to the Transfer Agent out of the moneys held in the separate account in
the name of the Series the total amount specified in the Certificate issued
pursuant to the foregoing paragraph 4 of this Article.
6. Notwithstanding the above provisions regarding the redemption of
any Shares, whenever any Shares are redeemed pursuant to any check redemption
privilege which may from time to time be offered by the Fund, the Custodian,
unless
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<PAGE> 33
otherwise instructed by a Certificate, shall, upon receipt of an advice from
the Fund or its agent setting forth that the redemption is in good form for
redemption in accordance with the check redemption procedure, honor the check
presented as part of such check redemption privilege out of the moneys held in
the separate account of the Series of the Shares being redeemed.
ARTICLE XIV
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian should in its sole discretion advance funds on
behalf of any Series which results in an overdraft because the moneys held by
the Custodian in the separate account for such Series shall be insufficient to
pay the total amount payable upon a purchase of Securities specifically
allocated to such Series, as set forth in a Certificate, Oral Instructions, or
Written Instructions or which results in an overdraft in the separate account
of such Series for some other reason, or if the Fund is for any other reason
indebted to the Custodian with respect to a Series (except a borrowing for
investment or for temporary or emergency purposes using Securities as
collateral pursuant to a separate agreement and subject to the provisions of
paragraph 2 of this Article), such overdraft or indebtedness shall be deemed to
be a loan made by the Custodian to the Fund for such Series payable on demand
and shall bear interest from the date incurred at a rate per annum (based on a
360-day year for the actual number of days involved) equal to 1/2% over
Custodian's prime commercial lending rate in effect from time to time, such
rate to be adjusted on the effective date of any change in such prime
commercial lending rate but in no event to be less than 6% per annum. In
addition, the Fund hereby agrees that the Custodian shall have a continuing
lien and security interest in and to any property specifically allocated to
such Series at any time held by it for the benefit of such Series or in which
the Fund may have an interest which is then in the Custodian's possession or
control or in possession or control of any third party acting in the
Custodian's behalf. The Fund authorizes the Custodian, in its sole discretion,
at any time to charge any such overdraft or indebtedness together with interest
due thereon against any balance of account standing to such Series' credit on
the Custodian's books.
2. The Fund will cause to be delivered to the Custodian by any bank
(including, if the borrowing is pur-
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<PAGE> 34
suant to a separate agreement, the Custodian) from which it borrows money for
investment or for temporary or emergency purposes using Securities held by the
Custodian hereunder as collateral for such borrowings, a notice or undertaking
in the form currently employed by any such bank setting forth the amount which
such bank will loan to the Fund against delivery of a stated amount of
collateral. The Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to each such borrowing: (a) the Series to which such
borrowing relates; (b) the name of the bank, (c) the amount and terms of the
borrowing, which may be set forth by incorporating by reference an attached
promissory note, duly endorsed by the Fund, or other loan agreement, (d) the
time and date, if known, on which the loan is to be entered into, (e) the date
on which the loan becomes due and payable, (f) the total amount payable to the
Fund on the borrowing date, (g) the market value of Securities to be delivered
as collateral for such loan, including the name of the issuer, the title and
the number of shares or the principal amount of any particular Securities, and
(h) a statement specifying whether such loan is for investment purposes or for
temporary or emergency purposes and that such loan is in conformance with the
Investment Company Act of 1940 and the Fund's prospectus. The Custodian shall
deliver on the borrowing date specified in a Certificate the specified
collateral and the executed promissory note, if any, against delivery by the
lending bank of the total amount of the loan payable, provided that the same
conforms to the total amount payable as set forth in the Certificate. The
Custodian may, at the option of the lending bank, keep such collateral in its
possession, but such collateral shall be subject to all rights therein given
the lending bank by virtue of any promissory note or loan agreement. The
Custodian shall deliver such Securities as additional collateral as may be
specified in a Certificate to collateralize further any transaction described
in this paragraph. The Fund shall cause all Securities released from collateral
status to be returned directly to the Custodian, and the Custodian shall
receive from time to time such return of collateral as may be tendered to it.
In the event that the Fund fails to specify in a Certificate the Series, the
name of the issuer, the title and number of shares or the principal amount of
any particular Securities to be delivered as collateral by the Custodian, the
Custodian shall not be under any obligation to deliver any Securities.
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<PAGE> 35
ARTICLE XV
CONCERNING THE CUSTODIAN
1. Except as hereinafter provided, neither the Custodian nor its
nominee shall be liable for any loss or damage, including counsel fees,
resulting from its action or omission to act or otherwise, either hereunder or
under any Margin Account Agreement, except for any such loss or damage arising
out of its own negligence or willful misconduct. The Custodian may, with
respect to questions of law arising hereunder or under any Margin Account
Agreement, apply for and obtain the advice and opinion of counsel to the Fund
or of its own counsel, at the expense of the Fund, and shall be fully protected
with respect to anything done or omitted by it in good faith in conformity with
such advice or opinion. The Custodian shall be liable to the Fund for any loss
or damage resulting from the use of the Book-Entry System or any Depository
arising by reason of any negligence, misfeasance or willful misconduct on the
part of the Custodian or any of its employees or agents.
2. Without limiting the generality of the foregoing, the Custodian
shall be under no obligation to inquire into, and shall not be liable for:
(a) The validity of the issue of any Securities purchased,
sold, or written by or for the Fund, the legality of the purchase, sale or
writing thereof, or the propriety of the amount paid or received therefor;
(b) The legality of the sale or redemption of any Shares, or
the propriety of the amount to be received or paid therefor;
(c) The legality of the declaration or payment of any dividend
by the Fund;
(d) The legality of any borrowing by the Fund using Securities
as collateral;
(e) The legality of any loan of portfolio Securities, nor
shall the Custodian be under any duty or obligation to see to it that any cash
collateral delivered to it by a broker, dealer, or financial institution or
held by it at any time as a result of such loan of portfolio Securities of the
Fund is adequate collateral for the Fund against any loss it might sustain as a
result of such loan. The Custodian specifically, but not by way of limitation,
shall not be under any duty or obligation periodically to check or notify the
Fund that the amount of such cash collateral held by it for the Fund is
sufficient collateral for the Fund,
<PAGE> 36
but such duty or obligation shall be the sole responsibility of the Fund. In
addition, the Custodian shall be under no duty or obligation to see that any
broker, dealer or financial institution to which portfolio Securities of the
Fund are lent pursuant to Article XIV of this Agreement makes payment to it of
any dividends or interest which are payable to or for the account of the Fund
during the period of such loan or at the termination of such loan, provided,
however, that the Custodian shall promptly notify the Fund in the event that
such dividends or interest are not paid and received when due; or
(f) The sufficiency or value of any amounts of money and/or
Securities held in any Margin Account, Senior Security Account, Exempt Account
or Collateral Account in connection with transactions by the Fund. In addition,
the Custodian shall be under no duty or obligation to see that any broker,
dealer, futures commission merchant or Clearing Member makes payment to the
Fund of any variation margin payment or similar payment which the Fund may be
entitled to receive from such broker, dealer, futures commission merchant or
Clearing Member, to see that any payment received by the Custodian from any
broker, dealer, futures commission merchant or Clearing Member is the amount
the Fund is entitled to receive, or to notify the Fund of the Custodian's
receipt or non-receipt of any such payment.
3. The Custodian shall not be liable for, or considered to be the
Custodian of, any money, whether or not represented by any check, draft, or
other instrument for the payment of money, received by it on behalf of the Fund
until the Custodian actually receives and collects such money directly or by
the final crediting of the account representing the Fund's interest at the
Book-Entry System or the Depository.
4. The Custodian shall have no responsibility and shall not be
liable for ascertaining or acting upon any calls, conversions, exchange,
offers, tenders, interest rate changes or similar matters relating to
Securities held in the Depositary, unless the Custodian shall have actually
received timely notice from the Depositary. In no event shall the Custodian
have any responsibility or liability for the failure of the Depositary to
collect, or for the late collection or late crediting by the Depositary of any
amount payable upon Securities deposited in the Depositary which may mature or
be redeemed, retired, called or otherwise become payable. However, upon receipt
of a Certificate from the Fund of an overdue amount on Securities held in the
Depositary the Custodian shall make a claim against the Depositary on behalf of
the Fund, except that the Custodian
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<PAGE> 37
shall not be under any obligation to appear in, prosecute or defend any action
suit or proceeding in respect to any Securities held by the Depositary which in
its opinion may involve it in expense or liability, unless indemnity
satisfactory to it against all expense and liability be furnished as often as
may be required.
5. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount due to the Fund from the Transfer
Agent of the Fund nor to take any action to effect payment or distribution by
the Transfer Agent of the Fund of any amount paid by the Custodian to the
Transfer Agent of the Fund in accordance with this Agreement.
6. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount, if the Securities upon which such
amount is payable are in default, or if payment is refused after due demand or
presentation, unless and until (i) it shall be directed to take such action by
a Certificate and (ii) it shall be assured to its satisfaction of
reimbursement of its costs and expenses in connection with any such action.
7. The Custodian may appoint one or more banking institutions as
Depository or Depositories, as Sub-Custodian or Sub-Custodians, or as Co-
Custodian or Co-Custodians including, but not limited to, banking institutions
located in foreign countries, of Securities and moneys at any time owned by the
Fund, upon such terms and conditions as may be approved in a Certificate or
contained in an agreement executed by the Custodian, the Fund and the appointed
institution.
8. The Custodian shall not be under any duty or obligation (a) to
ascertain whether any Securities at any time delivered to, or held by it, for
the account of the Fund and specifically allocated to a Series are such as
properly may be held by the Fund or such Series under the provisions of its
then current prospectus, or (b) to ascertain whether any transactions by the
Fund, whether or not involving the Custodian, are such transactions as may
properly be engaged in by the Fund.
9. The Custodian shall be entitled to receive and the Fund agrees to
pay to the Custodian all out-of-pocket expenses and such compensation as may be
agreed upon from time to time between the Custodian and the Fund. The Custodian
may charge such compensation and any expenses with respect to a Series incurred
by the Custodian in the performance of its
- 33 -
<PAGE> 38
duties pursuant to such agreement against any money specifically allocated to
such Series. Unless and until the Fund instructs the Custodian by a
Certificate to apportion any loss, damage, liability or expense among the
Series in a specified manner, the Custodian shall also be entitled to charge
against any money held by it for the account of a Series such Series' pro rata
share (based on such Series net asset value at the time of the charge to the
aggregate net asset value of all Series at that time) of the amount of any
loss, damage, liability or expense, including counsel fees, for which it shall
be entitled to reimbursement under the provisions of this Agreement. The
expenses for which the Custodian shall be entitled to reimbursement hereunder
shall include, but are not limited to, the expenses of sub-custodians and
foreign branches of the Custodian incurred in settling outside of New York City
transactions involving the purchase and sale of Securities of the Fund.
10. The Custodian shall be entitled to rely upon any Certificate,
notice or other instrument in writing received by the Custodian and reasonably
believed by the Custodian to be a Certificate. The Custodian shall be entitled
to rely upon any Oral Instructions and any Written Instructions actually
received by the Custodian hereinabove provided for. The Fund agrees to forward
to the Custodian a Certificate or facsimile thereof confirming such Oral
Instructions or Written Instructions in such manner so that such Certificate or
facsimile thereof is received by the Custodian, whether by hand delivery,
telecopier or other similar device, or otherwise, by the close of business of
the same day that such Oral Instructions or Written Instructions are given to
the Custodian. The Fund agrees that the fact that such confirming
instructions are not received by the Custodian shall in no way affect the
validity of the transactions or enforceability of the transactions hereby
authorized by the Fund. The Fund agrees that the Custodian shall incur no
liability to the Fund in acting upon Oral Instructions or Written Instructions
given to the Custodian hereunder concerning such transactions provided such
instructions reasonably appear to have been received from an Authorized Person.
11. The Custodian shall be entitled to rely upon any instrument,
instruction or notice received by the Custodian and reasonably believed by the
Custodian to be given in accordance with the terms and conditions of any Margin
Account Agreement. Without limiting the generality of the foregoing, the
Custodian shall be under no duty to inquire into, and shall not be liable for,
the accuracy of any statements or representations contained in any such
instrument or other notice including, without limitation, any specification of
any amount to be paid to a broker, dealer, futures commission merchant or
Clearing Member.
- 34 -
<PAGE> 39
12. The books and records pertaining to the Fund which are in the
possession of the Custodian shall be the property of the Fund. Such books and
records shall be prepared and maintained as required by the Investment Company
Act of 1940, as amended, and other applicable securities laws and rules and
regulations. The Fund, or the Fund's authorized representatives, shall have
access to such books and records during the Custodian's normal business hours.
Upon the reasonable request of the Fund, copies of any such books and records
shall be provided by the Custodian to the Fund or the Fund's authorized
representative, and the Fund shall reimburse the Custodian its expenses of
providing such copies. Upon reasonable request of the Fund, the Custodian shall
provide in hard copy or on micro-film, whichever the Custodian elects, any
records included in any such delivery which are maintained by the Custodian on
a computer disc, or are similarly maintained, and the Fund shall reimburse the
Custodian for its expenses of providing such hard copy or micro-film.
13. The Custodian shall provide the Fund with any report obtained by
the Custodian on the system of internal accounting control of the Book-Entry
System, the Depository, or O.C.C., and with such reports on its own systems of
internal accounting control as the Fund may reasonably request from time to
time.
14. The Fund agrees to indemnify the Custodian against and save the
Custodian harmless from all liability, claims, losses and demands whatsoever,
including attorney's fees, howsoever arising or incurred because of or in
connection with the Custodian's payment or non-payment of checks pursuant to
paragraph 6 of Article XIII as part of any check redemption privilege program
of the Fund, except for any such liability, claim, loss and demand arising out
of the Custodian's own negligence or willful misconduct.
15. Subject to the foregoing provisions of this Agreement, the
Custodian may deliver and receive Securities, and receipts with respect to such
Securities, and arrange for payments to be made and received by the Custodian
in accordance with the customs prevailing from time to time among brokers or
dealers in such Securities.
16. The Custodian shall have no duties or responsibilities whatsoever
except such duties and responsibilities as are specifically set forth in this
Agreement, and no covenant or obligation shall be implied in this Agreement
against the Custodian.
- 35 -
<PAGE> 40
ARTICLE XVI
TERMINATION
1. Either of the parties hereto may terminate this Agreement by
giving to the other party a notice in writing specifying the date of such
termination, which shall be not less than ninety (90) days after the date of
giving of such notice. In the event such notice is given by the Fund, it shall
be accompanied by a copy of a resolution of the Board of Trustees of the Fund,
certified by the Secretary, the Clerk, any Assistant Secretary or any Assistant
Clerk, electing to terminate this Agreement and designating a successor
custodian or custodians, each of which shall be a bank or trust company having
not less than $2,000,000 aggregate capital, surplus and undivided profits.
In the event such notice is given by the Custodian, the Fund shall, on or
before the termination date, deliver to the Custodian a copy of a resolution of
the Board of Trustees of the Fund, certified by the Secretary, the Clerk, any
Assistant Secretary or any Assistant Clerk, designating a successor custodian
or custodians. In the absence of such designation by the Fund, the Custodian
may designate a successor custodian which shall be a bank or trust company
having not less than $2,000,000 aggregate capital, surplus and undivided
profits. Upon the date set forth in such notice this Agreement shall terminate,
and the Custodian shall upon receipt of a notice of acceptance by the successor
custodian on that date deliver directly to the successor custodian all
Securities and moneys then owned by the Fund and held by it as Custodian, after
deducting all fees, expenses and other amounts for the payment or reimbursement
of which it shall then be entitled.
2. If a successor custodian is not designated by the Fund or the
Custodian in accordance with the preceding paragraph, the Fund shall upon the
date specified in the notice of termination of this Agreement and upon the
delivery by the Custodian of all Securities (other than Securities held in the
Book-Entry System which cannot be delivered to the Fund) and moneys then owned
by the Fund be deemed to be its own custodian and the Custodian shall thereby
be relieved of all duties and responsibilities pursuant to this Agreement,
other than the duty with respect to Securities held in the Book Entry System
which cannot be delivered to the Fund to hold such Securities hereunder in
accordance with this Agreement.
- 36 -
<PAGE> 41
ARTICLE XVII
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate signed by two of
the present Officers of the Fund under its seal, setting forth the names and
the signatures of the present Authorized Persons. The Fund agrees to furnish
to the Custodian a new Certificate in similar form in the event that any such
present Authorized Person ceases to be an Authorized Person or in the event
that other or additional Authorized Persons are elected or appointed. Until
such new Certificate shall be received, the Custodian shall be fully protected
in acting under the provisions of this Agreement upon Oral Instructions or
signatures of the present Authorized Persons as set forth in the last delivered
Certificate.
2. Annexed hereto as Appendix B is a Certificate signed by two of
the present Officers of the Fund under its seal, setting forth the names and
the signatures of the present Officers of the Fund. The Fund agrees to furnish
to the Custodian a new Certificate in similar form in the event any such
present Officer ceases to be an Officer of the Fund, or in the event that other
or additional Officers are elected or appointed. Until such new Certificate
shall be received, the Custodian shall be fully protected in acting under the
provisions of this Agreement upon the signatures of the Officers as set forth
in the last delivered Certificate.
3. Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Custodian, shall be sufficiently given if
addressed to the Custodian and mailed or delivered to it at its offices at 90
Washington Street, New York, New York 10015, or at such other place as the
Custodian may from time to time designate in writing.
4. Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Fund shall be sufficiently given if
addressed to the Fund and mailed or delivered to it at its office at the
address for the Fund first above written, or at such other place as the Fund
may from time to time designate in writing.
5. This Agreement may not be amended or modified in any manner
except by a written agreement executed by both parties with the same formality
as this Agreement and approved by a resolution of the Board of Trustees of the
Fund.
- 37 -
<PAGE> 42
6 This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable by the Fund without the written
consent of the Custodian, or by the Custodian without the written consent of
the Fund, authorized or approved by a resolution of the Fund's Board of
Trustees.
7. This Agreement shall be construed in accordance with the laws of
the State of New York.
8. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
9. A copy of the Declaration of Trust of the Fund is on file with
the Secretary of The Commonwealth of Massachusetts, and notice is hereby given
that this instrument is executed on behalf of the Board of Trustees of the Fund
as Trustees and not individually and that the obligations of this instrument
are not binding upon any of the Trustees or shareholders individually but are
binding only upon the assets and property of the Fund; provided, however, that
the Declaration of Trust of the Fund provides that the assets of a particular
Series of the Fund shall under no circumstances be charged with liabilities
attributable to any other Series of the Fund and that all persons extending
credit to, or contracting with or having any claim against a particular Series
of the Fund shall look only to the assets of that particular Series for payment
of such credit, contract or claim.
- 38 -
<PAGE> 43
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective Officers, thereunto duly authorized and their
respective seals to be hereunto affixed, as of the day and year first above
written.
SHORT-TERM INVESTMENTS CO.
By: /s/ ROBERT H. GRAHAM
------------------------
Attest:
/s/ WILLIAM H. KLEH
- --------------------
THE BANK OF NEW YORK
By: ILLEGIBLE
-----------------
Attest:
ILLEGIBLE
- --------------------
- 39 -
<PAGE> 44
APPENDIX A
I, Robert H. Graham, Executive Vice President and I, William H. Kleh,
Vice President and Secretary of SHORT-TERM INVESTMENTS CO., a Massachusetts
business trust (the "Fund"), do hereby certify that:
The following individuals have been duly authorized by the Board of
Trustees of the Fund in conformity with the Fund's Declaration of Trust and By-
Laws to give Oral Instructions and Written Instructions on behalf of the Fund,
and the signatures set forth opposite their respective names are their true and
correct signatures:
NAME SIGNATURE
Charles T. Bauer /s/ CHARLES T. BAUER
President --------------------------------
Robert H. Graham /s/ ROBERT H. GRAHAM
Executive Vice President --------------------------------
Gary T. Crum /s/ GARY T. CRUM
Vice President --------------------------------
Harold F. McElraft /s/ HAROLD F. MCELRAFT
Vice President and Treasurer --------------------------------
J. Abbott Sprague /s/ J. ABBOTT SPRAGUE
Vice President --------------------------------
Gary V. Beauchamp /s/ GARY V. BEAUCHAMP
Vice President --------------------------------
William H. Kleh /s/ WILLIAM H. KLEH
Vice President and Secretary --------------------------------
ALEX m. CICCONE /s/ ALEX M. CICCONE
Vice President --------------------------------
(SEAL) Dated this 23rd day of June 1987
/s/ ROBERT H. GRAHAM
--------------------------------
Robert H. Graham
/s/ WILLIAM H. KLEH
--------------------------------
William H. Kleh
<PAGE> 45
APPENDIX B
I, Robert H. Graham, Executive Vice President and I, William H. Kleh,
Vice President and Secretary of SHORT-TERM INVESTMENTS CO., a Massachusetts
business trust (the "Fund"), do hereby certify that:
The following individuals serve in the following positions with the Fund
and each has been duly elected or appointed by the Board of Trustees of the
Fund to each such position and qualified therefor in conformity with the Fund's
Declaration of Trust and By-Laws, and the signatures set forth opposite their
respective names are their true and correct signatures:
NAME SIGNATURE
Charles T. Bauer /s/ CHARLES T. BAUER
President ---------------------------------
Robert H. Graham /s/ ROBERT H. GRAHAM
Executive Vice President ---------------------------------
Gary T. Crum /s/ GARY T. CRUM
Vice President ---------------------------------
Harold F. McElraft /s/ HAROLD F. MCELRAFT
Vice President and Treasurer ---------------------------------
J. Abbott Sprague /s/ J. ABBOTT SPRAGUE
Vice President ---------------------------------
Gary V. Beauchamp /s/ GARY V. BEAUCHAMP
Vice President ---------------------------------
William H. Kleh /s/ WILLIAM H. KLEH
Vice President and Secretary ---------------------------------
Alex M. Ciccone /s/ ALEX M. CICCONE
Vice President ---------------------------------
Ray Walther /s/ RAY WALTHER
Assistant Treasurer ---------------------------------
<PAGE> 46
NAME SIGNATURE
Carol F. Relihan /s/ CAROL F. RELIHAN
Assistant Secretary ---------------------------------------
Pauletta P. Cohn /s/ PAULETTA P. COHN
Assistant Secretary ---------------------------------------
Nancy L. Martin /s/ NANCY L. MARTIN
Assistant Secretary ---------------------------------------
(SEAL) Dated this 23rd day of June, 1987
/s/ ROBERT H. GRAHAM
---------------------------------------
Robert H. Graham
/s/ WILLIAM H. KLEH
---------------------------------------
William H. Kleh
-2-
<PAGE> 47
APPENDIX C
I, , an Assistant Vice President with THE BANK OF NEW
YORK do hereby designate the following publications:
The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
New York Times
Standard & Poor's Called Bond Record
Wall Street Journal
<PAGE> 48
EXHIBIT A
CERTIFICATION
The undersigned, hereby certifies that he or she is the
duly elected and acting of SHORT-TERM INVESTMENTS CO., a
Massachusetts business trust (the "Fund"), and further certifies that the
following resolution was adopted by the Board of Trustees of the Fund at a
meeting duly held on , 1987, at which a quorum was at all
times present and that such resolution has not been modified or rescinded and
is in full force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to a
Custody Agreement between The Bank of New York and the Fund dated as of
, 1987,(the "Custody Agreement") is authorized and
instructed on a continuous and ongoing basis to deposit in the
Book-Entry System, as defined in the Custody Agreement,all securities
eligible for deposit therein, regardless of the Series to which the same
are specifically allocated, and to utilize the Book-Entry System to the
extent possible in connection with its performance thereunder,
including, without limitation, in connection with settlements of
purchases and sales of securities, loans of securities, and deliveries
and returns of securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of ,
as of the day of , 1987.
---------------------------
<PAGE> 49
EXHIBIT B
CERTIFICATION
The undersigned, , hereby certifies
that he or she is the duly elected and acting of SHORT-TERM
INVESTMENTS CO., a Massachusetts business Trust (the "Fund"), and further
certifies that the following resolution was adopted by the Board of Trustees of
the Fund at a meeting duly held on , 1987, at which a
quorum was at all times present and that such resolution has not been modified
or rescinded and is in full force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to a
Custody Agreement between The Bank of New York and the Fund dated as
of , 1987, (the "Custody Agreement") is authorized and
instructed on a continuous and ongoing basis until such time as it
receives a Certificate, as defined in the Custody Agreement, to the
contrary to deposit in the Depository, as defined in the Custody
Agreement, all securities eligible for deposit therein, regardless of the
Series to which the same are specifically allocated, and to utilize the
Depository to the extent possible in connection with its performance
thereunder, including, without limitation, in connection with settlements
of purchases and sales of securities, loans of securities, and deliveries
and returns of securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of ,
as of the day of , 1987.
---------------------
<PAGE> 50
EXHIBIT C
CERTIFICATION
The undersigned, , hereby certifies
that he or she is the duly elected and acting of SHORT-TERM
INVESTMENTS CO., a Massachusetts business trust (the "Fund"), and further
certifies that the following resolution was adopted by the Board of Trustees of
the Fund at a meeting duly held on , 1987, at which a quorum was at
all times present and that such resolution has not been modified or rescinded
and is in full force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to a
Custody Agreement between The Bank of New York and the Fund dated as of
, 1987, (the "Custody Agreement") is authorized and instructed on
a continuous and ongoing basis until such time as it receives a
Certificate, as defined in the Custody Agreement, to the contrary, to
accept, utilize and act with respect to Clearing Member confirmations
for Options and transaction in Options, regardless of the Series to
which the same are specifically allocated, as such terms are defined in
the Custody Agreement, as provided in the Custody Agreement.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal of ,
as of the day of , 1987.
----------------------
<PAGE> 1
EXHIBIT 8(b)
[BANK OF NEW YORK LETTERHEAD]
July 30, 1996
Mr Robert H. Graham
President
AIM Funds Group - AIM Municipal Bond Fund
AIM Investment Securities Funds
AIM Tax-Exempt Funds, Inc.
Short-Term Investments Co.
Short-Term Investments Trust
Tax-Free Investments Co.
11 Greenway Plaza, Suite 1919
Houston, Texas 77046
Dear Mr. Graham
Upon reviewing the existing Terminal Link Amendment dated May 17, 1993, we have
noted that originally the process called for The Bank of New York receiving
data transmissions directly from AIM, and not via a third party. Now that DST
is involved and will be acting as an intermediary there is a need to modify the
Terminal Link Amendment.
It is our understanding that the new methodology for receiving data
transmissions from DST via NDM software line utilized NDM's
Secure-Point-of-Entry security. This process calls for the issuance of a
Security ID by DST for AIM's sole use. This security ID along with DST's
specific NDM node name will identify each transmission sent to the Bank.
Internally, the Bank has pre-set an associated security ID that will allow the
data transmission to be processed according to the method pre-selected for the
AIM Funds. Both the AIM Security ID and the DST name node must match to what the
Bank expects to receive before the file is accepted and processed.
In light of how far along all parties are in this project, and in order to not
detain its implementation due to legal considerations, we ask that you please
acknowledge receipt of this letter as confirmation of AIM's understanding of
the process until such time as the new Terminal Link Amendment is drafted.
We would like to thank you and your staff for your time and cooperation
throughout this project.
<PAGE> 2
Mr. Robert Graham
July 30, 1996
Page 2
It is understood that this Amendment applies to the Custodian Agreements
between The Bank of New York and the entities listed below:
AIM Funds Group - AIM Municipal Bond Fund (Dated of Agreement: October
19, 1995)
AIM Investment Securities Funds (Date of Agreement: June 16, 1987)
AIM Tax-Exempt Funds, Inc. (Date of Agreement: October 19, 1995)
Short-Term Investments Co. (Date of Agreement: June 16, 1987)
Short-Term Investments Trust (Date of Agreement: June 16, 1987)
Tax-Free Investments Co. (Date of Agreement: October 19, 1995)
Sincerely,
/s/ MAYRA ADONNINO
Mayra Adonnino
Vice President
Relationship Management
Acknowledged by:
/s/ ROBERT H. GRAHAM
- ---------------------------
Robert H. Graham
Date: July 30, 1996
MA/df
cc: M. Yamaguchi
P. Holland
S. Grunston
<PAGE> 1
EXHIBIT 9(d)
AMENDMENT NO. 1
MASTER ADMINISTRATIVE SERVICES AGREEMENT
The Master Administrative Services Agreement (the "Agreement"), dated
October 18, 1993, by and between Short-Term Investments Trust, a Delaware
business trust, and A I M Advisors, Inc., a Delaware corporation, is hereby
amended as follows:
Appendix A of the Agreement is hereby deleted in its entirety and
replaced with the following:
"SHORT-TERM INVESTMENTS TRUST APPENDIX
A TO MASTER ADMINISTRATIVE SERVICES AGREEMENT
Treasury Portfolio
Institutional Class
Personal Investment Class
Private Investment Class
Cash Management Class
Resource Class
Treasury TaxAdvantage Portfolio
Institutional Class
Private Investment Class
All other terms and provisions of the Agreement not amended herein
shall remain in full force and effect.
Dated: November 2 , 1995
---------------------
SHORT-TERM INVESTMENTS TRUST
Attest: /s/ STEPHEN I. WINER By: /s/ ROBERT H. GRAHAM
-------------------------- --------------------------
Assistant Secretary President
(SEAL)
A I M ADVISORS, INC.
Attest: /s/ STEPHEN I. WINER By: /s/ ROBERT H. GRAHAM
-------------------------- --------------------------
Assistant Secretary President
(SEAL)
<PAGE> 1
EXHIBIT 11(a)
CONSENT OF COUNSEL
SHORT-TERM INVESTMENTS TRUST
We hereby consent to the use of our name and to the references
to our firm under the caption "General Information - - Legal Counsel" in the
Prospectuses for each class of the Treasury Portfolio and each class of the
Treasury TaxAdvantage Portfolio, and under the caption "Miscellaneous
Information - - Legal Matters" in the Statements of Additional Information for
each class of said Portfolios, all of which form a part of Post-Effective
Amendment No. 29 to the Registration Statement of Short-Term Investments Trust
on Form N-1A under the Securities Act of 1933 (Reg. No. 2-58287).
/s/ BALLARD SPAHR ANDREWS & INGERSOLL
-------------------------------------
Ballard Spahr Andrews & Ingersoll
Philadelphia, Pennsylvania
December 30, 1996
<PAGE> 1
EXHIBIT 11(b)
INDEPENDENT AUDITORS' CONSENT
-----------------------------
The Board of Trustees
Short-Term Investments Trust
We consent to the use of our reports on the Treasury Portfolio and Treasury
TaxAdvantage Portfolio (portfolios of Short- Term Investments Trust) dated
October 4, 1996 included herein and to the references to our firm under the
headings "Financial Highlights" in the Prospectuses and "Reports" in the
Statements of Additional Information.
/s/ KPMG PEAT MARWICK LLP
-------------------------
KPMG Peat Marwick LLP
Houston, Texas
December 4, 1996
<PAGE> 1
EXHIBIT 15(a)
MASTER DISTRIBUTION PLAN PURSUANT TO RULE 12b-1
OF
SHORT-TERM INVESTMENTS TRUST
WHEREAS, Short-Term Investments Trust (the "Trust") is engaged in
business as an open-end management investment company and is registered as
such under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the shares of beneficial interest of the Trust may be
divided into a number of separate series, including the Treasury Portfolio
(hereinafter referred to as the "Portfolios"); and
WHEREAS, the Treasury Portfolio is comprised of a Personal
Investment Class, a Private Investment Class and a Cash Management Class
("Retail Shares") and an institutional class, and Retail Shares are offered
to customers through certain banks and broker-dealers that may offer
special shareholder services to such customers; and
WHEREAS, the Trust desires to adopt, on behalf of the series of
beneficial interest set forth in Appendix A attached hereto (the "Shares"),
a Plan pursuant to Rule 12b-1 under the Act with respect to the Shares, and
the trustees of the Trust have determined that there is a reasonable
likelihood that adoption of this Plan will benefit the Trust, the Treasury
Portfolio and the holders of the Shares; and
WHEREAS, the Trust has employed A I M Advisors, Inc. ("AIM") as its
investment advisor with respect to the Treasury Portfolio to supply
investment advice; and
WHEREAS, the Trust on behalf of the Treasury Portfolio has entered
into a Master Distribution Agreement (the "Distribution Agreement")
designating a principal distributor of the Shares (the "Distributor").
NOW THEREFORE, the Trust hereby adopts, on behalf of the Treasury
Portfolio, the following terms constituting a Plan pursuant to Rule 12b-1
under the 1940 Act with respect to the Classes of Shares set forth in
Appendix A:
1. The Trust may act as a distributor of the Shares of
which the Trust is the issuer, pursuant to Rule 12b-1 under the 1940 Act,
according to the terms of this Distribution Plan (the "Plan").
2. Amounts set forth in Appendix A may be expended when and
if authorized in advance by the Trust's Board of Trustees. Such amounts
may be used to finance any activity which is primarily intended to result
in the sale of the Shares, including, but not limited to, expenses of
organizing and conducting sales seminars, advertising programs, finders
fees, printing of prospectuses and statements of additional information
(and supplements thereto) and reports for other than existing shareholders,
preparation and distribution of advertising material
-1-
<PAGE> 2
and sales literature, supplemental payments to the Distributor and the
costs of administering the Plan. All amounts expended pursuant to the Plan
shall be paid
(i) to the Distributor, as an asset-based sales charge, and
(ii) as a service fee to certain broker-dealers, banks, and other
financial institutions ("Service Providers") who offer
continuing personal shareholder services to their customers
who invest in the Shares, and who have entered into
Shareholder Service Agreements substantially in the form of
Exhibit A hereto.
The maximum shareholder service fee payable to any Service Provider
shall not exceed twenty-five one hundredths of one percent (0.25%) per
annum. Amounts paid under the Plan that are not paid as service fees shall
be deemed to be asset-based sales charges.
The activities, the payment of which by the Trust are intended to be
within the scope of the Plan, shall include, but not necessarily be limited
to, payments to the Distributor for its distribution-related activities and
to Service Providers as asset-based sales charges or as a service fee in
respect of the Shares owned by shareholders with whom such Service Provider
has a shareholder servicing relationship. Shareholder servicing may
include, among other things: (i) answering client inquiries regarding the
Shares and the Treasury Portfolio; (ii) assisting clients in changing
dividend options, account designations and addresses; (iii) performing
sub-accounting; (iv) establishing and maintaining shareholder accounts and
records; (v) processing purchase and redemption transactions; (vi)
automatic investment in Shares of customer cash account balances; (vii)
providing periodic statements showing a customer's account balance and
integrating such statements with those of other transactions and balances
in the customer's other accounts serviced by such firm; (viii) arranging
for bank wires; and (ix) such other services as the Trust 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.
3. No additional payments are to be made by the Trust on behalf
of the Treasury Portfolio with respect to the Shares as a result of the
Plan other than the payments such Portfolio is otherwise obligated to make
(i) to AIM pursuant to the Master Investment Advisory Agreement and (ii)
for the expenses otherwise incurred by the Treasury Portfolio and the Trust
on behalf of the Shares in the normal conduct of the Treasury Portfolio's
business pursuant to the Master Investment Advisory Agreement. However, to
the extent any payments by the Trust on behalf of the Treasury Portfolio to
AIM or such Portfolio's shareholder servicing and transfer agent; by AIM to
any Service Providers pursuant to any Shareholder Service Agreement; or,
generally, by the Trust on behalf of the Treasury Portfolio to any party
for the Treasury Portfolio's operating expenses, are deemed to be payments
for the financing of any activity primarily intended to result in the sale
of the Treasury Portfolio's shares within the context of Rule 12b-1 under
the 1940 Act, then such payments shall be deemed to be made pursuant to the
Plan as set forth herein.
4. Notwithstanding any of the foregoing, while the Plan is in
effect, the following terms and provisions will apply:
-2-
<PAGE> 3
a. The officers of the Trust shall report quarterly in writing
to the Board of Trustees on the amounts and purpose of
payments for any of the activities in paragraph 1 and shall
furnish the Board of Trustees with such other information as
the Board may reasonably request in connection with such
payments in order to enable the Board to make an informed
determination of the nature and value of such expenditures.
b. The Plan shall continue in effect for a period of more than
one year from the date written below only so long as such
continuance is specifically approved at least annually by the
Trust's Board of Trustees, including the non-interested
trustees, by vote cast in person at a meeting called for the
purpose of voting on the Plan.
c. The Plan may be terminated with respect to any class of
Shares at any time by vote of a majority of the
non-interested trustees or by vote of a majority of the
outstanding voting securities of the applicable class of
Shares, on not more than sixty (60) days' written notice to
any other party to the Plan.
d. The Plan may not be amended to materially increase the amount
to be spent hereunder or to permit the Trust on behalf of the
Treasury Portfolio to make payments for distribution other
than to the Distributor or with respect to a Shareholder
Service Agreement or without approval by the holders of the
applicable class of Shares, and all material amendments to
the Plan shall be approved by vote of the dis-interested
trustees cast in person at a meeting called for the purpose
of voting on such amendment.
e. So long as the Plan is in effect, the selection and
nomination of the Trust's dis-interested trustees shall be
committed to the discretion of such dis-interested trustees.
5. This Plan shall be subject to the laws of the State of Texas
and shall be interpreted and construed to further promote the operation of
the Trust as an open-end investment company. As used herein the terms "Net
Asset Value," "Offering Price," "Investment Company," "Open-End Investment
Company," "Assignment," "Principal Underwriter," "Interested Person,"
"Parent," "Affiliated Person," and "Majority of the Outstanding Voting
Securities" shall have the meanings set forth in the Securities Act of
1933, as amended, or the 1940 Act, and the rules and regulations
thereunder.
6. Nothing herein shall be deemed to protect the parties to any
Shareholder Service Agreement entered into pursuant to this Plan against
any liability to the Trust or its shareholders to which they would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of their duties hereunder, or by reason of
their reckless disregard of their obligations and duties hereunder.
-3-
<PAGE> 4
IN WITNESS WHEREOF, the undersigned has executed this
document as constituting a Plan pursuant to Rule 12b-1.
SHORT-TERM INVESTMENTS TRUST
By: /s/ ROBERT H. GRAHAM
------------------------
President
Plan effective as of August 6, 1993, as amended as of December 8,
1994, as further amended as of September 19, 1995, and as further amended
as of December 5, 1995.
-4-
<PAGE> 5
APPENDIX A TO
MASTER DISTRIBUTION PLAN
OF
SHORT-TERM INVESTMENTS TRUST
The Trust shall pay the Distributor as full compensation for all
services rendered and all facilities furnished under the Distribution Plan
for each Class as designated below, a Distribution Fee* determined by
applying the annual rate set forth below as to each Class to the average
daily net asset value of the Class for the plan year, computed in a manner
used for the determination of the offering price of shares of the Class.
<TABLE>
<CAPTION>
TREASURY PORTFOLIO ANNUAL RATE
------------------ -----------
<S> <C>
Personal Investment Class 0.75%
Private Investment Class 0.50%
Resource Class 0.20%
Cash Management Class 0.10%
<CAPTION>
TREASURY TAXADVANTAGE PORTFOLIO ANNUAL RATE
------------------------------- -----------
<S> <C>
Private Investment Class 0.50%
</TABLE>
-------------------------------------
* The Distribution Fee is payable apart from the sales charge, if any, as
stated in the current prospectus for the applicable Class. The amount of
the Distribution Fee is subject to any applicable limitations imposed from
time to time by applicable Rules of the National Association of Securities
Dealers, Inc.
-5-
<PAGE> 6
FUND MANAGEMENT COMPANY
SHAREHOLDER SERVICE AGREEMENT
[LOGO APPEARS HERE]
Fund Management Company
(BROKER-DEALERS AND BANKS)
_________, 19_____
Fund Management Company
11 Greenway Plaza, Suite 1919
Houston, Texas 77046-1173
Gentlemen:
We desire to enter into an Agreement with Fund Management Company
("FMC") as agent on behalf of the funds listed on Schedule A hereto (the
"Funds"), for the provision of continuing personal shareholder services to our
clients who are shareholders of, and/or the administration of accounts in, the
Funds. We understand that this Shareholder Service Agreement (the "Agreement")
has been adopted pursuant to Rule 12b-1 under the Investment Company Act of
1940 (the "1940 Act") by each of the Funds, under a Distribution Plan (the
"Plan") adopted pursuant to said Rule, and is subject to applicable rules of
the National Association of Securities Dealers, Inc. ("NASD"). This Agreement
defines the services to be provided by us for which we are to receive payments
pursuant to the Plan. The Plan and the Agreement have been approved by a
majority of the directors or trustees of the applicable Fund in accordance with
the requirements of Rule 12b-1. The terms and conditions of this Agreement
will be as follows:
1. We will provide continuing personal shareholder services and/or
administrative support services to our customers who may from time to
time beneficially own shares of the Funds, including but not limited to,
answering routine customer inquiries regarding the Funds, assisting
customers in changing dividend options, account designations and
addresses, and in enrolling into any of several special investment plans
offered in connection with the purchase of the Funds, forwarding sales
literature, assisting in the establishment and maintenance of customer
accounts and records and in the processing of purchase and redemption
transactions, investing dividends and capital gains distributions
automatically in shares of the Funds and providing such other services
as FMC or the customer may reasonably request, and you will pay us a fee
periodically. We represent that we will accept payment of fees
hereunder only so long as we continue to provide such services.
2. Shares of the Funds purchased by us on behalf of our clients may be
registered in our name or the name of our nominee. The client will be
the beneficial owner of the shares of the Funds purchased and held by us
in accordance with the client's instructions and the client may exercise
all applicable rights of a holder of such Shares. We agree to transmit
to FMC in a timely manner, all purchase orders and redemption requests
of our clients and to forward to each client all proxy statements,
periodic shareholder reports and other communications received from FMC
by us on behalf of our clients. FMC on behalf of the Funds agrees to
pay all out-of-pocket expenses actually incurred by us in connection
with the transfer by us of such proxy statements and reports to our
clients as required under applicable law or regulation.
<PAGE> 7
Shareholder Service Agreement Page 2
3. We agree to transfer to the Funds' custodian, in a timely manner as set
forth in the applicable prospectus, federal funds in an amount equal to
the amount of all purchase orders placed by us on behalf of our clients
and accepted by FMC. In the event that FMC fails to receive such
federal funds on such date (other than through the fault of FMC or the
Fund's custodian), we will indemnify the applicable Fund or FMC against
any expense (including overdraft charges) incurred by the applicable
Fund or FMC as a result of the failure to receive such federal funds.
4. We agree to make available, upon FMC's request, such information
relating to our clients who are beneficial owners of Fund shares and
their transactions in such shares as may be required by applicable laws
and regulations or as may be reasonably requested by FMC.
5. We agree to transfer record ownership of a client's Fund shares to the
client promptly upon the request of a client. In addition, record
ownership will be promptly transferred to the client in the event that
the person or entity ceases to be our client.
6. We acknowledge that if we use AIM LINK(TM) we are solely responsible for
the registration of account information for FMC's and A I M
Institutional Fund Services, Inc.'s ("AIFS") subaccounting customers
through AIM LINK(TM), and that neither FMC, AIFS nor any Fund is
responsible for the accuracy of such information; and we will indemnify
and hold harmless FMC, AIFS and the Funds for any claims or expenses
resulting from the inaccuracy or inadequacy of such information.
7. We will provide such facilities and personnel (which may be all or any
part of the facilities currently used in our business, or all or any
personnel employed by us) as may be necessary or beneficial in carrying
out the purposes of this Agreement.
8. Neither we nor any of our employees or agents are authorized to make any
representation to our clients concerning the Funds except those
contained in the then current applicable prospectus applicable to the
Funds, copies of which will be supplied to us by FMC; and we will have
no authority to act as agent for any Fund. Neither a Fund nor A I M
Advisors, Inc. ("AIM") will be a party, nor will they be represented as
a party, to any agreement that we may enter into with our clients and
neither a Fund nor AIM will participate, directly or indirectly, in any
compensation that we may receive from our clients in connection with our
acting on their behalf with respect to this Agreement.
9. In consideration of the services and facilities described herein, we
will receive a maximum annual service fee, payable monthly, as set forth
in Schedule A. We understand that this Agreement and the payment of
such fees has been authorized and approved by the Board of Directors or
Trustees of the applicable Fund, and that the payment of fees hereunder
is subject to limitations imposed by the rules of the NASD. Service
fees may be remitted to us net of any amounts due and payable to FMC,
AIFS or the Funds from us. A schedule of fees relating to subaccounting
and administration is attached hereto as Schedule B.
10. FMC reserves the right, at its discretion and without notice, to suspend
the sale of any Fund shares or withdraw the sale of shares of a Fund.
11. We represent that our activities on behalf of our clients and pursuant
to this Agreement either (i) are not such as to require our registration
as a broker-dealer with the Securities and
<PAGE> 8
Shareholder Service Agreement Page 3
Exchange Commission (the "SEC") or in the state(s) in which we engage in
such activities, or (ii) we are registered as a broker-dealer with the
SEC and in the state(s) in which we engage in such activities.
12. If we are a broker-dealer registered with the SEC, we represent that we
are a member in good standing of the NASD, and agree to abide by the
Rules of Fair Practice of the NASD and all other federal and state rules
and regulations that are now or may become applicable to transactions
hereunder. Our expulsion from the NASD will automatically terminate
this agreement without notice. Our suspension from the NASD or a
violation by us of applicable state and federal laws and rules and
regulations of authorized regulatory agencies will terminate this
agreement effective upon notice received by us from FMC.
13. This Agreement or Schedule A hereto may be amended at any time without
our prior consent by FMC, by mailing a copy of an amendment to us at the
address set forth below. Such amendment will become effective on the
date set forth in such amendment unless we terminate this Agreement
within thirty (30) days of our receipt of such amendment.
14. This Agreement may be terminated at any time by FMC on not less than 60
days' written notice to us at our principal place of business. We, on
60 days' written notice addressed to FMC at its principal place of
business, may terminate this Agreement. FMC may also terminate this
Agreement for cause on violation by us of any of the provisions of this
Agreement, said termination to become effective on the date of mailing
notice to us of such termination. FMC's failure to terminate for any
cause will not constitute a waiver of FMC's right to terminate at a
later date for any such cause. This Agreement will terminate
automatically in the event of its assignment, the term "assignment" for
this purpose having the meaning defined in Section 2(a) (4) of the 1940
Act.
15. All communications to FMC will be sent to it at P.O. Box 4333, Houston,
Texas 77210-4333. Any notice to us will be duly given if mailed or
telegraphed to us at the address shown on this Agreement.
16. We agree that under this Agreement we will be acting as an independent
contractor and not as your employee or agent, nor as an employee or
agent of the Funds, and we may not hold ourselves out to any other party
as your agent with the authority to bind you or the Funds in any manner.
17. We agree that this Agreement and the arrangement described herein are
intended to be non-exclusive and that either of us may enter into
similar agreements and arrangements with other parties.
<PAGE> 9
Shareholder Service Agreement Page 4
18. This Agreement will become effective as of the date when it is executed
and dated below by FMC. This Agreement and all rights and obligations
of the parties hereunder will be governed by and construed under the
laws of the State of Texas.
-----------------------------------------------
(Firm Name)
-----------------------------------------------
(Address)
-----------------------------------------------
City/State/Zip/County
BY:
---------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Dated:
---------------------------------------
For administrative convenience, please supply
the following information, which may be updated
in writing at any time. Wiring instructions for
service fees payable by FMC:
-----------------------------------------------
(Bank Name) (Bank ABA Number)
-----------------------------------------------
(Reference Account Name and Number)
Contact person for operational issues:
-------------------------- ---------------
(Name) (Phone Number)
ACCEPTED:
FUND MANAGEMENT COMPANY
BY:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
Dated:
-----------------------------
<PAGE> 10
Shareholder Service Agreement Page 5
SCHEDULE A
<TABLE>
<CAPTION>
FUNDS FEE
- ----- ----
<S> <C>
Short-Term Investments Co.
- --------------------------
Prime Portfolio - Personal Investment Class .40%*
Prime Portfolio - Private Investment Class .25%
Prime Portfolio - Resource Class .16%
Prime Portfolio - Cash Management Class .08%
Liquid Assets Portfolio - Private Investment Class .25%
Liquid Assets Portfolio - Cash Management Class .08%
Short-Term Investments Trust
- ----------------------------
Treasury Portfolio - Personal Investment Class .40%*
Treasury Portfolio - Private Investment Class .25%
Treasury Portfolio - Resource Class .16%
Treasury Portfolio - Cash Management Class .08%
Treasury TaxAdvantage Portfolio - Private Investment Class .25%
Tax-Free Investments Co.
- ------------------------
Cash Reserve Portfolio - Private Investment Class .25%
</TABLE>
*Fees in excess of .25% are for services of an administrative nature, as
described in Paragraph 1 of this Agreement.
<PAGE> 11
Shareholder Service Agreement Page 6
SCHEDULE B
SUBACCOUNTING AND ADMINISTRATION FEES
We will be assessed a fee, payable monthly, in the amount of ______
basis points of our monthly average net assets managed by your affiliates. As
described in the attached Shareholder Service Agreement, we understand that the
amount of any service fees remitted to us will be net of any amounts due and
payable to FMC, AIFS or the Funds, including the ______ basis points of monthly
average net assets related to subaccounting and administration services
provided to us by AIFS.
<PAGE> 1
EXHIBIT 18
MULTIPLE CLASS PLAN
OF
THE AIM FAMILY OF FUNDS
1. This Multiple Class Plan (the "Plan") adopted in accordance with Rule
18f-3 under the Act shall govern the terms and conditions under which
the Funds may issue separate Classes of Shares representing interests
in one or more Portfolios of each Fund.
2. Definitions. As used herein, the terms set forth below shall have the
meanings ascribed to them below.
a. Act - Investment Company Act of 1940, as amended.
b. CDSC - contingent deferred sales charge.
c. CDSC Period - the period of years following acquisition of
Shares during which such Shares may be assessed a CDSC upon
redemption.
d. Class - a class of Shares of a Fund representing an interest
in a Portfolio.
e. Class A Shares - shall mean those Shares designated as Class A
Shares in the Fund's organizing documents, as well as those
Shares deemed to be Class A Shares for purposes of this Plan.
f. Class B Shares - shall mean those Shares designated as Class B
Shares in the Fund's organizing documents.
g. Class C Shares - shall mean those Shares designated as Class C
Shares in the Fund's organizing documents, as well as those
Shares deemed to be Class C Shares for purposes of this Plan.
h. Directors - the directors or trustees of a Fund.
i. Distribution Expenses - expenses incurred in activities which
are primarily intended to result in the distribution and sale
of Shares as defined in a Plan of Distribution and/or
agreements relating thereto.
j. Distribution Fee - a fee paid by a Fund to the Distributor to
compensate the Distributor for Distribution Expenses.
k. Distributor - A I M Distributors, Inc. or Fund Management
Company, as applicable.
l. Fund - those investment companies advised by A I M Advisors,
Inc. which have adopted this Plan.
1
<PAGE> 2
m. Institutional Shares - shall mean Shares of a Fund
representing an interest in a Portfolio offered for sale to
institutional customers as may be approved by the Directors
from time to time and as set forth in the Fund's prospectus.
n. Plan of Distribution - Any plan adopted under Rule 12b-1 under
the Act with respect to payment of a Distribution Fee.
o. Portfolio - a series of the Shares of a Fund constituting a
separate investment portfolio of the Fund.
p. Service Fee - a fee paid to financial intermediaries for the
ongoing provision of personal services to Fund shareholders
and/or the maintenance of shareholder accounts.
q. Share - a share of common stock of or beneficial interest in a
Fund, as applicable.
3. Allocation of Income and Expenses.
a. Distribution and Service Fees - Each Class shall bear directly
any and all Distribution Fees and/or Service Fees payable by
such Class pursuant to a Plan of Distribution adopted by the
Fund with respect to such Class.
b. Transfer Agency and Shareholder Recordkeeping Fees - Each
Class shall bear directly the transfer agency and other
shareholder recordkeeping fees attributable to that Class.
c. Allocation of Other Expenses - Each Class shall bear
proportionately all other expenses incurred by a Fund based on
the relative net assets attributable to each such Class.
d. Allocation of Income, Gains and Losses - The Portfolio will
allocate income and realized and unrealized capital gains and
losses to a Class based on the relative net assets of each
Class; provided, however, that if permitted by Rule 18f-3
under the Act, as amended, the Portfolio may allocate its
income on the basis of settled shares in the manner described
in Rule 18f-3 under the Act, as amended.
e. Waiver and Reimbursement of Expenses - A Portfolio's adviser,
underwriter or any other provider of services to the Portfolio
may waive or reimburse the expenses of a particular Class or
Classes.
4. Distribution and Servicing Arrangements. The distribution and
servicing arrangements identified below will apply for the following
Classes offered by a Fund with respect to a Portfolio. The provisions
of the Fund's prospectus describing the distribution and servicing
arrangements in detail are incorporated herein by this reference.
a. Class A Shares. Class A Shares shall be offered at net asset
value plus a front-end sales charge as approved from time to
time by the Directors and set forth in the Fund's prospectus,
may be reduced or eliminated for certain money market fund
shares, for larger purchases, under a combined purchase
privilege, under a right of
2
<PAGE> 3
accumulation, under a letter of intent or for certain
categories of purchasers as permitted by Rule 22(d) of the Act
and as set forth in the Fund's prospectus. Class A Shares that
are not subject to a front-end sales charge as a result of the
foregoing shall be subject to a CDSC for the CDSC Period set
forth in Section 5(a) of this Plan if so provided in the Fund's
prospectus. The offering price of Shares subject to a front-end
sales charge shall be computed in accordance with Rule 22c-1
and Section 22(d) of the Act and the rules and regulations
thereunder. Class A Shares shall be subject to ongoing Service
Fees and/or Distribution Fees approved from time to time by the
Directors and set forth in the Fund's prospectus. Although
shares of AIM Limited Maturity Treasury Shares, AIM Tax-Exempt
Bond Fund of Connecticut, AIM Tax- Exempt Cash Fund and AIM
Tax-Free Intermediate Shares are not designated as "Class A"
they are substantially similar to Class A Shares as defined
herein and shall be deemed to be Class A Shares for the
purposes of this Plan.
b. Class B Shares. Class B Shares shall be (1) offered at net
asset value, (2) subject to a CDSC for the CDSC Period set
forth in Section 5(b), (3) subject to ongoing Service Fees and
Distribution Fees approved from time to time by the Directors
and set forth in the Fund's prospectus and (4) converted to
Class A Shares eight years from the end of the calendar month
in which the shareholder's order to purchase was accepted as
set forth in the Fund's prospectus.
c. Class C Shares. Class C Shares shall be (1) offered at net
asset value and (2) subject to ongoing Service Fees approved
from time to time by the Directors and set forth in the Fund's
prospectus.
d. Institutional Shares. Institutional Shares shall be (1)
offered at net asset value, (2) offered only to certain
categories of institutional customers as approved from time to
time by the Directors and as set forth in the Fund's
prospectus and (3) may be subject to ongoing Service Fees
and/or Distribution Fees as approved from time to time by the
Directors and set forth in the Fund's prospectus.
5. CDSC. A CDSC shall be imposed upon redemptions of Class A Shares that
do not incur a front-end sales charge and of Class B Shares as
follows:
a. Class A Shares. The CDSC Period for Class A Shares shall be
18 months. The CDSC Rate shall be as set forth in the Fund's
prospectus, the relevant portions of which are incorporated
herein by this reference. No CDSC shall be imposed on Class A
Shares unless so provided in a Fund's prospectus.
b. Class B Shares. The CDSC Period for the Class B Shares shall
be six years. The CDSC Rate for the Class B Shares shall be
as set forth in the Fund's prospectus, the relevant portions
of which are incorporated herein by this reference.
c. Method of Calculation. The CDSC shall be assessed on an
amount equal to the lesser of the then current market value or
the cost of the Shares being redeemed. No sales charge shall
be imposed on increases in the net asset value of the Shares
being redeemed above the initial purchase price. No CDSC
shall be assessed on Shares derived from reinvestment of
dividends or capital gains distributions. The order in which
Shares are to be redeemed when not all of such Shares would be
3
<PAGE> 4
subject to a CDSC shall be determined by the Distributor in
accordance with the provisions of Rule 6c-10 under the Act.
d. Waiver. The Distributor may in its discretion waive a CDSC
otherwise due upon the redemption of Shares and disclosed in
the Fund's prospectus or statement of additional information
and, for the Class A Shares, as allowed under Rule 6c-10 under
the Act.
6. Exchange Privileges. Exchanges of Shares shall be permitted between
Funds as follows:
a. Class A Shares may be exchanged for Class A Shares of another
Portfolio, subject to certain limitations set forth in the
Fund's prospectus as it may be amended from time to time,
relevant portions of which are incorporated herein by this
reference.
b. Class B Shares may be exchanged for Class B Shares of another
Portfolio at their relative net asset value.
c. Class C Shares may be exchanged for Class A Shares of any
other Portfolio.
d. Depending upon the Portfolio from which and into which an
exchange is being made and when the shares were purchased,
shares being acquired in an exchange may be acquired at their
offering price, at their net asset value or by paying the
difference in sales charges, as disclosed in the Fund's
prospectus and statement of additional information.
e. CDSC Computation. The CDSC payable upon redemption of Class
A Shares and Class B Shares subject to a CDSC shall be
computed in the manner described in the Fund's prospectus.
7. Service and Distribution Fees. The Service Fee and Distribution Fee
applicable to any Class shall be those set forth in the Fund's
prospectus, relevant portions of which are incorporated herein by this
reference. All other terms and conditions with respect to Service
Fees and Distribution Fees shall be governed by the Plan of
Distribution adopted by the Fund with respect to such fees and Rule
12b-1 of the Act.
8. Conversion of Class B Shares.
a. Shares Received upon Reinvestment of Dividends and
Distributions - Shares purchased through the reinvestment of
dividends and distributions paid on Shares subject to
conversion shall be treated as if held in a separate
sub-account. Each time any Shares in a Shareholder's account
(other than Shares held in the sub-account) convert to Class A
Shares, a proportionate number of Shares held in the sub-
account shall also convert to Class A Shares.
b. Conversions on Basis of Relative Net Asset Value - All
conversions shall be effected on the basis of the relative net
asset values of the two Classes without the imposition of any
sales load or other charge.
4
<PAGE> 5
c. Amendments to Plan of Distribution for Class A Shares - If any
amendment is proposed to the Plan of Distribution under which
Service Fees and Distribution Fees are paid with respect to
Class A Shares of a Fund that would increase materially the
amount to be borne by those Class A Shares, then no Class B
Shares shall convert into Class A Shares of that Fund until
the holders of Class B Shares of that Fund have also approved
the proposed amendment. If the holders of such Class B Shares
do not approve the proposed amendment, the Directors of the
Fund and the Distributor shall take such action as is
necessary to ensure that the Class voting against the
amendment shall convert into another Class identical in all
material respects to Class A Shares of the Fund as constituted
prior to the amendment.
9. This Plan shall not take effect until a majority of the Directors of a
Fund, including a majority of the Directors who are not interested
persons of the Fund, shall find that the Plan, as proposed and
including the expense allocations, is in the best interests of each
Class individually and the Fund as a whole.
10. This Plan may not be amended to materially change the provisions of
this Plan unless such amendment is approved in the manner specified in
Section 9 above.
5
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information for the Short-Term
Investments Trust Treasury Portfolio-Cash Management Class for the year
ended August 31, 1996.
</LEGEND>
<CIK> 0000205007
<NAME> SHORT-TERM INVESTMENTS TRUST
<SERIES>
<NUMBER> 13
<NAME> TREASURY PORTFOLIO-CASH MANAGEMENT CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 3885231938
<INVESTMENTS-AT-VALUE> 3885231938
<RECEIVABLES> 9950056
<ASSETS-OTHER> 199121
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3895381115
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 191489975
<TOTAL-LIABILITIES> 191489975
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3703242819
<SHARES-COMMON-STOCK> 3703242819
<SHARES-COMMON-PRIOR> 3259810478
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 648321
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 3703891140
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 198959801
<OTHER-INCOME> 0
<EXPENSES-NET> (5611587)
<NET-INVESTMENT-INCOME> 193348214
<REALIZED-GAINS-CURRENT> 490127
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 193838341
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (193348214)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 23478756059
<NUMBER-OF-SHARES-REDEEMED> 23061744286
<SHARES-REINVESTED> 26420568
<NET-CHANGE-IN-ASSETS> 443922468
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 158194
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2227788
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5725087
<AVERAGE-NET-ASSETS> 547363692
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.05)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.17
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information for the Short-Term
Investments Trust Treasury Portfolio-Institutional Class for the year
ended August 31, 1996.
</LEGEND>
<CIK> 0000205007
<NAME> SHORT-TERM INVESTMENTS TRUST
<SERIES>
<NUMBER> 2
<NAME> TREASURY PORTFOLIO-INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 3885231938
<INVESTMENTS-AT-VALUE> 3885231938
<RECEIVABLES> 9950056
<ASSETS-OTHER> 199121
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3895381115
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 191489975
<TOTAL-LIABILITIES> 191489975
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3703242819
<SHARES-COMMON-STOCK> 3703242819
<SHARES-COMMON-PRIOR> 3259810478
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 648321
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 3703891140
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 198959801
<OTHER-INCOME> 0
<EXPENSES-NET> (5611587)
<NET-INVESTMENT-INCOME> 193348214
<REALIZED-GAINS-CURRENT> 490127
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 193838341
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (193348214)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 23478756059
<NUMBER-OF-SHARES-REDEEMED> 23061744286
<SHARES-REINVESTED> 26420568
<NET-CHANGE-IN-ASSETS> 443922468
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 158194
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2227788
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5725087
<AVERAGE-NET-ASSETS> 2499257005
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.05)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.09
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information for the Short-Term
Investments Trust Treasury Portfolio-Personal Investment Class for the
year ended August 31, 1996.
</LEGEND>
<CIK> 0000205007
<NAME> SHORT-TERM INVESTMENTS TRUST
<SERIES>
<NUMBER> 12
<NAME> TREASURY PORTFOLIO-PERSONAL INVESTMENT CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 3885231938
<INVESTMENTS-AT-VALUE> 3885231938
<RECEIVABLES> 9950056
<ASSETS-OTHER> 199121
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3895381115
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 191489975
<TOTAL-LIABILITIES> 191489975
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3703242819
<SHARES-COMMON-STOCK> 3703242819
<SHARES-COMMON-PRIOR> 3259810478
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 648321
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 3703891140
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 198959801
<OTHER-INCOME> 0
<EXPENSES-NET> (5611587)
<NET-INVESTMENT-INCOME> 193348214
<REALIZED-GAINS-CURRENT> 490127
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 193838341
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (193348214)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 23478756059
<NUMBER-OF-SHARES-REDEEMED> 23061744286
<SHARES-REINVESTED> 26420568
<NET-CHANGE-IN-ASSETS> 443922468
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 158194
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2227788
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5726087
<AVERAGE-NET-ASSETS> 142591904
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.05)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.59
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information for the Short-Term
Investments Trust Treasury Portfolio-Private Investment Class for the
year ended August 31, 1996.
</LEGEND>
<CIK> 0000205007
<NAME> SHORT-TERM INVESTMENTS TRUST
<SERIES>
<NUMBER> 11
<NAME> TREASURY PORTFOLIO-PRIVATE INVESTMENT CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 3885231938
<INVESTMENTS-AT-VALUE> 3885231938
<RECEIVABLES> 9950056
<ASSETS-OTHER> 199121
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3895381115
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 191489975
<TOTAL-LIABILITIES> 191489975
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3703242819
<SHARES-COMMON-STOCK> 3703242819
<SHARES-COMMON-PRIOR> 3259810478
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 648321
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 3703891140
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 198959801
<OTHER-INCOME> 0
<EXPENSES-NET> (5611587)
<NET-INVESTMENT-INCOME> 193348214
<REALIZED-GAINS-CURRENT> 490127
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 193838341
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (193348214)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 23478756059
<NUMBER-OF-SHARES-REDEEMED> 23061744286
<SHARES-REINVESTED> 26420568
<NET-CHANGE-IN-ASSETS> 443922468
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 158194
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2227788
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5725087
<AVERAGE-NET-ASSETS> 407231329
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.05)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.39
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information for the Short-Term
Investments Trust Treasury Portfolio-Resource Class for the twelve month
period ended August 31, 1996.
</LEGEND>
<CIK> 0000205007
<NAME> SHORT-TERM INVESTMENTS TRUST
<SERIES>
<NUMBER> 15
<NAME> TREASURY PORTFOLIO-RESOURCE CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 3885231938
<INVESTMENTS-AT-VALUE> 3885231938
<RECEIVABLES> 9950056
<ASSETS-OTHER> 199121
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3895381115
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 191489975
<TOTAL-LIABILITIES> 191489975
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3703242819
<SHARES-COMMON-STOCK> 3703242819
<SHARES-COMMON-PRIOR> 3259810478
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 648321
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 3703891140
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 198959801
<OTHER-INCOME> 0
<EXPENSES-NET> (5611587)
<NET-INVESTMENT-INCOME> 193348214
<REALIZED-GAINS-CURRENT> 490127
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 193838341
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (193348214)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 23478756059
<NUMBER-OF-SHARES-REDEEMED> 23061744286
<SHARES-REINVESTED> 26420568
<NET-CHANGE-IN-ASSETS> 443922468
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 158194
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2227788
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5725087
<AVERAGE-NET-ASSETS> 41695963
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.03)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information for the Short-Term
Investments Trust Treasury Tax-Advantage Portfolio-Institutional Class
for the year ended August 31, 1996.
</LEGEND>
<CIK> 0000205007
<NAME> SHORT-TERM INVESTMENTS TRUST
<SERIES>
<NUMBER> 007
<NAME> TREASURY TAX-ADVANTAGE PORTFOLIO-INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 456110700
<INVESTMENTS-AT-VALUE> 456110700
<RECEIVABLES> 52748920
<ASSETS-OTHER> 28852
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 508888472
<PAYABLE-FOR-SECURITIES> 49479246
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2113076
<TOTAL-LIABILITIES> 51692322
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 457072217
<SHARES-COMMON-STOCK> 457072217
<SHARES-COMMON-PRIOR> 399731067
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 123933
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 457196150
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 23434439
<OTHER-INCOME> 0
<EXPENSES-NET> (947135)
<NET-INVESTMENT-INCOME> 22487304
<REALIZED-GAINS-CURRENT> 55902
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 22543206
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (22487304)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2104256584
<NUMBER-OF-SHARES-REDEEMED> 2047411318
<SHARES-REINVESTED> 495884
<NET-CHANGE-IN-ASSETS> 57397052
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 68031
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 791921
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1088861
<AVERAGE-NET-ASSETS> 424432042
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.05)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information for the Short-Term
Investments Trust Treasury Tax-Advantage Portfolio-Private Class for the
year ended August 31, 1996.
</LEGEND>
<CIK> 0000205007
<NAME> SHORT-TERM INVESTMENTS TRUST
<SERIES>
<NUMBER> 14
<NAME> TREASURY TAX-ADVANTAGE PORTFOLIO-PRIVATE CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 456110700
<INVESTMENTS-AT-VALUE> 456110700
<RECEIVABLES> 52748920
<ASSETS-OTHER> 28852
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 508888472
<PAYABLE-FOR-SECURITIES> 49579246
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2113076
<TOTAL-LIABILITIES> 51692322
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 457072217
<SHARES-COMMON-STOCK> 457072217
<SHARES-COMMON-PRIOR> 399731067
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 123933
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 457196150
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 23434439
<OTHER-INCOME> 0
<EXPENSES-NET> (947135)
<NET-INVESTMENT-INCOME> 22487304
<REALIZED-GAINS-CURRENT> 55902
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 22543206
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (22487304)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2107256584
<NUMBER-OF-SHARES-REDEEMED> 2047411318
<SHARES-REINVESTED> 495884
<NET-CHANGE-IN-ASSETS> 57397052
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 68031
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 791921
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1088861
<AVERAGE-NET-ASSETS> 21111080
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.05)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.45
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
