<PAGE> 1
As filed with the Securities and Exchange Commission on November 25, 1998
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 X
---
Pre-Effective Amendment No.
Post-Effective Amendment No. 32 X
--- ---
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 33 X
--- ---
(Check appropriate box or boxes.)
SHORT-TERM INVESTMENTS TRUST
----------------------------
(Exact Name of Registrant as Specified in Charter)
11 Greenway Plaza, Suite 100, 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 100, Houston, TX 77046-1173
----------------------------------------------------
(Name and Address of Agent for Service)
Copy to:
<TABLE>
<S> <C>
Jeffrey H. Kupor, Esquire Martha J. Hays, Esquire
A I M Advisors, Inc. Ballard Spahr Andrews & Ingersoll, LLP
11 Greenway Plaza, Suite 100 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
</TABLE>
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[x] on December 18, 1998 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.
Title of Securities Being Registered: Shares of Beneficial Interest
<PAGE> 2
SHORT-TERM
INVESTMENTS TRUST
Prospectus
- --------------------------------------------------------------------------------
GOVERNMENT & The Government & Agency Portfolio is a money
AGENCY market fund whose investment objective is the
PORTFOLIO maximization of current income to the extent consistent
with the preservation of capital and the maintenance of
PERSONAL liquidity. The Government & Agency Portfolio seeks to
INVESTMENT achieve its objective by investing in direct
CLASS obligations of the U.S. Treasury and other securities
issued or guaranteed as to principal and interest by
DECEMBER 18, 1998 the U.S. Government or by its agencies or
instrumentalities, as well as repurchase agreements
secured by such obligations. The instruments purchased
by the Government & Agency Portfolio will have
maturities of 397 days or less.
The Government & Agency 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 Government &
Agency 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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE 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
GOVERNMENT & AGENCY PORTFOLIO AND SHOULD BE READ AND
RETAINED FOR FUTURE REFERENCE. A STATEMENT OF
ADDITIONAL INFORMATION, DATED DECEMBER 18, 1998, HAS
BEEN FILED WITH THE 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 GOVERNMENT &
AGENCY 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.
[AIM LOGO APPEARS HERE]
Fund Management Company
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 877-4744
<PAGE> 3
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
Government & Agency Portfolio (the "Portfolio"). The Portfolio is a money market
fund which invests in direct obligations of the U.S. Treasury and other
securities issued or guaranteed as to principal and interest by the U.S.
Government or by its agencies or instrumentalities, as well as 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 classes of
shares of beneficial interest representing interests in the Portfolio: the Cash
Management Class, Institutional Class, Private Investment Class, Reserve Class,
and Resource Class. Such classes have different distribution arrangements and
are designed for institutional and other categories of investors. The Trust also
offers shares of six classes of the Treasury TaxAdvantage Portfolio and shares
of six classes of the Treasury 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 $1,000. 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."
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
5:00 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 5:00 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 6:00 p.m. Eastern time on that day.
See "Dividends."
2
<PAGE> 4
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. 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." Under a Transfer Agency and Service Agreement,
A I M Fund Services, Inc. ("Transfer Agent"), AIM's wholly owned subsidiary and
a registered transfer agent, receives a fee for its provision of transfer
agency, dividend distribution and disbursement, and shareholder services to the
Trust. See "General Information -- Transfer Agent and Custodian."
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 0.75% 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 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, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design and Invest With
Discipline are registered service marks and AIM Bank Connection is a service
mark of A I M Management Group Inc.
3
<PAGE> 5
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 (after fee waivers)***.................... 0.00%
12b-1 fees (after fee waivers)***......................... 0.50%****
Other expenses*** (estimated):
Custodian fees......................................... 0.01%
Other.................................................. 0.09%
--------
Total other expenses (after expense
reimbursements)***............................... 0.10%
--------
Total portfolio operating expenses -- Personal Investment
Class***............................................... 0.60%
========
</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.
** The expenses set forth in the table are based on estimated average net
assets of $200,000,000 during the Portfolio's current fiscal period.
*** If no fees were being waived or reimbursed, Management fees, 12b-1 fees,
Total other expenses and Total portfolio operating expenses would be 0.10%,
0.75%, 0.11% and 0.96%, 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
</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 "Total portfolio
operating expenses -- Personal Investment Class" figure is based upon costs and
the estimated size of the Class and fees to be charged for the current fiscal
period. The Table of Fees and Expenses reflects a voluntary waiver of management
fees and 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. The "Other expenses"
and "12b-1 fees" figures are based upon estimated costs and the estimated size
of the Class and the Portfolio and estimated fees to be charged for the current
fiscal period. Thus, actual expenses may be greater or less than such estimates.
The Table of Fees and Expenses reflects a voluntary waiver of management fees
and 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
4
<PAGE> 6
Class, such assumption of expenses will have the effect of lowering the Class's
overall expense ratio and increasing its yield to investors.
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 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.
5
<PAGE> 7
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 $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 other securities issued
or guaranteed as to principal and interest by the U.S. Government or by its
agencies or instrumentalities, as well as 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 in direct obligations of the U.S. Treasury, which
include Treasury bills, notes and bonds, and repurchase agreements relating to
such securities. In addition, the Portfolio invests in securities issued or
guaranteed as to principal and interest by the U.S. Government or by its
agencies or instrumentalities, and repurchase agreements relating to such
securities. Such obligations are collectively referred to as "Money Market
Obligations". Under normal circumstances, the Portfolio will invest at least 65%
of its total assets in Money Market Obligations. 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.
Money Market Obligations
GOVERNMENT OBLIGATIONS. The Portfolio may invest in securities issued or
guaranteed as to principal and interest by the U.S. Government or by its
agencies or instrumentalities. Such obligations may be supported (a) by the full
faith and credit of the U.S. Treasury (as in the case of Government National
Mortgage Association Certificates), (b) by the right of the issuer to borrow
from the U.S. Treasury (as in the case of obligations of the Federal Home Loan
Bank), (c) by discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality (as in the case of the Federal
National Mortgage Association), or (d) only by the credit of the agency or
instrumentality itself (as in the case of obligations of the Federal Farm Credit
Bank). No assurance can be given that the U.S. Government will provide financial
support to such U.S. Government sponsored agencies or instrumentalities in the
future and it is not obligated by law to renew, grant or extend future financial
support.
REPURCHASE AGREEMENTS. The Portfolio intends to invest in repurchase
agreements with banks and broker-dealers pertaining to the securities described
above and which at the date of purchase are "First Tier" securities as defined
in Rule 2a-7 under the Investment Company Act of 1940, as amended (the "1940
Act"), as such Rule may be amended from time to time. 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
6
<PAGE> 8
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 by the Portfolio under the 1940 Act.
Investment Practices
BORROWING MONEY. The Portfolio may borrow money with respect to its
portfolio securities in amounts up to 10% of the value of its total assets at
the time of borrowing. The Portfolio will borrow money 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.
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 of funds available for
investment on the settlement date. Until the settlement date, liquid 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 liquid 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.
INVESTMENT IN OTHER INVESTMENT COMPANIES. The Portfolio is permitted to
invest in other investment companies to the extent permitted by the 1940 Act,
the rules and regulations thereunder and, if applicable, exemptive orders
granted by the SEC.
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
beneficial interest of the Trust.
INVESTMENT RESTRICTIONS
The Portfolio's investment program is subject to a number of investment
restrictions which reflect self-imposed standards as well as federal 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
7
<PAGE> 9
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 the securities of any issuer if, as a result, the
Portfolio would fail to be a diversified company within the meaning of the
1940 Act, the rules and regulations promulgated thereunder, as such
statute, rules and regulations are amended from time to time; provided,
however, that the Portfolio may purchase securities of other investment
companies to the extent permitted by the 1940 Act and the rules and
regulations promulgated thereunder (as such statute, rules and regulations
are amended from time to time) or to the extent permitted by exemptive
order or other similar relief; or
(2) concentrate 25% or more of its total assets in the securities of
issuers in a particular industry; provided, however, that securities issued
or guaranteed by banks or subject to financial guaranty insurance are not
subject to this limitation; and provided further, that securities issued or
guaranteed by the U.S. Government, its agencies and instrumentalities and
tax-exempt securities issued by state and local governments and their
political subdivisions, are not included within this restriction.
The foregoing investment restrictions of the Portfolio (as well as certain
others set forth in the Statement of Additional Information) are matters of
fundamental policy which may not be changed without the affirmative vote of a
majority of the outstanding shares of the Portfolio.
In addition to the restrictions described above, the Portfolio must also
comply with the requirements of Rule 2a-7 under the 1940 Act, as such rule may
be amended from time to time, which govern the operations of money market funds,
and may be more restrictive than the policies described herein. 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 Transfer Agent
prior to 5:00 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. Following the initial investment, subsequent purchases of shares of the
Class may also be made via AIM LINK(R) Remote, a personal computer application
software product. 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. The Portfolio, however, reserves the right to change the
time for which purchase and redemption requests must be submitted to the
Portfolio for execution or the same day on any day when the U.S. primary
broker-dealer community is closed for business or trading is restricted due to
national holiday. 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
8
<PAGE> 10
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 the Transfer Agent, must be completed
and sent to the Transfer Agent at P.O. Box 4497, Houston, Texas 77210-4497. 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 the Transfer Agent.
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, 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 the
Transfer Agent.
Subject to the conditions stated above and to the Trust's right to reject
any purchase order, orders will be accepted (a) when payment for 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 the Transfer
Agent or (b) 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
5:00 p.m. Eastern time will earn the dividend declared on the date of purchase.
Any request for correction to a transaction of Portfolio shares must be
submitted in writing to the Transfer Agent. The Transfer Agent reserves the
right to reject any such request. When a correction results in a dividend
adjustment, the institution must agree in writing to reimburse the Portfolio for
any loss resulting from the correction. Failure to deliver purchase proceeds on
the requested settlement date may result in a claim against the institution for
an amount equal to the overdraft charge incurred by 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 must specify that it is for the purchase of Shares of the
"Personal Investment Class of the Government & Agency 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.
9
<PAGE> 11
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) Remote. 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 Transfer Agent prior to 5:00 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 Transfer Agent after
5:00 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 5:00 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. The Portfolio reserves the right to change the time of which
redemption requests must be submitted to and received by the Transfer Agent for
execution on the same day on any day when the U.S. primary broker-dealer
community is closed for business or trading is restricted due to national
holidays.
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 the
Transfer Agent.
Shareholders may request a redemption by telephone. Neither the Transfer
Agent nor FMC will 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. If a shareholder is unable to reach the Transfer Agent by
telephone, he may also request redemptions by telegraph or use overnight courier
services to expedite redemptions by mail, which will be effective on the
Business Day received by the Transfer Agent as long as such request is received
prior to 5:00 p.m. Eastern time.
Payment for shares of the Class redeemed by mail and payment for telephone
redemptions in amounts of less than $1,000 may 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.
Any request for correction to a redemption transaction of Portfolio shares
must be submitted in writing to the Transfer Agent as described above in
"Purchase of Shares."
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.
10
<PAGE> 12
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
5:00 p.m. Eastern time on the day of declaration. Net income for dividend
purposes is determined daily as of 5:00 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 5:00 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 the Transfer Agent at P.O. Box 4497, Houston, Texas 77210-4497
and will become effective with dividends paid after its receipt by the Transfer
Agent. 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.
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 portfolios of the Trust and each portfolio of the Trust must
specifically comply with all the provisions of the Code.
11
<PAGE> 13
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.
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 paid to any shareholder (a) who has provided either an incorrect tax
identification number or no number at all, (b) who is subject to backup
withholding by the Internal Revenue Service for failure to report the receipt of
interest or dividend income properly, or (c) 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."
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 the
Transfer Agent.
NET ASSET VALUE
The net asset value per share of the Portfolio is determined daily as of
5:00 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) 877-4744. Yields will fluctuate from time to time and are not necessarily
indicative of future results. Accordingly, the yield information may not provide
a basis for comparison with investments which pay a fixed rate of interest for a
stated period of time. Yield is a function of the type and quality of the
Portfolio's investments, the Portfolio's maturity and the operating expense
ratio of the Class. A SHAREHOLDER'S INVESTMENT IN THE PORTFOLIO IS NOT INSURED
OR GUARANTEED BY THE U.S. GOVERNMENT OR BY ANY INSTITUTION. These factors should
be carefully considered by the investor before making an investment in the
Portfolio.
To assist banks and other institutions performing their own 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 6:00 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 will furnish 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 will be audited by the Trust's independent auditors.
12
<PAGE> 14
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. Information concerning the Board of Trustees may be found in the
Statement of Additional Information. Certain trustees and officers of the Trust
are affiliated with AIM and A I M Management Group Inc. ("AIM Management"), the
parent corporation of AIM.
For a discussion of AIM Management and its subsidiaries' Year 2000
Compliance Project, see "General Information -- Year 2000 Compliance Project."
INVESTMENT ADVISOR
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173, acts as the investment advisor for the Portfolio pursuant to a
Master Investment Advisory Agreement (the "Advisory Agreement"). AIM was
organized in 1976 and, together with its subsidiaries, manages or advises over
90 investment company portfolios encompassing a broad range of investment
objectives. Certain of the directors and 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. AIM Management is an indirect, wholly owned subsidiary of
AMVESCAP PLC, a publicly-traded holding company that, through its subsidiaries,
engages in the institutional investment management and retail fund businesses in
the United States, Europe and the Pacific Region.
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. For such services, AIM is entitled to receive a fee from the
Portfolio calculated at the maximum annual rate of 0.10% on all net assets.
ADMINISTRATIVE SERVICES
The Trust has entered into a Master Administrative Services Agreement 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
13
<PAGE> 15
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 portfolio of the Trust are allocated among all portfolios of the Trust.
Distribution expenses of the Portfolio 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. All other expenses of
the Portfolio are allocated among all classes of shares of the Portfolio.
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.
DISTRIBUTOR
The Trust has entered into a Master Distribution Agreement (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 100, 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 Class either directly or through other broker-dealers.
FMC is the distributor of several of the mutual funds managed or advised by AIM.
FMC may, from time to time, at its expense, pay a bonus or other
consideration or incentive to dealers or banks who sell a minimum dollar amount
of the shares of the Class during a specific period of time. In some instances,
these incentives may be offered only to certain dealers or institutions who have
sold or may sell significant amounts of shares. The total amount of such
additional bonus payments or other consideration shall not exceed 0.05% of the
net asset value of the shares of the Class sold. Any such bonus or incentive
programs will not change the price paid by investors for the purchase of shares
of the Class or the amount received as proceeds from such sales. Dealers or
institutions may not use sales of the shares of the Class to qualify for any
incentives to the extent that such incentives may be prohibited by the laws of
any jurisdiction.
DISTRIBUTION PLAN
The 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 0.75% 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, 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
14
<PAGE> 16
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 has been 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"). In approving the Plan,
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.
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. In the event the Portfolio purchases securities
traded over-the-counter, the Portfolio deals directly with dealers who make
markets in the securities involved, except when better prices are available
elsewhere. Portfolio transactions placed through dealers who are primary market
makers are effected at net prices without commissions, but which include
compensation in the form of a mark up or mark down. 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. Shares of beneficial interest of the
Trust are divided into eighteen classes. Six classes, including the Class,
represent interests in the Portfolio, six classes represent interests in the
Treasury Portfolio, and six 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.
15
<PAGE> 17
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.
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 and
classes of the Trust without shareholder approval.
As of October 30, 1998, Gardnyr Michael Capital, Inc. and Fund Services
Associates, Inc. were the owners of record of 44.68% and 33.10%, respectively,
of the outstanding shares of the Portfolio, and, therefore could be deemed to
"control" the Portfolio, as that term is defined in the 1940 Act.
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 Fund Services, Inc., P.O. Box 4497, Houston, Texas 77210-4497, acts as
transfer agent for the shares of the Class.
LEGAL COUNSEL
The law firm of Ballard Spahr Andrews & Ingersoll, LLP, Philadelphia,
Pennsylvania, serves as counsel to the Trust and passes upon certain legal
matters for the Trust.
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 100, Houston, Texas 77046-1173, or may be made by calling (800) 877-4744.
YEAR 2000 COMPLIANCE PROJECT
In providing services to the Trust, AIM Management and its subsidiaries
rely on both internal software systems as well as external software systems
provided by third parties. Many software systems in use today are unable to
distinguish the year 2000 from the year 1900. This defect if not cured will
likely adversely affect the services that AIM Management, its subsidiaries and
other service providers to the Trust provide the Trust and its shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and phase (iii) has
commenced. The Project is scheduled to be completed during the second quarter of
1999. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm year 2000 compliance
upon installation. No assurance can be given that the Project will be successful
or that AIM Management and its subsidiaries will not otherwise be adversely
affected by the year 2000 issue.
16
<PAGE> 18
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.
17
<PAGE> 19
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 20
- ------------------------------------------------------
------------------------------------------------------
- ------------------------------------------------------
------------------------------------------------------
SHORT-TERM INVESTMENTS TRUST
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 877-4744
INVESTMENT ADVISOR
A I M ADVISORS, INC.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(713) 626-1919
DISTRIBUTOR
FUND MANAGEMENT COMPANY
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 877-4744
AUDITORS
KPMG PEAT MARWICK LLP
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 FUND SERVICES, INC.
P.O. Box 4497
Houston, Texas 77210-4497
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.
PROSPECTUS
December 18, 1998
SHORT-TERM
INVESTMENTS TRUST
---------------------
GOVERNMENT &
AGENCY PORTFOLIO
---------------------
PERSONAL
INVESTMENT CLASS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Summary........................................... 2
Table of Fees and Expenses........................ 4
Suitability for Investors......................... 6
Investment Program................................ 6
Purchase of Shares................................ 8
Redemption of Shares.............................. 10
Dividends......................................... 11
Taxes............................................. 11
Net Asset Value................................... 12
Yield Information................................. 12
Reports to Shareholders........................... 12
Management of the Trust........................... 13
General Information............................... 15
</TABLE>
- ------------------------------------------------------
------------------------------------------------------
- ------------------------------------------------------
------------------------------------------------------
<PAGE> 21
SHORT-TERM
INVESTMENTS TRUST
Prospectus
- --------------------------------------------------------------------------------
GOVERNMENT The Government & Agency Portfolio is a money
& AGENCY market fund whose investment objective is the
PORTFOLIO maximization of current income to the extent consistent
with the preservation of capital and the maintenance of
RESERVE liquidity. The Government & Agency Portfolio seeks to
CLASS achieve its objective by investing in direct
obligations of the U.S. Treasury and other securities
DECEMBER 18, 1998 issued or guaranteed as to principal and interest by
the U.S. Government or by its agencies or
instrumentalities, as well as repurchase agreements
secured by such obligations. The instruments purchased
by the Government & Agency Portfolio will have
maturities of 397 days or less.
The Government & Agency 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 Reserve Class of the Government & Agency 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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE 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 RESERVE CLASS OF THE GOVERNMENT & AGENCY
PORTFOLIO AND SHOULD BE READ AND RETAINED FOR FUTURE
REFERENCE. A STATEMENT OF ADDITIONAL INFORMATION, DATED
DECEMBER 18, 1998, HAS BEEN FILED WITH THE 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) 467-8792. 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 GOVERNMENT &
AGENCY 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.
[AIM LOGO APPEARS HERE]
Fund Management Company
11 Greenway Plaza
Suite 100
Houston, Texas 77046-1173
(800) 467-8792
<PAGE> 22
SUMMARY
THE PORTFOLIO AND ITS INVESTMENT OBJECTIVE
The Trust is an open-end diversified series management investment company.
This Prospectus relates to the Reserve Class (the "Class") of the Government &
Agency Portfolio (the "Portfolio"). The Portfolio is a money market fund which
invests in direct obligations of the U.S. Treasury and other securities issued
or guaranteed as to principal and interest by the U.S. Government or by its
agencies or instrumentalities, as well as 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 classes of
shares of beneficial interest representing interests in the Portfolio: the Cash
Management Class, Institutional Class, Personal Investments Class, Private
Investment Class, and Resource Class. Such classes have different distribution
arrangements and are designed for institutional and other categories of
investors. The Trust also offers shares of six classes of the Treasury
TaxAdvantage Portfolio and shares of six classes of the Treasury 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 $1,000. 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."
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
5:00 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 5:00 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 6:00 p.m. Eastern time on that day.
See "Dividends."
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. 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."
2
<PAGE> 23
Under a Transfer Agency and Service Agreement, A I M Fund Services, Inc.
("Transfer Agent"), AIM's wholly owned subsidiary and a registered transfer
agent, receives a fee for its provision of transfer agency, dividend
distribution and disbursement, and shareholder services to the Trust. See
"General Information -- Transfer Agent and Custodian."
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 1.00% 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 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, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design and Invest With
Discipline are registered service marks and AIM Bank Connection is a service
mark of A I M Management Group Inc.
3
<PAGE> 24
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 -- RESERVE CLASS**
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management fees (after fee waivers)***.................... 0.00%
12b-1 fees (after fee waivers)***......................... 0.80%****
Other expenses*** (estimated):
Custodian fees......................................... 0.01%
Other.................................................. 0.09%
--------
Total other expenses (after expense
reimbursements)***............................... 0.10%
--------
Total portfolio operating expenses -- Reserve Class***.... 0.90%
========
</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.
** The expenses set forth in the table are based on estimated average net
assets of $200,000,000 during the Portfolio's current fiscal period.
*** If no fees were being waived or reimbursed, Management fees, 12b-1 fees,
Total other expenses and Total portfolio operating expenses would be 0.10%,
1.00%, 0.11% and 1.21%, 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..................................................... $ 9
3 years.................................................... $29
</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 "Total portfolio
operating expenses -- Reserve Class" figure is based upon costs and the
estimated size of the Class and fees to be charged for the current fiscal
period. The Table of Fees and Expenses reflects a voluntary waiver of management
fees and 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. The "Other expenses"
and "12b-1 fees" figures are 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 period. Thus, actual expenses may be greater or less than such
estimates. The Table of Fees and Expenses reflects a voluntary waiver of
Management and 12b-1 fees for the Class. Future Waivers of Fees (if any) may
vary from the figures reflected in the Tables 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.
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 -- Reserve 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.
4
<PAGE> 25
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 $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 other securities issued
or guaranteed as to principal and interest by the U.S. Government or by its
agencies or instrumentalities, as well as 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 in direct obligations of the U.S. Treasury, which
include Treasury bills, notes and bonds, and repurchase agreements relating to
such securities. In addition, the Portfolio invests in securities issued or
guaranteed as to principal and interest by the U.S. Government or by its
agencies or instrumentalities, and repurchase agreements relating to such
securities. Such obligations are collectively referred to as "Money Market
Obligations". Under normal circumstances, the Portfolio will invest at least 65%
of its total assets in Money Market Obligations. 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.
Money Market Obligations
GOVERNMENT OBLIGATIONS. The Portfolio may invest in securities issued or
guaranteed as to principal and interest by the U.S. Government or by its
agencies or instrumentalities. Such obligations may be supported (a) by the full
faith and credit of the U.S. Treasury (as in the case of Government National
Mortgage Association Certificates), (b) by the right of the issuer to borrow
from the U.S. Treasury (as in the case of obligations of the Federal Home Loan
Bank), (c) by discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality (as in the case of the Federal
National Mortgage Association), or (d) only by the credit of the agency or
instrumentality itself (as in the case of obligations of the Federal Farm Credit
Bank). No assurance can be given that the U.S. Government will provide financial
support to such U.S. Government sponsored agencies or instrumentalities in the
future and it is not obligated by law to renew, grant or extend future financial
support.
REPURCHASE AGREEMENTS. The Portfolio intends to invest in repurchase
agreements with banks and broker-dealers pertaining to the securities described
above and which at the date of purchase are "First Tier" securities as defined
in Rule 2a-7 under the Investment Company Act of 1940, as amended (the "1940
Act"), as such Rule may be amended from time to time. 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
5
<PAGE> 26
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.
Investment Practices
BORROWING MONEY. The Portfolio may borrow money with respect to its portfolio
securities in amounts up to 10% of the value of its total assets at the time of
borrowing. The Portfolio will borrow money 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.
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 of funds available for
investment on the settlement date. Until the settlement date, liquid 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 liquid 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.
INVESTMENT IN OTHER INVESTMENT COMPANIES. The Portfolio is permitted to invest
in other investment companies to the extent permitted by the 1940 Act, the rules
and regulations thereunder and, if applicable, exemptive orders granted by the
SEC.
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
beneficial interest of the Trust.
INVESTMENT RESTRICTIONS
The Portfolio's investment program is subject to a number of investment
restrictions which reflect self-imposed standards as well as federal 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 the securities of any issuer if, as a result, the
Portfolio would fail to be a diversified company within the meaning of the
1940 Act, the rules and regulations promulgated thereunder, as such
statute, rules and regulations are amended from time to time; provided,
however, that the Portfolio may purchase securities of other investment
companies to the extent permitted by the 1940 Act and the rules and
regulations promulgated thereunder (as such statute, rules and regulations
are amended from time to time) or to the extent permitted by exemptive
order or other similar relief; or
(2) concentrate 25% or more of its total assets in the securities of
issuers in a particular industry; provided, however, that securities issued
or guaranteed by banks or subject to financial guaranty insurance are not
subject to this limitation; and provided further, that securities issued or
guaranteed by the U.S. Government, its agencies and instrumentalities
6
<PAGE> 27
and tax-exempt securities issued by state and local governments and their
political subdivisions, are not included within this restriction.
The foregoing investment restrictions of the Portfolio (as well as certain
others set forth in the Statement of Additional Information) are matters of
fundamental policy which may not be changed without the affirmative vote of a
majority of the outstanding shares of the Portfolio.
In addition to the restrictions described above, the Portfolio must also
comply with the requirements of Rule 2a-7 under the 1940 Act, as such rule may
be amended from time to time, which govern the operations of money market funds,
and may be more restrictive than the policies described herein. 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 Transfer Agent
prior to 5:00 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. Following the initial investment, subsequent purchases of shares of the
Class may also be made via AIM LINK(R) Remote, a personal computer application
software product. 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. The Portfolio, however, reserves the right to change the time for
which purchase and redemption requests must be submitted to the Portfolio for
execution or the same day on any day when the U.S. primary broker-dealer
community is closed for business or trading is restricted due to national
holiday. 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.
Prior to the initial purchase of shares of the Class, an Account Application,
which can be obtained from the Transfer Agent, must be completed and sent to the
Transfer Agent at P.O. Box 4497, Houston, Texas 77210-4497. 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 the Transfer Agent. 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, 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.
7
<PAGE> 28
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 the
Transfer Agent.
Subject to the conditions stated above and to the Trust's right to reject any
purchase order, orders will be accepted (a) when payment for 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 the Transfer
Agent or (b) 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
5:00 p.m. Eastern time will earn the dividend declared on the date of purchase.
Any request for correction to a transaction of Portfolio shares must be
submitted in writing to the Transfer Agent. The Transfer Agent reserves the
right to reject any such request. When a correction results in a dividend
adjustment, the institution must agree in writing to reimburse the Portfolio for
any loss resulting from the correction. Failure to deliver purchase proceeds on
the requested settlement date may result in a claim against the institution for
an amount equal to the overdraft charge incurred by 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 must specify that it is for the purchase of Shares of the
"Reserve Class of the Government & Agency 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) Remote. 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 Transfer Agent prior to 5:00 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 Transfer Agent after 5:00
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 5:00 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. The Portfolio reserves the right to change the time of which
redemption requests must be submitted to and received by the Transfer Agent for
execution on the same day on any day when the U.S. primary broker-dealer
community is closed for business or trading is restricted due to national
holidays.
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 the
Transfer Agent.
Shareholders may request a redemption by telephone. Neither the Transfer Agent
nor FMC will 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. If a shareholder is unable to reach
8
<PAGE> 29
the Transfer Agent by telephone, he may also request redemptions by telegraph or
use overnight courier services to expedite redemptions by mail, which will be
effective on the Business Day received by the Transfer Agent as long as such
request is received prior to 5:00 p.m. Eastern time.
Payment for shares of the Class redeemed by mail and payment for telephone
redemptions in amounts of less than $1,000 may 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.
Any request for correction to a redemption transaction of Portfolio shares
must be submitted in writing to the Transfer Agent as described above in
"Purchase of Shares."
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.
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
5:00 p.m. Eastern time on the day of declaration. Net income for dividend
purposes is determined daily as of 5:00 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
5:00 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 the
Transfer Agent at P.O. Box 4497, Houston, Texas 77210-4497 and will become
effective with dividends paid after its receipt by the Transfer Agent. 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.
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
9
<PAGE> 30
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 portfolios 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.
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
paid to any shareholder (a) who has provided either an incorrect tax
identification number or no number at all, (b) who is subject to backup
withholding by the Internal Revenue Service for failure to report the receipt of
interest or dividend income properly, or (c) 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."
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 the
Transfer Agent.
NET ASSET VALUE
The net asset value per share of the Portfolio is determined daily as of 5:00
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)
467-8792. 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.
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 6:00 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 will furnish 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 will be audited by the Trust's independent auditors.
10
<PAGE> 31
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.
Information concerning the Board of Trustees may be found in the Statement of
Additional Information. Certain trustees and officers of the Trust are
affiliated with AIM and A I M Management Group Inc. ("AIM Management"), the
parent corporation of AIM.
For a discussion of AIM Management and its subsidiaries' Year 2000 Compliance
Project, see "General Information -- Year 2000 Compliance Project."
INVESTMENT ADVISOR
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173,
acts as the investment advisor for the Portfolio pursuant to a Master Investment
Advisory Agreement (the "Advisory Agreement"). AIM was organized in 1976 and,
together with its subsidiaries, manages or advises over 90 investment company
portfolios encompassing a broad range of investment objectives. Certain of the
directors and 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. AIM Management is an
indirect, wholly owned subsidiary of AMVESCAP PLC, a publicly-traded holding
company that, through its subsidiaries, engages in institutional investment
management and retail fund businesses in the United States, Europe and the
Pacific Region.
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. For such services, AIM is entitled to receive a fee from the
Portfolio calculated at the maximum annual rate of 0.10% on all net assets.
ADMINISTRATIVE SERVICES
The Trust has entered into a Master Administrative Services Agreement
effective February 28, 1997, as amended, 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,
11
<PAGE> 32
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 portfolio of the Trust are allocated among all portfolios of the Trust.
Distribution expenses of the Portfolio 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. All other expenses of
the Portfolio are allocated among all classes of shares of the Portfolio.
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.
DISTRIBUTOR
The Trust has entered into a Master Distribution Agreement (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 100, 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 Class either directly or through other broker-dealers. FMC is the
distributor of several of the mutual funds managed or advised by AIM.
FMC may, from time to time, at its expense, pay a bonus or other consideration
or incentive to dealers or banks who sell a minimum dollar amount of the shares
of the Class during a specific period of time. In some instances, these
incentives may be offered only to certain dealers or institutions who have sold
or may sell significant amounts of shares. The total amount of such additional
bonus payments or other consideration shall not exceed 0.05% of the net asset
value of the shares of the Class sold. Any such bonus or incentive programs will
not change the price paid by investors for the purchase of shares of the Class
or the amount received as proceeds from such sales. Dealers or institutions may
not use sales of the shares of the Class to qualify for any incentives to the
extent that such incentives may be prohibited by the laws of any jurisdiction.
DISTRIBUTION PLAN
The 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
1.00% 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.
12
<PAGE> 33
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 has been 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"). In approving the Plan,
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.
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. In the event the Portfolio purchases securities traded
over-the-counter, the Portfolio deals directly with dealers who make markets in
the securities involved, except when better prices are available elsewhere.
Portfolio transactions placed through dealers who are primary market makers are
effected at net prices without commissions, but which include compensation in
the form of a mark up or mark down. 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. Shares of beneficial interest of the Trust are divided
into eighteen classes. Six classes, including the Class, represent interests in
the Portfolio, six classes represent interests in the Treasury Portfolio, and
six 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. Fractional shares of
each portfolio have the same rights as full shares to the extent of their
proportionate interest.
13
<PAGE> 34
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 and classes of the Trust
without shareholder approval.
As of October 30, 1998, Gardnyr Michael Capital, Inc. and Fund Services
Associates, Inc. were the owners of record of 44.68% and 33.10%, respectively,
of the outstanding shares of the Portfolio, and, therefore could be deemed to
"control" the Portfolio, as that term is defined in the 1940 Act.
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 Fund Services, Inc., P.O. Box 4497, Houston, Texas 77210-4497, acts as
transfer agent for the shares of the Class.
LEGAL COUNSEL
The law firm of Ballard Spahr Andrews & Ingersoll, LLP, Philadelphia,
Pennsylvania, serves as counsel to the Trust and passes upon certain legal
matters for the Trust.
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 100,
Houston, Texas 77046-1173, or may be made by calling (800) 467-8792.
YEAR 2000 COMPLIANCE PROJECT
In providing services to the Trust, AIM Management and its subsidiaries rely
on both internal software systems as well as external software systems provided
by third parties. Many software systems in use today are unable to distinguish
the year 2000 from the year 1900. This defect if not cured will likely adversely
affect the services that AIM Management, its subsidiaries and other service
providers to the Trust provide the Trust and its shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and phase (iii) has
commenced. The Project is scheduled to be completed during the second quarter of
1999. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm year 2000 compliance
upon installation. No assurance can be given that the Project will be successful
or that AIM Management and its subsidiaries will not otherwise be adversely
affected by the year 2000 issue.
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.
14
<PAGE> 35
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 36
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS TRUST
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 467-8792
INVESTMENT ADVISOR
A I M ADVISORS, INC.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(713) 626-1919
DISTRIBUTOR
FUND MANAGEMENT COMPANY
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 467-8792
AUDITORS
KPMG PEAT MARWICK LLP
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 FUND SERVICES, INC.
P.O. Box 4497
Houston, Texas 77210-4497
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROSPECTUS
December 18, 1998
SHORT-TERM
INVESTMENTS TRUST
---------------------
GOVERNMENT & AGENCY
PORTFOLIO
---------------------
RESERVE CLASS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Summary........................................... 2
Table of Fees and Expenses........................ 4
Suitability for Investors......................... 5
Investment Program................................ 5
Purchase of Shares................................ 7
Redemption of Shares.............................. 8
Dividends......................................... 9
Taxes............................................. 9
Net Asset Value................................... 10
Yield Information................................. 10
Reports to Shareholders........................... 10
Management of the Trust........................... 11
General Information............................... 13
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 37
STATEMENT OF
ADDITIONAL INFORMATION
SHORT-TERM INVESTMENTS TRUST
GOVERNMENT & AGENCY PORTFOLIO
(CASH MANAGEMENT CLASS)
(INSTITUTIONAL CLASS)
(PERSONAL INVESTMENT CLASS)
(PRIVATE INVESTMENT CLASS)
(RESERVE CLASS)
(RESOURCE CLASS)
11 GREENWAY PLAZA
SUITE 100
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
CLASSES OF THE GOVERNMENT & AGENCY PORTFOLIO,
COPIES OF WHICH MAY BE OBTAINED BY WRITING
FUND MANAGEMENT COMPANY, 11 GREENWAY PLAZA,
SUITE 100, HOUSTON, TEXAS 77046-1173
OR CALLING (800) 659-1005
---------------------
STATEMENT OF ADDITIONAL INFORMATION DATED DECEMBER 18, 1998
RELATING TO THE PROSPECTUS OF EACH OF THE FOLLOWING CLASSES OF THE GOVERNMENT &
AGENCY PORTFOLIO:
CASH MANAGEMENT CLASS PROSPECTUS DATED SEPTEMBER 1, 1998
INSTITUTIONAL CLASS PROSPECTUS DATED SEPTEMBER 1, 1998
PERSONAL INVESTMENT CLASS PROSPECTUS DATED DECEMBER 18, 1998
PRIVATE INVESTMENT CLASS PROSPECTUS DATED SEPTEMBER 1, 1998
RESERVE CLASS PROSPECTUS DATED DECEMBER 18, 1998
RESOURCE CLASS PROSPECTUS DATED SEPTEMBER 1, 1998
1
<PAGE> 38
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Introduction................................................ 3
General Information about the Trust......................... 3
The Trust and Its Shares............................... 3
Management.................................................. 5
Trustees and Officers.................................. 5
Remuneration of Trustees............................... 7
Investment Advisor..................................... 9
Administrative Services................................ 10
Expenses............................................... 10
Banking Regulations.................................... 11
Transfer Agent and Custodian........................... 11
Reports................................................ 11
Fee Waivers............................................ 11
Principal Holders of Securities........................ 12
Purchases and Redemptions................................... 16
Net Asset Value Determination.......................... 17
Distribution Agreement................................. 17
Distribution Plan...................................... 17
Performance Information................................ 18
Investment Program and Restrictions......................... 19
Investment Program..................................... 19
Investment Restrictions................................ 19
Portfolio Transactions...................................... 20
General Brokerage Policy............................... 20
Allocation of Portfolio Transactions................... 21
Section 28(e) Standards................................ 21
Tax Matters................................................. 22
Qualification as a Regulated Investment Company........ 22
Excise Tax on Regulated Investment Companies........... 22
Portfolio Distributions................................ 23
Sale or Redemption of Shares........................... 23
Foreign Shareholders................................... 23
Effect of Future Legislation; Local Tax
Considerations........................................ 24
Financial Statements........................................ None
</TABLE>
2
<PAGE> 39
INTRODUCTION
The Government & Agency 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 September
1, 1998, the Institutional Class Prospectus dated September 1, 1998, the
Personal Investment Class Prospectus dated December 18, 1998, the Private
Investment Class Prospectus dated September 1, 1998, the Reserve Class
Prospectus dated December 18, 1998 and the Resource Class Prospectus dated
September 1, 1998 (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 100, 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 Amended and Restated Agreement and Declaration
of Trust (the "Declaration of Trust") establishing the Trust is on file with the
SEC. 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 caption "General Information" and "Redemption of Shares."
The Trust offers on a continuous basis shares representing an interest in one
of three portfolios: the Portfolio, the Treasury Portfolio and the Treasury
TaxAdvantage Portfolio (together, the "Portfolios"). The Portfolio consists of
the following six classes of shares: Cash Management Class, Institutional Class,
Personal Investment Class, Private Investment Class, Reserve 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 Portfolio and 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 each 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 (a) 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 (b) 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, each of its Portfolios 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
3
<PAGE> 40
may terminate, without such shareholder approval, the Trust, each of its
Portfolios and any class thereof with respect to which there are fewer than 100
holders of record.
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 property of the Portfolio for all losses and
expenses of any shareholder of the Portfolio 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
Portfolio 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 and officers will
not be personally liable for any act, omission or obligation of the Trust or any
trustee or officer. However, nothing in the Declaration of Trust protects a
trustee or officer against any liability to the Trust or to the shareholders to
which a trustee or officer 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 or her office with the Trust. The Declaration of
Trust provides for indemnification by the Trust of the trustees and the
officers, employees or agents of the Trust if it is determined that such person
acted in good faith and reasonably believed: (1) in the case of conduct in his
official care or conduct in his official capacity for the Trust, that his
conduct was in the Trust's best interests, (2) in all other cases, that his
conduct was at least not opposed to the Trust's best interest and (3) in a
criminal proceeding, that he had no reason to believe that his conduct was
unlawful. 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 each 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.
Except as otherwise disclosed in each Prospectus and in this Statement of
Additional Information, the trustees shall continue to hold office and may
appoint their successors.
4
<PAGE> 41
MANAGEMENT
TRUSTEES AND OFFICERS
The trustees and officers of the Trust and their principal occupations during
at least the last five years are set forth below. Unless otherwise indicated,
the address of each trustee and officer is 11 Greenway Plaza, Suite 100,
Houston, Texas 77046.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
POSITIONS HELD
NAME, ADDRESS AND AGE WITH REGISTRANT PRINCIPAL OCCUPATION DURING AT LEAST THE PAST 5 YEARS
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
*CHARLES T. BAUER (79) Trustee and Chairman of the Board of Directors, A I M Management
Chairman Group Inc., A I M Advisors, Inc., A I M Capital
Management, Inc., A I M Distributors, Inc., A I M
Fund Services, Inc. and Fund Management Company; and
Vice Chairman and Director, AMVESCAP PLC.
- -----------------------------------------------------------------------------------------------------------------------
BRUCE L. CROCKETT (54) Trustee Director, ACE Limited (insurance company). Formerly,
906 Frome Lane Director, President and Chief Executive Officer,
McLean, VA 22102 COMSAT Corporation; and Chairman, Board of Governors
of INTELSAT (international communications company).
- -----------------------------------------------------------------------------------------------------------------------
OWEN DALY II (74) Trustee Director, Cortland Trust Inc. (investment company).
Six Blythewood Road Formerly, Director, CF & I Steel Corp., Monumental
Baltimore, MD 21210 Life Insurance Company and Monumental General
Insurance Company; and Chairman of the Board of
Equitable Bancorporation.
- -----------------------------------------------------------------------------------------------------------------------
EDWARD K. DUNN, JR. (63) Trustee Chairman of the Board of Directors, Mercantile
2 Hopkins Plaza, 20th Floor Mortgage Corp. Formerly, Vice Chairman of the Board
Baltimore, MD 21201 of Directors and President, Mercantile-Safe Deposit
Trust Co.; and President, Mercantile Bankshares.
- -----------------------------------------------------------------------------------------------------------------------
JACK M. FIELDS (46) Trustee Chief Executive Officer, Texana Global, Inc. (foreign
8810 Will Clayton Parkway trading company) and Twenty First Century Group, Inc.
Jetero Plaza, Suite E (a governmental affairs company). Formerly, Member of
Humble, TX 77338 the U.S. House of Representatives.
- -----------------------------------------------------------------------------------------------------------------------
**CARL FRISCHLING (61) Trustee Partner, Kramer, Levin, Naftalis & Frankel (law
919 Third Avenue firm). Formerly, Partner, Reid & Priest (law firm).
New York, NY 10022
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
* A trustee who is an "interested person" of the Trust and AIM as defined in
the 1940 Act.
** A trustee who is an "interested person" of the Trust as defined in the 1940
Act.
5
<PAGE> 42
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
POSITIONS HELD
NAME, ADDRESS AND AGE WITH REGISTRANT PRINCIPAL OCCUPATION DURING AT LEAST THE PAST 5 YEARS
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
*ROBERT H. GRAHAM (51) Trustee and Director, President and Chief Executive Officer,
President A I M Management Group Inc.; Director and President,
A I M Advisors, Inc.; Director and Senior Vice
President, A I M Capital Management, Inc., A I M
Distributors, Inc., A I M Fund Services, Inc. and
Fund Management Company; and Director, AMVESCAP PLC.
- -----------------------------------------------------------------------------------------------------------------------
PREMA MATHAI-DAVIS(48) Trustee Chief Executive Officer, YWCA of the USA;
350 Fifth Avenue, Suite 301 Commissioner, New York City Department for the Aging;
New York, NY 10118 and Member of the Board of Directors, Metropolitan
Transportation Authority of New York State
- -----------------------------------------------------------------------------------------------------------------------
LEWIS F. PENNOCK (56) Trustee Attorney in private practice in Houston, Texas.
6363 Woodway, Suite 825
Houston, TX 77057
- -----------------------------------------------------------------------------------------------------------------------
IAN W. ROBINSON (75) Trustee Formerly, Executive Vice President and Chief
183 River Drive Financial Officer, Bell Atlantic Management Services,
Tequesta, FL 33469 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.
- -----------------------------------------------------------------------------------------------------------------------
LOUIS S. SKLAR (59) Trustee Executive Vice President, Development and Operations,
Transco Tower, 50th Floor Hines Interests Limited Partnership (real estate
2800 Post Oak Blvd. development).
Houston, TX 77056
- -----------------------------------------------------------------------------------------------------------------------
***JOHN J. ARTHUR (54) Senior Vice Director, Senior Vice President and Treasurer, A I M
President and Advisors, Inc.; and Vice President and Treasurer,
Treasurer A I M Management Group Inc., A I M Capital
Management, Inc., A I M Distributors, Inc., A I M
Fund Services, Inc. and Fund Management Company.
- -----------------------------------------------------------------------------------------------------------------------
GARY T. CRUM (51) Senior Vice Director and President, A I M Capital Management,
President Inc.; Director and Senior Vice President, A I M
Management Group Inc., A I M Advisors, Inc.; and
Director, A I M Distributors, Inc. and AMVESCAP PLC.
- -----------------------------------------------------------------------------------------------------------------------
***CAROL F. RELIHAN (44) Senior Vice Director, Senior Vice President, General Counsel and
President and Secretary, A I M Advisors, Inc.; Vice President,
Secretary General Counsel and Secretary, A I M Management Group
Inc.; Director, Vice President and General Counsel,
Fund Management Company; General Counsel and Vice
President, A I M Fund Services, Inc.; and Vice
President, A I M Capital Management, Inc. and A I M
Distributors, Inc.
- -----------------------------------------------------------------------------------------------------------------------
DANA R. SUTTON (39) Vice President Vice President and Fund Controller, A I M Advisors,
and Assistant Inc.; and Assistant Vice President and Assistant
Treasurer Treasurer, Fund Management Company.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
* A trustee who is an "interested person" of the Trust and AIM as defined in
the 1940 Act.
*** Mr. Arthur and Ms. Relihan are married to each other.
6
<PAGE> 43
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
POSITIONS HELD
NAME, ADDRESS AND AGE WITH REGISTRANT PRINCIPAL OCCUPATION DURING AT LEAST THE PAST 5 YEARS
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
MELVILLE B. COX (55) Vice President 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. and
Fund Management Company.
- -----------------------------------------------------------------------------------------------------------------------
KAREN DUNN KELLEY (38) Vice President Senior Vice President, A I M Capital Management,
Inc.; and Vice President, A I M Advisors, Inc.
- -----------------------------------------------------------------------------------------------------------------------
J. ABBOTT SPRAGUE (43) Vice President Director and President, Fund Management Company;
Director, A I M Fund Services, Inc.; and Senior Vice
President, A I M Management Group Inc. and A I M
Advisors, Inc.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
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. Crockett, Daly, Dunn, Fields,
Frischling, Pennock, Robinson (Chairman) and Sklar. 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,
Dunn, Fields, Frischling, Pennock, Robinson and Sklar (Chairman). 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.
The members of the Nominating and Compensation Committee are Messrs. Crockett
(Chairman), Daly, Dunn, Fields, Pennock, Robinson 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"). 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 or her services according to
a fee schedule which recognizes the fact that such trustee also serves as a
director or trustee of certain 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 or she
serves as a director or trustee, which consists of an annual retainer component
and a meeting fee component.
7
<PAGE> 44
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................................. 4,747 67,774 84,000
Owen Daly II...................................... 4,747 103,542 84,000
Edward K. Dunn, Jr.(4)............................ 2,193 0 0
Jack Fields....................................... 4,747 0 70,500
Carl Frischling................................... 4,747 96,520 84,000(5)
Robert H. Graham.................................. 0 0 0
John F. Kroeger(6)................................ 4,547 94,132 82,500
Prema Mathai-Davis(4)............................. 261 0 0
Lewis F. Pennock.................................. 4,747 55,777 84,000
Ian W. Robinson................................... 4,672 85,912 84,000
Louis S. Sklar.................................... 4,695 84,370 83,500
</TABLE>
- ---------------
(1) The total amount of compensation deferred by all Trustees of the Trust
during the fiscal year ended August 31, 1998, including interest earned
thereon, was $26,330.
(2) During the fiscal year ended August 31, 1998, the total amount of expenses
allocated to the Trust in respect of such retirement benefits was $32,407.
Data reflects compensation for the calendar year ended December 31, 1997.
(3) Each serves as a Director or Trustee of a total of twelve registered
investment companies advised by AIM (comprised of over 50 portfolios). Data
reflects total compensation for the calendar year ended December 31, 1997.
(4) Mr. Dunn and Ms. Mathai-Davis were not serving as Trustees during the
calendar year ended December 31, 1997.
(5) The Trust paid the law firm of Kramer, Levin, Naftalis & Frankel $4,488 in
legal fees for services provided to the Trust during the fiscal year ended
August 31, 1998. Mr. Frischling, a trustee of the Trust, is a partner in
such firm.
(6) Mr. Kroeger resigned as a Trustee of the Trust on June 11, 1998 and on that
date became a consultant to the Trust.
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 regulated investment companies
managed, administered or distributed by AIM or its affiliates (the "Applicable
AIM Funds"). Each eligible trustee is entitled to receive an annual benefit from
the Applicable 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 Applicable 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 Applicable 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 Applicable 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 Applicable AIM Fund.
8
<PAGE> 45
Set forth below is a table that shows the estimated annual benefits payable to
an eligible trustee upon retirement assuming a specified level of compensation
and years of service classifications. The estimated credited years of service
for Messrs. Crockett, Daly, Dunn, Fields, Frischling, Kroeger, Pennock,
Robinson, Sklar and Ms. Mathai-Davis are 11, 11, 0, 1, 21, 20, 16, 11, 8 and 0
years, respectively.
ESTIMATED ANNUAL BENEFITS UPON RETIREMENT
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
NUMBER OF
YEARS OF
SERVICE WITH
APPLICABLE ANNUAL RETAINER PAID BY ALL AIM FUNDS
AIM FUNDS $90,000
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------
10 $67,500
- ------------------------------------------------------------------------------------
9 $60,750
- ------------------------------------------------------------------------------------
8 $54,000
- ------------------------------------------------------------------------------------
7 $47,250
- ------------------------------------------------------------------------------------
6 $40,500
- ------------------------------------------------------------------------------------
5 $33,750
- ------------------------------------------------------------------------------------
</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 (5) or ten
(10) years (depending on the Agreement) 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.
INVESTMENT ADVISOR
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173,
acts as the investment advisor of the Portfolio pursuant to a Master Investment
Advisory Agreement (the "Advisory Agreement"). AIM was organized in 1976, and
together with its subsidiaries advises or manages over 90 investment company
portfolios encompassing a broad range of investment objectives.
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.
9
<PAGE> 46
As compensation for its services with respect to the Portfolio, AIM receives a
monthly fee which is calculated by applying a maximum annual rate of 0.10% to
the average daily net assets of the Portfolio.
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."
The Advisory Agreement will continue from year to year, 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' written 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"), a holding company that has been engaged in the financial service
businesses since 1976. The address of AIM is 11 Greenway Plaza, Suite 100,
Houston, Texas 77046-1173. AIM Management is an indirect wholly owned subsidiary
of AMVESCAP PLC, 11 Devonshire Square, London EC2M 4YR, United Kingdom. AMVESCAP
PLC and its subsidiaries are an independent investment management group engaged
in institutional investment management and retail fund businesses in the United
States, Europe and the Pacific Region. Certain of the directors and 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 100, 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 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.
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
10
<PAGE> 47
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 portfolio of the Trust are allocated among all portfolios of the Trust.
Distribution expenses of the Portfolio directly attributable to a specific class
of shares are charged against the income available for distribution as dividends
to the holders of such shares. All other expenses of the Portfolio are allocated
among all classes of shares of the Portfolio.
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.
Under the terms of a Transfer Agency and Service Agreement between the Trust
and A I M Fund Services, Inc., ("AFS"), a wholly owned subsidiary of AIM, P.O.
Box 4497, Houston, Texas 77210-4497, AFS acts as transfer agent for the shares
of all classes of the Portfolio. For services it provides to the Trust, AFS is
entitled to receive a fee based on the average daily net assets of the Trust,
plus out-of-pocket expenses and advances it has incurred.
REPORTS
The Trust will furnish 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 will be audited by the Trust's independent auditors. The
Board of Trustees has selected KPMG Peat Marwick LLP, 700 Louisiana, Houston,
Texas 77002, as the independent auditors to audit the financial statements and
review the tax returns of the Portfolio.
FEE WAIVERS
AIM or its affiliates may, from time to time, agree to waive voluntarily all
or any portion of its fees or reimburse the Portfolio for certain of its
expenses. Such waivers or reimbursements may be discontinued at any time.
11
<PAGE> 48
PRINCIPAL HOLDERS OF SECURITIES
GOVERNMENT & AGENCY 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 October 30, 1998, 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>
Fund Services Associates.................................. 59.52%
1875 Century Park East -- Suite 1345
Los Angeles, CA 90067
Gardnyr Michael Capital, Inc.............................. 40.48%b
2281 Lee Rd. Ste. 104
Winter Park, FL 32789
</TABLE>
INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Only a
---------------- -------------
<S> <C>
Gardnyr Michael Capital, Inc.............................. 65.79%b
2281 Lee Rd. Ste. 104
Winter Park, FL 32789
Norwest Bank Mpls......................................... 34.11%
733 Marquette Ave.
Minneapolis, MN 55479-0052
</TABLE>
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Only a
---------------- -------------
<S> <C>
Fund Services Associates, Inc............................. 94.36%b
1875 Century Park East -- Suite 1345
Los Angeles, CA 90067
Huntington Capital Corp................................... 5.64%
41 S. High St., Ninth Floor
Columbus, OH 43287
</TABLE>
RESOURCE CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Only a
---------------- --------------
<S> <C>
Hambrecht & Quist LLC..................................... 97.81%
230 Park Avenue, Floor 19
New York, NY 10169
</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
portfolio may be presumed to be in "control" of such portfolio, as defined in
the 1940 Act.
AIM provided the initial capitalization of the Personal Investment Class and
the Reserve Class of the Portfolio and, accordingly, as of the date of this
Statement of Additional Information, owned all the outstanding shares of
beneficial interest of each
12
<PAGE> 49
such Class. The Trust expects that the sale of shares of such Classes to the
public pursuant to the Prospectuses will promptly reduce the percentage of such
shares owned by AIM to less than 1% of the total shares outstanding of such
Classes.
12.1
<PAGE> 50
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 Treasury
Portfolio as of October 30, 1998 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>
Bank of New York.......................................... 57.31%
One Wall Street
5Th Floor
Stif/Master Note
New York, NY 10286
Fund Services Associates, Inc............................. 12.08%
1875 Century Park East -- Suite 1345
Los Angeles, CA 90067
Chase Bank of Texas....................................... 8.91%
600 Travis St., 8th Floor
8-CBT-39
Houston, TX 77252-8009
Bank of Oklahoma.......................................... 5.87%
P.O. Box 2180
Tulsa, OK 74101
</TABLE>
INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Only a
---------------- --------------
<S> <C>
Trust Company Bank........................................ 8.20%
Center 3139
P.O. Box 105504
Atlanta, GA 30348
City of New York Deferred Compensation Plan............... 7.25%
40 Rector Street, 3rd Floor
New York, NY 10006
Weststar Bank Trust Dept.................................. 5.96%
P.O. Box 1156
Bartlesville, OK 74005-1156
First Trust/Var & Co...................................... 5.03%
Funds Control Suite 0404
180 East Fifth Street
St. Paul, MN 55101
</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.
13
<PAGE> 51
PERSONAL INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Only a
---------------- -------------
<S> <C>
Cullen/Frost Discount Brokers............................. 67.44%
P.O. Box 2358
San Antonio, TX 78299
Bank of New York.......................................... 24.64%
4 Fisher Lane
White Plains, NY 10603
</TABLE>
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Only a
---------------- -------------
<S> <C>
The Bank of New York...................................... 26.49%
One Wall Street
5Th Floor
Stif/Master Note
New York, NY 10286
Huntington Capital Corp................................... 19.84%
41 S. High St., Ninth Floor
Columbus, OH 43287
Zions First National Bank................................. 13.19%
P.O. Box 30880
Salt Lake City, UT 84130
First Trust/Var & Co...................................... 8.45%
Funds Control Suite 0404
180 East 5th Street
St. Paul, MN 55101
New Haven Savings Bank Trust Department................... 6.74%
P.O. Box 302
Trust Department
New Haven, CT 06502
Midland First American.................................... 6.53%
One Erieview Plaza Ste. 500
Cleveland, OH 44114
Cullen/Frost Discount Brokers............................. 6.39%
P.O. Box 2358
San Antonio, TX 78299
</TABLE>
RESOURCE CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Only a
---------------- -------------
<S> <C>
First Union Capital Markets............................... 80.64%
8739 Research Drive
Capital Markets
Charlotte, NC 28262-0675
Mellon Bank NA............................................ 11.26%
P.O. Box 710
Pittsburgh, PA 15230-0710
</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.
14
<PAGE> 52
AIM provided the initial capitalization of the Reserve Class of the Treasury
Portfolio and, accordingly, as of the date of this Statement of Additional
Information, owned all the outstanding shares of beneficial interest of such
Class. The Trust expects that the sale of shares of such Class to the public
pursuant to its Prospectus will promptly reduce the percentage of such shares
owned by AIM to less than 1% of the total shares outstanding of such Class.
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 October 30, 1998 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...................................... 26.43%
Funds Control Suite 0404
180 East Fifth Street
St. Paul, MN 55101
Peoples Two Ten Company................................... 20.85%
P.O. Box 821
C/O Summit Bank
Hackensack, NJ 07602
Frost National Bank TX.................................... 12.17%
Muir & Co.
C/O Frost
P.O. Box 2479
San Antonio, TX 78298-2479
Everen Clearing Corp...................................... 6.60%
111 East Kilbourn Ave.
Milwaukee, WI 53202
Key Trust Company......................................... 6.48%
Mail Code OH-01-49-3040
4900 Tiedeman
Cleveland, OH 44101-5971
Nationsbank Texas......................................... 6.21%
1401 Elm Street 11Th Floor
P.O. Box 831000
Dallas, TX 75202-2911
Mason-Dixon Trust Company................................. 5.57%
45 W. Main Street
Westminister, MD 21158-0199
</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.
15
<PAGE> 53
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Onlya
---------------- --------------
<S> <C>
Huntington Capital Corp. ................................. 26.45%
41 S High St., Ninth Floor
Columbus, OH 43287
Bank of New York.......................................... 24.01%
One Wall Street
5Th Floor
Stif/Master Note
New York, NY 10286
First National Bank of Chicago............................ 18.69%
Mail Suite 0126
Attention Sweep Coordinator
Chicago, IL 60670-0126
Oppenheimer & Co., Inc.................................... 11.15%
Oppenheimer Tower
World Financial Center
New York, NY 10281
Hambrecht & Quist LLC..................................... 8.79%
1100 Newport Center Drive, Second Floor
Newport Beach, CA 92660
First Union Capital Markets............................... 8.65%
8739 Research Drive
Capital Markets
Charlotte, NC 28262-0675
</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.
AIM provided the initial capitalization of the Cash Management Class, Personal
Investment Class, Reserve Class and Resource Class of the Treasury Tax Advantage
Portfolio and, accordingly, as of the date of this Statement of Additional
Information, owned all the outstanding shares of beneficial interest of each
such Class. The Trust expects that the sale of shares of each such Class to the
public pursuant to its Prospectuses will promptly reduce the percentage of such
shares owned by AIM to less than 1% of the total shares outstanding of each such
Class.
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 October 30, 1998, the
trustees and officers of the Trust beneficially owned less than 1% of each class
of the Trust's outstanding shares.
PURCHASES AND REDEMPTIONS
A complete description of the manner by which shares of a particular class may
be purchased, redeemed or exchanged appears in each Prospectus under the heading
"Purchase of Shares."
The right of redemption may be suspended or the date of payment postponed when
(a) trading on the New York Stock Exchange ("NYSE") is restricted, as determined
by applicable rules and regulations of the SEC, (b) the NYSE is closed for other
than customary weekend and 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
Fund not reasonably practicable.
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. The Portfolio, however, reserves the right to change the time for
which
16
<PAGE> 54
purchase and redemption requests must be submitted to the Portfolio for
execution on the same day on any day when the U.S. primary broker-dealer
community is closed for business or trading is restricted due to national
holidays.
NET ASSET VALUE DETERMINATION
Shares of each class 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, which require the Trust to adhere to certain conditions. The Portfolio
will invest only in "Eligible Securities" as defined in Rule 2a-7 of the 1940
Act, which the Board of Trustees has determined present minimal credit risks.
Rule 2a-7 also requires, among other things, that the Portfolio maintain a
dollar-weighted average portfolio maturity of 90 days or less and purchase only
U.S. dollar-denominated instruments having remaining maturities of 397 calendar
days or less.
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 (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 100, 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 continue in effect from year to year 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. 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, as amended, (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, Reserve Class and Resource Class of
the Portfolio. These services may include among other things: (a) answering
customer inquiries regarding the shares of these classes and the Portfolio; (b)
assisting customers in changing dividend options, account designations and
addresses; (c) performing sub-accounting; (d) establishing and maintaining
shareholder accounts and records; (e) processing purchase and redemption
transactions; (f) automatic investment in the shares of these classes of
customer cash account balances; (g) 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; (h) arranging for bank wires; and (i) such other services as the Trust may
request on behalf of the shares of the class, to the
17
<PAGE> 55
extent such firms are permitted to engage in such services by applicable
statute, rule or regulation. The Plan may only be used for the purposes
specified above and as stated in the Plan. Expenses may not be carried over from
year to year.
FMC is a wholly owned subsidiary of AIM, a wholly owned subsidiary of AIM
Management. Charles T. Bauer, a Trustee and Chairman of the 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 each 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 and income other than investment income)
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.
The Trust may compare the performance of a particular 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 the yield of a class 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.
18
<PAGE> 56
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 in direct obligations of the U.S. Treasury, which include
Treasury bills, notes and bonds and repurchase agreements relating to such
securities. In addition, the Portfolio invests in securities issued or
guaranteed as to principal and interest by the U.S. Government or by its
agencies or instrumentalities, and repurchase agreements relating to such
securities. Under normal circumstances, the Portfolio will invest at least 65%
of its total assets in the foregoing securities. The Portfolio may also borrow
money 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 for temporary or emergency
purposes to facilitate the orderly sale of portfolio securities to accommodate
abnormally heavy redemption requests should they occur.
As set forth in each Prospectus, the Portfolio will limit its purchases of
securities to U.S. dollar-denominated securities which are "First Tier"
securities, as such term is defined from time to time in Rule 2a-7 under the
1940 Act. A First Tier Security is generally a security that: (i) has received a
short-term rating, or is subject to a guarantee that has received a short-term
rating, or, in either case, is issued by an issuer with a short-term rating from
the Requisite NRSROs in the highest short-term rating category for debt
obligations; (ii) is an unrated security that the Portfolio's investment adviser
has determined is of comparable quality to a rated security described in (i);
(iii) is a security issued by a registered investment company that is a money
market fund; or (iv) is a Government security. The term "Requisite NRSROs" means
(a) any two nationally recognized statistical rating organizations that have
issued a rating with respect to a security or class of debt obligations of an
issuer, or (b) if only one NRSRO has issued a rating with respect to such
security or issuer at the time the Portfolio acquires the security, that NRSRO.
At present, the NRSROs are; Standard & Poor's Corp.; Moody's Investors Services,
Inc.; Thomson Bankwatch, One; Duff and Phelps, Inc.; Fitch Investors Services,
Inc. and; with regard to certain types of securities, IBCA Ltd and its
subsidiary; IBCA, Inc. Subcategories or gradations in ratings (such as "+" or
"-") do not count as rating categories.
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) purchase the securities of any issuer if, as a result, the
Portfolio would fail to be a diversified company within the meaning of the
1940 Act, the rules and regulations promulgated thereunder, as such
statute, rules and regulations are amended from time to time; provided,
however, that the Portfolio may purchase securities of other investment
companies to the extent permitted by the 1940 Act and the rules and
regulations promulgated thereunder (as such statute, rules and regulations
are amended from time to time) or to the extent permitted by exemptive
order or other similar relief; or
(2) concentrate 25% or more of its total assets in the securities of
issuers in a particular industry; provided, however, that securities issued
or guaranteed by banks or subject to financial guaranty insurance are not
subject to this limitation; and provided further, that securities issued or
guaranteed by the U.S. Government, its agencies and instrumentalities are
not included within this restriction.
(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, 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 then only in an amount up to 33 1/3% of the value
of its total assets at the time of borrowing;
(5) make loans of money or securities other than (a) through the
purchase of debt securities in accordance with the Portfolio's investment
program, and (b) by entering into repurchase agreements;
(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;
19
<PAGE> 57
(8) purchase or sell commodities or commodity futures contracts,
purchase securities on margin, make short sales or invest in puts or calls;
or
(9) invest in any obligation not payable as to principal and interest
in United States currency.
As a non-fundamental investment policy the Portfolio does not intend to invest
in companies for the purpose of exercising control or management, except that
the Portfolio may purchase securities of other investment companies to the
extent permitted by applicable law or exemptive order.
PORTFOLIO TRANSACTIONS
GENERAL BROKERAGE POLICY
AIM makes decisions to buy and sell securities for the Portfolio, selects
broker-dealers, effects the Portfolio's investment portfolio transactions,
allocates brokerage fees in such transactions, and where applicable, negotiates
commissions and spreads on transactions. Since purchases and sales of portfolio
securities by the Portfolio are usually principal transactions, the Portfolio
incurs little or no brokerage commissions. AIM's primary consideration in
effecting a security transaction is to obtain the most favorable execution of
the order, which includes the best price on the security and a low commission
rate (as applicable). While AIM seeks reasonable competitive commission rates,
the Portfolio may not pay the lowest commission or spread available. See
"Section 28(e) Standards" below.
In the event the Portfolio purchases securities traded in over-the-counter
markets, the Portfolio deals directly with dealers who make markets in the
securities involved, except when better prices are available elsewhere.
Portfolio transactions placed through dealers who are primary market makers are
effected at net prices without commissions, but which include compensation in
the form of a mark up or mark down.
AIM may determine target levels of commission business with various brokers on
behalf of its clients (including the Portfolio) over a certain time period. The
target levels will be based upon the following factors, among others: (1) the
execution services provided by the broker; (2) the research services provided by
the broker; and (3) the broker's interest in mutual funds in general and in the
Portfolio and other mutual funds advised by AIM or A I M Capital Management,
Inc. (collectively, the "AIM Funds") in particular, including sales of the
Portfolio and of the other AIM Funds. In connection with (3) above, the
Portfolio's trades may be executed directly by dealers which sell shares of the
AIM Funds or by other broker-dealers with which such dealers have clearing
arrangements. AIM will not use a specific formula in connection with any of
these considerations to determine the target levels.
AIM will seek, whenever possible, to recapture for the benefit of a Portfolio
any commissions, fees, brokerage or similar payments paid by the Portfolio on
portfolio transactions. Normally, the only fees which AIM can recapture are the
soliciting dealer fees on the tender of the Portfolio's securities in a tender
or exchange offer.
The Portfolio may engage in certain principal and agency transactions with
banks and their affiliates that own 5% or more of the outstanding voting
securities of the Portfolio provided the conditions of an exemptive order
received by the Portfolio from the SEC are met. In addition, the Portfolio may
purchase or sell a security from or to another AIM Fund provided the Portfolio
follows procedures adopted by the Board of Directors/Trustees of the various AIM
Funds, including the Trust. These inter-fund transactions do not generate
brokerage commissions but may result in custodial fees or taxes or other related
expenses.
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. 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.
20
<PAGE> 58
ALLOCATION OF PORTFOLIO TRANSACTIONS
AIM and its affiliates manage several other investment accounts. Some of these
accounts may have investment objectives similar to the Portfolio. Occasionally,
identical securities will be appropriate for investment by the Portfolio and by
another fund or one or more of these investment accounts. However, the position
of each account in the same securities and the length of time that each account
may hold its investment in the same securities may 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, AIM will fairly allocate transactions in such securities among the
Portfolio and these accounts. AIM may combine such transactions, in accordance
with applicable laws and regulations, to obtain the most favorable execution.
Simultaneous transactions could, however, adversely affect the Portfolio's
ability to obtain or dispose of the full amount of a security which it seeks to
purchase or sell.
Sometimes the procedure for allocating portfolio transactions among the
various investment accounts advised by AIM could have an adverse effect on the
price or amount of securities available to the Portfolio. In making such
allocations, AIM considers the investment objectives and policies of its
advisory clients, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment, the size of
investment commitments generally held, and the judgments of the persons
responsible for recommending the investment.
SECTION 28(E) STANDARDS
Section 28(e) of the Securities Exchange Act of 1934 provides that AIM, under
certain circumstances, lawfully may cause an account to pay a higher commission
than the lowest available. Under Section 28(e), AIM must make a good faith
determination that the commissions paid are "reasonable in relation to the value
of the brokerage and research services provided . . . viewed in terms of either
that particular transaction or [AIM's] overall responsibilities with respect to
the accounts as to which it exercises investment discretion." The services
provided by the broker also must lawfully and appropriately assist AIM in the
performance of its investment decision-making responsibilities. Accordingly, in
recognition of research services provided to it, a Fund may pay a broker higher
commissions than those available from another broker.
Research services received from broker-dealers supplement AIM's own research
(and the research of its affiliates), and may include the following types of
information: statistical and background information on the U.S. and foreign
economies, industry groups and individual companies; forecasts and
interpretations with respect to the U.S. and foreign economies, securities,
markets, specific industry groups and individual companies; information on
federal, state, local and foreign political developments; portfolio management
strategies; performance information on securities, indexes and investment
accounts; information concerning prices of securities; and information supplied
by specialized services to AIM and to the Trust's trustees with respect to the
performance, investment activities, and fees and expenses of other mutual funds.
Broker-dealers may communicate such information electronically, orally or in
written form. Research services may also include the providing of custody
services, as well as the providing of equipment used to communicate research
information, the providing of specialized consultations with AIM personnel with
respect to computerized systems and data furnished to AIM as a component of
other research services, the arranging of meetings with management of companies,
and the providing of access to consultants who supply research information.
The outside research assistance is useful to AIM since the broker-dealers used
by AIM tend to follow a broader universe of securities and other matters than
AIM's staff can follow. In addition, the research provides AIM with a diverse
perspective on financial markets. Research services provided to AIM by
broker-dealers are available for the benefit of all accounts managed or advised
by AIM or by its affiliates. Some broker-dealers may indicate that the provision
of research services is dependent upon the generation of certain specified
levels of commissions and underwriting concessions by AIM's clients, including
the Portfolio. However, the Portfolio is not under any obligation to deal with
any broker-dealer in the execution of transactions in portfolio securities.
In some cases, the research services are available only from the broker-dealer
providing them. In other cases, the research services may be obtainable from
alternative sources in return for cash payments. AIM believes that the research
services are beneficial in supplementing AIM's research and analysis and that
they improve the quality of AIM's investment advice. The advisory fee paid by
the Portfolio is not reduced because AIM receives such services. However, to the
extent that AIM would have purchased research services had they not been
provided by broker-dealers, the expenses to AIM could be considered to have been
reduced accordingly.
Under the 1940 Act, certain 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 certain persons
affiliated with the Trust are members 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
21
<PAGE> 59
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.
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
each Prospectus. No attempt is made to present a detailed explanation of the tax
treatment of each 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 (a) must 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 (b) must satisfy an asset
diversification test in order to qualify for tax purposes as a regulated
investment company (the "Asset Diversification Test"). Under the Asset
Diversification Test, at the close of each quarter of a fund's taxable year, at
least 50% of the value of a fund's assets must consist of cash and cash items,
U.S. Government securities, securities of other regulated investment companies,
and securities of other issuers (as to which a fund has not invested more than
5% of the value of a fund's total assets in securities of such issuer and as to
which a fund does not hold more than 10% of the outstanding voting securities of
such issuer), and no more than 25% of the value of its total assets may be
invested in the securities of any other issuer (other than U.S. Government
securities and securities of other regulated investment companies), or in two or
more issuers which a fund controls and which are engaged in the same or similar
trades or businesses.
If, for any taxable year the Portfolio does not qualify as a regulated
investment company, all of its taxable income (including its net capital gain)
will be subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable as
ordinary dividends to the extent of the Portfolio's current and accumulated
earnings and profits. Such distributions generally will be eligible for the
dividends received deduction in the case of corporate shareholders.
EXCISE TAX ON REGULATED INVESTMENT COMPANIES
A 4% non-deductible excise tax is imposed on a regulated investment company
that fails to distribute in each calendar year an amount equal to 98% of
ordinary taxable income for the calendar year and 98% of capital gain net income
for the one-year period ended on October 31 of such calendar year (or, at the
election of a regulated investment company having a taxable year ending November
30 or December 31, for its taxable year (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
22
<PAGE> 60
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 a class 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
in accordance with the guidance that has been provided by the Internal Revenue
Service.
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 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 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. Under the Taxpayer Relief Act of 1997, the Internal Revenue Service is
authorized to issue appropriate regulations that will enable shareholders to
determine the tax rates applicable to such recognized long-term capital gain.
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.
23
<PAGE> 61
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
18, 1998. 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.
24
<PAGE> 62
SHORT-TERM
INVESTMENTS TRUST
Prospectus
- --------------------------------------------------------------------------------
TREASURY The Treasury Portfolio is a money market fund
PORTFOLIO whose investment objective is the maximization of
current income to the extent consistent with the
CASH preservation of capital and the maintenance of
MANAGEMENT liquidity. The Treasury Portfolio seeks to achieve its
CLASS objective by investing in direct obligations of the
U.S. Treasury and repurchase agreements secured by such
obligations. The instruments purchased by the Treasury
DECEMBER 18, 1998 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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE 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 18, 1998, 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) 877-7745. 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.
[AIM LOGO APPEARS HERE]
Fund Management Company
11 Greenway Plaza
Suite 100
Houston, Texas 77046-1173
(800) 877-7745
<PAGE> 63
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 other classes of
shares of beneficial interest representing interests in the Portfolio: the
Institutional Class, Personal Investment Class, Private Investment Class,
Reserve Class and Resource Class. Such classes have different distribution
arrangements and are designed for institutional and other categories of
investors. The Trust also offers shares of six classes of the Treasury
TaxAdvantage Portfolio and shares of six classes of the Government & Agency
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
5:00 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 6:00 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 6:00 p.m. Eastern Time on that day.
See "Dividends."
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, 1998, 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
2
<PAGE> 64
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." Under a Transfer Agency and Service Agreement, A I M Fund Services,
Inc. ("Transfer Agent"), AIM's wholly owned subsidiary and a registered transfer
agent, receives a fee for its provision of transfer agency, dividend
distribution and disbursement, and shareholder services to the Trust. See
"General Information -- Transfer Agent and Custodian."
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 0.10% 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, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design and Invest With
Discipline are registered service marks and AIM Bank Connection is a service
mark of A I M Management Group Inc.
3
<PAGE> 65
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 be 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, 1998. 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> 66
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, 1998 and the period August 17, 1993 (date sales commenced) through
August 31, 1993. The data has been audited by KPMG Peat Marwick LLP, independent
auditors, whose report on the financial statements and the related notes appears
in the Statement of Additional Information.
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- --------
<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 0.05 0.05 0.03 0.001
-------- -------- -------- ------- ------- -------
Less distributions:
Dividends from net
investment income......... (0.05) (0.05) (0.05) (0.05) (0.03) (0.001)
-------- -------- -------- ------- ------- -------
Net asset value, end of
period...................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- ------- ------- -------
Total return.................. 5.56% 5.39% 5.48% 5.57% 3.44% 2.91%(a)
======== ======== ======== ======= ======= =======
Ratios/supplemental data:
Net assets, end of period
(000s omitted)............ $933,791 $829,243 $789,627 $81,219 $73,619 $ 8,681
======== ======== ======== ======= ======= =======
Ratio of expenses to average
net assets(b)............. 0.17%(c) 0.17% 0.17% 0.18% 0.16% 0.16%(a)
======== ======== ======== ======= ======= =======
Ratio of net investment
income to average net
assets(d)................. 5.42%(c) 5.25% 5.25% 5.42% 3.48% 3.00%(a)
======== ======== ======== ======= ======= =======
</TABLE>
- ---------------
(a) Annualized.
(b) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
0.19%, 0.19%, 0.19%, 0.20%, 0.21% and 0.18% (annualized) for the periods
1998-1993, respectively .
(c) Ratios are based on average net assets of $1,032,845,745.
(d) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 5.40%, 5.24%, 5.23%, 5.40%, 3.43% and 2.98% (annualized)
for the periods 1998-1993, 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> 67
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.
Briefly, "First Tier" securities are securities that are rated in the highest
rating category for short-term debt obligations 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 the Portfolio's investment advisor (under the supervision of and
pursuant to guidelines established by the Board of Directors) to be of
comparable quality to a rated security that meets the foregoing quality
standards, as well as securities issued by a registered investment company that
is a money market fund and U.S. government securities. 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. The Portfolio will give shareholders notice of its
intent to enter into a reverse repurchase agreement in sufficient time to permit
shareholder redemptions before the Portfolio enters into any reverse repurchase
agreements. 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, liquid 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 liquid 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
6
<PAGE> 68
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.
INVESTMENT IN OTHER INVESTMENT COMPANIES. The Trust is permitted to invest 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 investment policies described above may be changed by the Board of
Trustees without the affirmative vote of a majority of the outstanding shares of
beneficial interest of the Trust.
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, and
except that the Portfolio may purchase securities of other investment
companies to the extent permitted by applicable law or exemptive order.
(2) borrow money or issue senior securities except (a) for temporary
or emergency purposes (e.g., in order to facilitate the orderly sale of
portfolio securities or to accommodate abnormally heavy redemption
requests), the Portfolio may borrow money from banks or obtain funds by
entering into reverse repurchase agreements, and (b) to the extent that
entering into commitments to purchase securities in accordance with the
Portfolio's investment program may be considered the issuance of senior
securities. The Portfolio will not purchase securities while borrowings in
excess of 5% of its total assets are outstanding.
The foregoing investment restrictions of the Portfolio (as well as certain
others set forth in the Statement of Additional Information) are matters of
fundamental policy which may not be changed without the affirmative vote of a
majority of the outstanding shares of the Portfolio.
In addition to the restrictions described above, the Portfolio must also
comply with the requirements of Rule 2a-7 under the 1940 Act, as such Rule may
be amended from time to time, which govern the operations of money market funds,
and may be more restrictive than the policies described herein. 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
7
<PAGE> 69
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 Transfer Agent prior to 5:00 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. Following the initial
investment, subsequent purchases of shares of the Class may also be made via AIM
LINK(R) Remote, a personal computer application software product. 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. The Portfolio, however, reserves the right to change the time for
which purchase and redemption requests must be submitted to the Portfolio for
execution on the same day or any day when the U.S. primary broker-dealer
community is closed for business or trading is restricted due to national
holidays. 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 the Transfer Agent, must be completed and sent to the
Transfer Agent at P.O. Box 4497, Houston, Texas 77210-4497. 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 the Transfer
Agent. 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 the
Transfer Agent.
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 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 the 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
5:00 p.m. Eastern Time will earn the dividend declared on the date of purchase.
8
<PAGE> 70
Any request for correction to a transaction of Portfolio shares must be
submitted in writing to the Transfer Agent. The Transfer Agent reserves the
right to reject any such request. When a correction results in a dividend
adjustment, the institution must agree in writing to reimburse the Portfolio for
any loss resulting from the correction. Failure to deliver purchase proceeds on
the requested settlement date may result in a claim against the institution for
an amount equal to the overdraft charge incurred by 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 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(R)Remote. 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 Transfer Agent prior to 5:00 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 Transfer Agent after 5:00
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 5:00 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. The Portfolio reserves the right to change the time for which
redemption requests must be submitted to and received by the Transfer Agent for
execution on the same day on any day when the U.S. primary broker-dealer
community is closed for business or trading is restricted due to national
holiday.
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 the
Transfer Agent.
Shareholders may request a redemption by telephone. Neither the Transfer Agent
nor FMC will 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 may 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
5:00 p.m. Eastern Time on the day of declaration. Net income for dividend
purposes is determined daily as of 5:00 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's 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
9
<PAGE> 71
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 at the net asset value as of 5:00 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 the Transfer
Agent at P.O. Box 4497, Houston, Texas 77210-4497 and will become effective with
dividends paid after its receipt by the Transfer Agent. 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 the
Transfer Agent.
NET ASSET VALUE
The net asset value per share of the Portfolio is determined daily as of 5:00
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> 72
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, 1998, 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 5.45% and 5.60%, 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 6:00 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.
Information concerning the Board of Trustees may be found in the Statement of
Additional Information. Certain trustees and officers of the Trust are
affiliated with AIM and A I M Management Group Inc. ("AIM Management"), the
parent corporation of AIM.
For a discussion of AIM Management and its subsidiaries' Year 2000 Compliance
Project, see "General Information -- Year 2000 Compliance Project."
INVESTMENT ADVISOR
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173,
acts as the investment advisor for the Portfolio pursuant to a Master Investment
Advisory Agreement (the "Advisory Agreement"). AIM was organized in 1976 and,
to-
11
<PAGE> 73
gether with its affiliates, manages or advises over 90 investment company
portfolios. Certain of the directors and 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. AIM Management is an indirect, wholly owned subsidiary of AMVESCAP
PLC, a publicly-traded holding company that, through its subsidiaries, engages
in institutional investment management and retail fund business in the United
States, Europe and the Pacific Region.
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, 1998, 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 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.
DISTRIBUTOR
The Trust has entered into a Master Distribution Agreement (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 100, 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
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. 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. 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
12
<PAGE> 74
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 has been 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"). In approving the Plan,
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 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 eighteen
classes. Six classes, including the Class, represent interests in the Portfolio,
six classes represent interests in the Treasury TaxAdvantage Portfolio, and six
classes represent interests in the Government & Agency 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
13
<PAGE> 75
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 Fund Services, Inc., P.O. Box 4497, Houston, Texas 77210-4497, acts as
transfer agent for the shares of the Class.
LEGAL COUNSEL
The law firm of Ballard Spahr Andrews & Ingersoll, LLP, Philadelphia,
Pennsylvania, serves as counsel to the Trust and passes upon certain legal
matters for the Trust.
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 100,
Houston, Texas 77046-1173, or may be made by calling (800) 877-7745.
YEAR 2000 COMPLIANCE PROJECT
In providing services to the Trust, AIM Management and its subsidiaries rely
on both internal software systems as well as external software systems provided
by third parties. Many software systems in use today are unable to distinguish
the year 2000 from the year 1900. This defect if not cured will likely adversely
affect the services that AIM Management, its subsidiaries and other service
providers to the Trust provide the Trust and its shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and phase (iii) has
commenced. The Project is scheduled to be completed during the second quarter of
1999. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm year 2000 compliance
upon installation. No assurance can be given that the Project will be successful
or that AIM Management and its subsidiaries will not otherwise be adversely
affected by the year 2000 issue.
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.
14
<PAGE> 76
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 77
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS TRUST
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 877-7745
INVESTMENT ADVISOR
A I M ADVISORS, INC.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(713) 626-1919
DISTRIBUTOR
FUND MANAGEMENT COMPANY
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 877-7745
AUDITORS
KPMG PEAT MARWICK LLP
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 FUND SERVICES, INC.
P.O. Box 4497
Houston, Texas 77210-4497
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROSPECTUS
December 18, 1998
SHORT-TERM
INVESTMENTS TRUST
---------------------
TREASURY PORTFOLIO
---------------------
CASH MANAGEMENT CLASS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Summary........................................... 2
Table of Fees and Expenses........................ 4
Financial Highlights.............................. 5
Suitability for Investors......................... 5
Investment Program................................ 5
Purchase of Shares................................ 7
Redemption of Shares.............................. 9
Dividends......................................... 9
Taxes............................................. 10
Net Asset Value................................... 10
Yield Information................................. 11
Reports to Shareholders........................... 11
Management of the Trust........................... 11
General Information............................... 13
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 78
SHORT-TERM
INVESTMENTS TRUST
Prospectus
- --------------------------------------------------------------------------------
TREASURY The Treasury Portfolio is a money market fund
PORTFOLIO 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
DECEMBER 18, 1998 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 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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE 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 18, 1998, 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
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.
[AIM LOGO APPEARS HERE]
Fund Management Company
11 Greenway Plaza
Suite 100
Houston, Texas 77046-1173
(800) 659-1005
<PAGE> 79
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 other classes of
shares of beneficial interest representing interests in the Portfolio: the Cash
Management Class, Personal Investment Class, Private Investment Class, Reserve
Class and Resource Class. Such classes have different distribution arrangements
and are designed for institutional and other categories of investors. The Trust
also offers shares of six classes of the Treasury TaxAdvantage Portfolio and six
classes of the Government & Agency 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, 1998, the expenses of operation for the Class represented 0.08% 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
5:00 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 6:00 p.m. Eastern Time on that day.
See "Dividends."
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, 1998, the Trust paid AIM fees with respect to the
Portfolio which repre-
2
<PAGE> 80
sented 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" and
"-- Administrative Services." Under a Transfer Agency and Service Agreement,
A I M Fund Services, Inc., ("Transfer Agent"), AIM's wholly owned subsidiary and
a registered transfer agent, receives a fee for its provision of transfer
agency, dividend distribution and disbursement, and shareholder services to the
Trust. See "General Information -- Transfer Agent and Custodian."
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, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design and Invest With
Discipline are registered service marks and AIM Bank Connection is a service
mark of A I M Management Group Inc.
3
<PAGE> 81
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.................................................. 0.01%
------
Total other expenses................................. 0.02%
----
Total portfolio operating expenses -- Institutional
Class.................................................. 0.08%
====
</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.................................................... $10
</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, 1998. 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> 82
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, 1998. The data has been audited by KPMG Peat Marwick LLP, independent
auditors, whose report on the financial statements and the related notes appears
in the Statement of Additional Information.
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ---------- ---------- ----------
<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 0.05 0.06 0.04 0.03 0.05
---------- ---------- ---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment
income..................... (0.05) (0.05) (0.05) (0.06) (0.04) (0.03) (0.05)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of
period....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ========== ========== ==========
Total return.................. 5.64% 5.47% 5.57% 5.66% 3.53% 3.22% 4.56%
========== ========== ========== ========== ========== ========== ==========
Ratios/supplemental data:
Net assets, end of period
(000s omitted)............. $2,988,375 $3,408,010 $2,335,441 $2,669,637 $2,452,389 $3,652,672 $3,835,387
========== ========== ========== ========== ========== ========== ==========
Ratio of expenses to average
net assets................... 0.08%(a) 0.09% 0.09% 0.10% 0.08% 0.08% 0.09%
========== ========== ========== ========== ========== ========== ==========
Ratio of net investment income
to average net assets........ 5.50%(a) 5.35% 5.43% 5.53% 3.39% 3.17% 4.38%
========== ========== ========== ========== ========== ========== ==========
<CAPTION>
1991 1990 1989
---------- ---------- ----------
<S> <C> <C> <C>
Net asset value, beginning of
period....................... $ 1.00 $ 1.00 $ 1.00
Income from investment
operations:
Net investment income........ 0.07 0.08 0.09
---------- ---------- ----------
Less distributions:
Dividends from net investment
income..................... (0.07) (0.08) (0.09)
---------- ---------- ----------
Net asset value, end of
period....................... $ 1.00 $ 1.00 $ 1.00
========== ========== ==========
Total return.................. 7.04% 8.52% 9.03%
========== ========== ==========
Ratios/supplemental data:
Net assets, end of period
(000s omitted)............. $2,437,902 $1,703,460 $1,189,822
========== ========== ==========
Ratio of expenses to average
net assets................... 0.10% 0.12% 0.11%
========== ========== ==========
Ratio of net investment income
to average net assets........ 6.73% 8.19% 8.69%
========== ========== ==========
</TABLE>
- ---------------
(a) Ratios are based on average net assets of $3,112,551.185.
5
<PAGE> 83
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 record keeping. 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 6:00 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.
Briefly, "First Tier" securities are securities that are rated in the highest
rating category for short-term debt obligations 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 the Portfolio's investment advisor (under the supervision of and
pursuant to guidelines established by the Board of Directors) to be of
comparable quality to a rated security that meets the foregoing quality
standards, as well as securities issued by a registered investment company that
is a money market fund and U.S. government securities. 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
6
<PAGE> 84
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. The Portfolio will give shareholders notice of its
intent to enter into a reverse repurchase agreement in sufficient time to permit
shareholder redemptions before the Portfolio enters into any reverse repurchase
agreements. 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, liquid 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 liquid 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.
INVESTMENT IN OTHER INVESTMENT COMPANIES. The Trust is permitted to invest 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 investment policies described above may be changed by the Board of
Trustees without the affirmative vote of a majority of the outstanding shares of
beneficial interest of the Trust.
7
<PAGE> 85
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, and
except that the Portfolio may purchase securities of other investment
companies to the extent permitted by applicable law or exemptive order; or
(2) borrow money or issue senior securities except (a) for temporary
or emergency purposes (e.g., in order to facilitate the orderly sale of
portfolio securities, or to accommodate abnormally heavy redemption
requests), the Portfolio may borrow money from banks or obtain funds by
entering into reverse repurchase agreements, and (b) to the extent that
entering into commitments to purchase securities in accordance with the
Portfolio's investment program may be considered the issuance of senior
securities. The Portfolio will not purchase securities while borrowings in
excess of 5% of its total assets are outstanding.
The foregoing investment restrictions of the Portfolio (as well as certain
others set forth in the Statement of Additional Information) are matters of
fundamental policy which may not be changed without the affirmative vote of a
majority of the outstanding shares of the Portfolio.
In addition to the restrictions described above, the Portfolio must also
comply with the requirements of Rule 2a-7 under the 1940 Act, as such Rule may
be amended from time to time, which govern the operations of money market funds,
and may be more restrictive than the policies described herein. 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 Transfer Agent
prior to 5:00 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. Following the initial investment, subsequent purchases of shares of the
Class may also be made via AIM LINK(R) Remote, a personal computer application
software product. 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. The Portfolio, however, reserves the right to change the time for
which purchase and redemption requests must be submitted to the Portfolio for
execution on the same day on any day when the U.S. primary broker-dealer
community is closed for business or trading is restricted due to national
holidays. 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 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 the 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
5:00 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.
8
<PAGE> 86
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 the Transfer Agent, P.O. Box
4497, Houston, Texas 77210-4497. Account Applications may be obtained from the
Transfer Agent. 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 the Transfer Agent.
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) Remote. 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 the Transfer Agent prior to 5:00 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 Transfer Agent after 5:00
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 5:00 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. The Portfolio reserves the right to change the time for which
redemption requests must be submitted to and received by the Transfer Agent for
execution on the same day on any day when the U.S. primary broker-dealer
community is closed for business or trading is restricted due to national
holidays.
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 the
Transfer Agent.
Shareholders may request a redemption by telephone. Neither the Transfer Agent
nor FMC will 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 may 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.
9
<PAGE> 87
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
5:00 p.m. Eastern Time on the day of declaration. Net income for dividend
purposes is determined daily as of 5:00 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's 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
5:00 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 the
Transfer Agent, P.O. Box 4497, Houston, Texas 77210-4497 and will become
effective with dividends paid after its receipt by the Transfer Agent. 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 portfolios 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 the
Transfer Agent.
10
<PAGE> 88
NET ASSET VALUE
The net asset value per share of the Portfolio is determined daily as of 5:00
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, 1998, 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 5.53% and 5.69%, 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 6:00 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 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.
Information concerning the Board of Trustees may be found in the Statement of
Additional Information. Certain trustees and officers of the Trust are
affiliated with AIM and A I M Management Group Inc. ("AIM Management"), the
parent corporation of AIM.
11
<PAGE> 89
For a discussion of AIM Management and its subsidiaries' Year 2000 Compliance
Project, see "General Information -- Year 2000 Compliance Project."
INVESTMENT ADVISOR
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173,
acts as the investment advisor for the Portfolio pursuant to a Master Investment
Advisory Agreement (the "Advisory Agreement"). AIM, organized in 1976, together
with its affiliates, manages or advises over 90 investment company portfolios.
Certain of the directors and 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. AIM
Management is an indirect, wholly owned subsidiary of AMVESCAP PLC, a
publicly-traded holding company that, through its subsidiaries, engages in
institutional investment management and retail fund businesses in the United
States, Europe and the Pacific Region.
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, 1998, AIM received fees from the Trust
under 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 0.08% of the Class's
average daily net assets.
ADMINISTRATIVE SERVICES
The Trust has entered into a Master Administrative Services Agreement 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.
DISTRIBUTOR
The Trust has entered into a Master Distribution Agreement (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 100, 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 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.
12
<PAGE> 90
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 eighteen
classes of which six, including the Class, represent interests in the Portfolio,
six classes represent interests in the Treasury TaxAdvantage Portfolio, and six
classes represent interests in the Government & Agency 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 Fund Services, Inc., P.O. Box 4497, Houston, Texas 77210-4497, acts as
transfer agent for the shares of the Class.
LEGAL COUNSEL
The law firm of Ballard Spahr Andrews & Ingersoll, LLP, Philadelphia,
Pennsylvania, serves as counsel to the Trust and passes upon certain legal
matters for the Trust.
SHAREHOLDER INQUIRIES
Shareholder inquiries concerning the status of an account should be directed
to the Trust at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173, or may
be made by calling (800) 659-1005.
YEAR 2000 COMPLIANCE PROJECT
In providing services to the Trust, AIM Management and its subsidiaries rely
on both internal software systems as well as external software systems provided
by third parties. Many software systems in use today are unable to distinguish
the year 2000 from the year 1900. This defect if not cured will likely adversely
affect the services that AIM Management, its subsidiaries and other service
providers to the Trust provide the Trust and its shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
13
<PAGE> 91
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and phase (iii) has
commenced. The Project is scheduled to be completed during the second quarter of
1999. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm year 2000 compliance
upon installation. No assurance can be given that the Project will be successful
or that AIM Management and its subsidiaries will not otherwise be adversely
affected by the year 2000 issue.
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. The Statement of Additional Information
is attached as Appendix A to this Prospectus. 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.
14
<PAGE> 92
APPENDIX A
STATEMENT OF
ADDITIONAL INFORMATION
SHORT-TERM INVESTMENTS TRUST
TREASURY PORTFOLIO
(CASH MANAGEMENT CLASS)
(INSTITUTIONAL CLASS)
(PERSONAL INVESTMENT CLASS)
(PRIVATE INVESTMENT CLASS)
(RESERVE CLASS)
(RESOURCE CLASS)
11 GREENWAY PLAZA
SUITE 100
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
CLASSES
OF THE TREASURY PORTFOLIO, COPIES OF WHICH MAY BE OBTAINED BY WRITING
FUND MANAGEMENT COMPANY, 11 GREENWAY PLAZA,
SUITE 100, HOUSTON, TEXAS 77046-1173
OR CALLING (800) 659-1005
---------------------
STATEMENT OF ADDITIONAL INFORMATION DATED DECEMBER 18, 1998
RELATING TO THE PROSPECTUS OF EACH OF THE FOLLOWING CLASSES OF THE TREASURY
PORTFOLIO:
CASH MANAGEMENT CLASS PROSPECTUS DATED DECEMBER 18, 1998,
INSTITUTIONAL CLASS PROSPECTUS DATED DECEMBER 18, 1998,
PERSONAL INVESTMENT CLASS PROSPECTUS DATED DECEMBER 18, 1998,
PRIVATE INVESTMENT CLASS PROSPECTUS DATED DECEMBER 18, 1998,
RESERVE CLASS PROSPECTUS DATED DECEMBER 18, 1998
AND RESOURCE CLASS PROSPECTUS DATED DECEMBER 18, 1998
A-1
<PAGE> 93
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Introduction................................................ A-3
General Information about the Trust......................... A-3
The Trust and Its Shares............................... A-3
Management.................................................. A-5
Trustees and Officers.................................. A-5
Remuneration of Trustees............................... A-7
Investment Advisor..................................... A-9
Administrative Services................................ A-10
Expenses............................................... A-11
Banking Regulations.................................... A-11
Transfer Agent and Custodian........................... A-11
Reports................................................ A-12
Fee Waivers............................................ A-12
Principal Holders of Securities........................ A-12
Purchases and Redemptions................................... A-18
Net Asset Value Determination.......................... A-18
Distribution Agreement................................. A-18
Distribution Plan...................................... A-19
Performance Information................................ A-19
Investment Program and Restrictions......................... A-20
Investment Program..................................... A-20
Eligible Securities.................................... A-20
Investment Restrictions................................ A-20
Other Investment Policies.............................. A-21
Portfolio Transactions...................................... A-21
General Brokerage Policy............................... A-21
Allocation of Portfolio Transactions................... A-22
Section 28(e) Standards................................ A-22
Tax Matters................................................. A-23
Qualification as a Regulated Investment Company........ A-23
Excise Tax on Regulated Investment Companies........... A-24
Portfolio Distributions................................ A-24
Sale or Redemption of Shares........................... A-24
Foreign Shareholders................................... A-24
Effect of Future Legislation; Local Tax
Considerations........................................ A-25
Financial Statements........................................ FS
</TABLE>
A-2
<PAGE> 94
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
18, 1998, the Institutional Class Prospectus dated December 18, 1998, the
Personal Investment Class Prospectus dated December 18, 1998, the Private
Investment Class Prospectus dated December 18, 1998, the Reserve Class
Prospectus dated December 18, 1998 and the Resource Class Prospectus dated
December 18, 1998 (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 100, 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 Amended and Restated 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 caption "General Information" and "Redemption
of Shares."
The Trust offers on a continuous basis shares representing an interest in one
of three portfolios: the Portfolio, the Government & Agency Portfolio and the
Treasury TaxAdvantage Portfolio (together, the "Portfolios"). The Portfolio
consists of the following six classes of shares: Cash Management Class,
Institutional Class, Personal Investment Class, Private Investment Class,
Reserve 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 and the
Government & Agency Portfolio are offered pursuant to separate prospectuses and
separate statements 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.
A-3
<PAGE> 95
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, any Portfolio and any class
thereof with respect to which there are fewer than 100 holders of record.
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 property of the Portfolio for all losses and
expenses of any shareholder of the Portfolio 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
Portfolio 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 and officers will
not be liable for any act, ommision or obligation of the Trust or any Trustee of
officer. However, nothing in the Declaration of Trust protects a trustee or
officer against any liability to the Trust or to the shareholders to which a
trustee or officer 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 with the Trust. The Declaration of Trust provides for
indemnification by the Trust of the trustees, the officers, employees or agents
of the Trust, if it is determined that such person acted in good faith and
reasonably believed: (1) in the case of conduct in his official capacity for the
Trust, that his conduct was in the Trust's best interests, (2) in all other
cases, that his conduct was at least not opposed to the Trust's best interests
and (3) in a criminal proceeding, that he had no reason to believe that his
conduct was unlawful. 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.
Except as otherwise disclosed in each Prospectus and this Statement of
Additional Information, the Trustees shall continue to hold office and may
appoint their successors.
A-4
<PAGE> 96
MANAGEMENT
TRUSTEES AND OFFICERS
The trustees and officers of the Trust and their principal occupations during
at least the last five years are set forth below. Unless otherwise indicated,
the address of each trustee and officer is 11 Greenway Plaza, Suite 100,
Houston, Texas 77046.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
POSITIONS HELD
NAME, ADDRESS AND AGE WITH REGISTRANT PRINCIPAL OCCUPATION DURING AT LEAST THE PAST 5 YEARS
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
*CHARLES T. BAUER (79) Trustee and Chairman of the Board of Directors, A I M Management
Chairman Group Inc., A I M Advisors, Inc., A I M Capital
Management, Inc., A I M Distributors, Inc., A I M
Fund Services, Inc. and Fund Management Company; and
Vice Chairman and Director, AMVESCAP PLC.
- -----------------------------------------------------------------------------------------------------------------------
BRUCE L. CROCKETT (54) Trustee Director, ACE Limited (insurance company). Formerly,
906 Frome Lane Director, President and Chief Executive Officer,
McLean, VA 22102 COMSAT Corporation; and Chairman, Board of Governors
of INTELSAT (international communications company).
- -----------------------------------------------------------------------------------------------------------------------
OWEN DALY II (74) Trustee Director, Cortland Trust Inc. (investment company).
Six Blythewood Road Formerly, Director, CF & I Steel Corp., Monumental
Baltimore, MD 21210 Life Insurance Company and Monumental General
Insurance Company; and Chairman of the Board of
Equitable Bancorporation.
- -----------------------------------------------------------------------------------------------------------------------
EDWARD K. DUNN (63) Trustee Chairman of the Board of Directors, Mercantile
2 Hopkins Plaza, 20th Floor Mortgage Corp. Formerly, Vice Chairman of the Board
Baltimore, MD 21201 of Directors and President, Mercantile-Safe Deposit &
Trust Co., and President, Mercantile Bankshares
- -----------------------------------------------------------------------------------------------------------------------
JACK M. FIELDS (46) Trustee Chief Executive Officer, Texana Global, Inc. (foreign
8810 Will Clayton Parkway trading company) and Twenty First Century Group, Inc.
Jetero Plaza, Suite E (a governmental affairs company). Formerly, Member of
Humble, TX 77338 the U.S. House of Representatives.
- -----------------------------------------------------------------------------------------------------------------------
**CARL FRISCHLING (61) Trustee Partner, Kramer, Levin, Naftalis & Frankel (law
919 Third Avenue firm). Formerly, Partner, Reid & Priest (law firm).
New York, NY 10022
- -----------------------------------------------------------------------------------------------------------------------
*ROBERT H. GRAHAM (51) Trustee and Director, President and Chief Executive Officer,
President 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. and
Fund Management Company; and Director, AMVESCAP PLC.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
* A trustee who is an "interested person" of the Trust and AIM as defined in
the 1940 Act.
** A trustee who is an "interested person" of the Trust as defined in the 1940
Act.
A-5
<PAGE> 97
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
POSITIONS HELD
NAME, ADDRESS AND AGE WITH REGISTRANT PRINCIPAL OCCUPATION DURING AT LEAST THE PAST 5 YEARS
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
PREMA MATHAI-DAVIS (48) Trustee Chief Executive Officer, YWCA of the U.S.A.;
350 Fifth Avenue, Suite 301 Commissioner, New York City Department for the Aging;
New York, NY 10118 and Member of the Board of Directors, Metropolitan
Transportation Authority of New York State.
- -----------------------------------------------------------------------------------------------------------------------
LEWIS F. PENNOCK (56) Trustee Attorney in private practice in Houston, Texas.
6363 Woodway, Suite 825
Houston, TX 77057
- -----------------------------------------------------------------------------------------------------------------------
IAN W. ROBINSON (75) Trustee Formerly, Executive Vice President and Chief
183 River Drive Financial Officer, Bell Atlantic Management Services,
Tequesta, FL 33469 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.
- -----------------------------------------------------------------------------------------------------------------------
LOUIS S. SKLAR (59) Trustee Executive Vice President, Development and Operations,
Transco Tower, 50th Floor Hines Interests Limited Partnership (real estate
2800 Post Oak Blvd. development).
Houston, TX 77056
- -----------------------------------------------------------------------------------------------------------------------
***JOHN J. ARTHUR (54) Senior Vice Director, Senior Vice President and Treasurer, A I M
President and Advisors, Inc.; and Vice President and Treasurer,
Treasurer A I M Management Group Inc., A I M Capital
Management, Inc., A I M Distributors, Inc., A I M
Fund Services, Inc. and Fund Management Company.
- -----------------------------------------------------------------------------------------------------------------------
GARY T. CRUM (51) Senior Vice Director and President, A I M Capital Management,
President Inc.; Director and Senior Vice President, A I M
Management Group Inc., A I M Advisors, Inc.; and
Director, A I M Distributors, Inc. and AMVESCAP PLC.
- -----------------------------------------------------------------------------------------------------------------------
***CAROL F. RELIHAN (44) Senior Vice Director, Senior Vice President, General Counsel and
President and Secretary, A I M Advisors, Inc.; Vice President,
Secretary General Counsel and Secretary, A I M Management Group
Inc.; Director, Vice President and General Counsel,
Fund Management Company; General Counsel and Vice
President, A I M Fund Services, Inc.; and Vice
President, A I M Capital Management, Inc. and A I M
Distributors, Inc.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
*** Mr. Arthur and Ms. Relihan are married to each other.
A-6
<PAGE> 98
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
POSITIONS HELD
NAME, ADDRESS AND AGE WITH REGISTRANT PRINCIPAL OCCUPATION DURING AT LEAST THE PAST 5 YEARS
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
DANA R. SUTTON (39) Vice President Vice President and Fund Controller, A I M Advisors,
and Assistant Inc.; and Assistant Vice President and Assistant
Treasurer Treasurer, Fund Management Company.
- -----------------------------------------------------------------------------------------------------------------------
MELVILLE B. COX (55) Vice President 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. and
Fund Management Company.
- -----------------------------------------------------------------------------------------------------------------------
KAREN DUNN KELLEY (38) Vice President Senior Vice President, A I M Capital Management,
Inc.; and Vice President, A I M Advisors, Inc.
- -----------------------------------------------------------------------------------------------------------------------
J. ABBOTT SPRAGUE (43) Vice President Director and President, Fund Management Company;
Director, AIM Fund Services, Inc.; and Senior Vice
President, A I M Advisors, Inc. and A I M Management
Group Inc.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
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. Crockett, Daly, Dunn, Fields,
Frischling, Pennock, Robinson (Chairman) and Sklar. 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,
Dunn, Fields, Frischling, Pennock, Robinson and Sklar (Chairman). 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.
The members of the Nominating and Compensation Committee are Messrs. Crockett
(Chairman), Daly, Dunn, Fields, Pennock, Robinson 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. Most 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 or her services according to
a fee schedule which recognizes the fact that such trustee also serves as a
director or trustee of certain 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 or she
serves as a director or trustee, which consists of an annual retainer component
and a meeting fee component.
A-7
<PAGE> 99
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................................. 4,747 67,774 84,000
Owen Daly II...................................... 4,747 103,542 84,000
Edward K. Dunn(4)................................. 2,193 0 0
Jack Fields....................................... 4,747 0 70,500
Carl Frischling................................... 4,747 96,520 84,000(5)
Robert H. Graham.................................. 0 0 0
John F. Kroeger(6)................................ 4,547 94,132 82,500
Prema Mathai-Davis(4)............................. 261 0 0
Lewis F. Pennock.................................. 4,747 55,777 84,000
Ian W. Robinson................................... 4,672 85,912 84,000
Louis S. Sklar.................................... 4,695 84,370 83,500
</TABLE>
- ---------------
(1) The total amount of compensation deferred by all Trustees of the Trust
during the fiscal year ended August 31, 1998, including interest earned
thereon, was $26,330.
(2) During the fiscal year ended August 31, 1998, the total amount of expenses
allocated to the Trust in respect of such retirement benefits was $32,407.
Data reflects compensation for the calendar year ended December 31, 1997.
(3) Each serves as a Director or Trustee of a total of 12 registered investment
companies advised by AIM as of December 31, 1997 (comprised of over 50
portfolios). Data reflects total compensation for the calendar year ended
December 31, 1997.
(4) Mr. Dunn and Ms. Mathai-Davis were not serving as Trustees during the
calendar year ended December 31, 1997.
(5) The Trust paid the law firm of Kramer, Levin, Naftalis & Frankel $15,485 in
legal fees for services provided to the Portfolio during the fiscal year
ended August 31, 1998. Mr. Frischling, a trustee of the Trust, is a partner
in such firm.
(6) Mr. Kroeger resigned as a trustee of the Trust on June 11, 1998 and on that
date became a consultant to the Trust.
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 regulated investment companies
managed, administered or distributed by AIM or its affiliates (the "Applicable
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 Applicable 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 Applicable 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.
A-8
<PAGE> 100
Set forth below is a table that shows the estimated annual benefits payable to
an eligible trustee upon retirement assuming a specified level of compensation
and years of service classifications. The estimated credited years of service
for Messrs. Crockett, Daly, Dunn, Fields, Frischling, Kroeger, Pennock,
Robinson, Sklar and Ms. Mathai-Davis are 11, 11, 0, 1, 21, 20, 16, 11, 8 and 0
years, respectively.
ANNUAL RETAINER UPON RETIREMENT
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
NUMBER OF
YEARS OF
SERVICE WITH ANNUAL RETAINER PAID BY ALL AIM FUNDS
THE AIM FUNDS $90,000
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------
10 $67,500
- ------------------------------------------------------------------------------------
9 $60,750
- ------------------------------------------------------------------------------------
8 $54,000
- ------------------------------------------------------------------------------------
7 $47,250
- ------------------------------------------------------------------------------------
6 $40,500
- ------------------------------------------------------------------------------------
5 $33,750
- ------------------------------------------------------------------------------------
</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 (5) or ten
(10) years (depending on the Agreement) 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.
During the fiscal year ended August 31, 1998, $34,137 in trustees' fees and
expenses were allocated to the Portfolio.
INVESTMENT ADVISOR
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173,
acts as the investment advisor for the Portfolio pursuant to a Master Investment
Advisory Agreement (the "Advisory Agreement"). AIM was organized in 1976, and
together with its subsidiaries advises or manages over 90 investment company
portfolios.
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. 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.
A-9
<PAGE> 101
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 and under an investment advisory agreement in effect prior to February
28, 1997 which provided for the same level of compensation to AIM, AIM received
fees from the Trust for the fiscal years ended August 31, 1998, 1997 and 1996
with respect to the Portfolio in the amounts of $3,026,608, $2,666,379 and
$2,227,788, respectively. For the fiscal years ended August 31, 1998, 1997 and
1996, AIM waived no advisory fees with respect to the Portfolio.
The Advisory Agreement will continue from year to year 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 100, Houston, Texas 77046-1173. AIM
Management is an indirect wholly owned subsidiary of AMVESCAP PLC, 11 Devonshire
Square, London EC2M 4YR, United Kingdom. AMVESCAP PLC and its subsidiaries are
an independent investment management group engaged in institutional investment
management and retail fund businesses in the United States, Europe and the
Pacific Region. Certain of the directors and 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 100, 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 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 and under a prior administrative
services agreement which provided for the same level of reimbursement to AIM,
AIM was reimbursed for the fiscal years ended August 31, 1998, 1997 and 1996,
$102,543, $99,273 and $86,796, respectively, for fund accounting services for
the Portfolio.
A-10
<PAGE> 102
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 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 Fund Services, Inc.("AFS"), a wholly owned subsidiary of AIM, P.O. Box
4497, Houston, Texas 77210-4497, acts as transfer agent for the shares of each
class of the Portfolio. For the services it provides to the Trust, AFS is
entitled to receive a fee based on the average daily net assets of the Trust,
plus out-of-pocket expenses and advances it incurred. Such compensation may be
changed from time to time as is agreed to by AFS and the Trust. AFS has provided
transfer agency and shareholder services to the Portfolio since December 29,
1997 pursuant to a Transfer Agency and Service Agreement. Prior to December 29,
1997, A I M Institutional Fund Services, Inc. ("AIFS") provided transfer agency
and shareholder services to the fund pursuant to a Transfer Agency and Service
Agreement.
A-11
<PAGE> 103
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, 700 Louisiana, Houston, Texas
77002, as the independent auditors to audit the financial statements and review
the tax returns of the Portfolio.
FEE WAIVERS
AIM or its affiliates may, from time to time, agree to waive voluntarily all
or any portion of its fees or reimburse the Portfolio for certain of its
expenses. Such waivers or reimbursements may be discontinued at any time.
PRINCIPAL HOLDERS OF SECURITIES
GOVERNMENT & AGENCY 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 Government
and Agency Portfolio as of October 30, 1998, 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 Onlya
---------------- ------------
<S> <C>
Fund Services Associates.................................. 59.52%b
1875 Century Park East -- Suite 1345
Los Angeles, CA 90067
Gardnyr Michael Capital, Inc.............................. 40.48%b
2281 Lee Rd. Ste. 104
Winter Park, FL 32789
</TABLE>
INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Onlya
---------------- ------------
<S> <C>
Gardnyr Michael Capital, Inc.............................. 65.79%b
2281 Lee Rd. Ste. 104
Winter Park, FL 32789
Norwest Bank Mpls......................................... 34.11%
733 Marquette Ave.
Minneapolis, MN 55479-0052
</TABLE>
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Onlya
---------------- ------------
<S> <C>
Fund Services Associates, Inc............................. 94.36%b
1875 Century Park East -- Suite 1345
Los Angeles, CA 90067
Huntington Capital Corp................................... 5.64%
41 S. High St., Ninth Floor
Columbus, OH 43287
</TABLE>
A-12
<PAGE> 104
RESOURCE CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Onlya
---------------- --------------
<S> <C>
Hambrecht & Quist LLC..................................... 97.81%
230 Park Avenue, Floor 19
New York, NY 10169
</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
portfolio may be presumed to be in "control" of such portfolio, as defined
in the 1940 Act.
AIM provided the initial capitalization of the Personal Investment Class and
the Reserve Class of the Government & Agency Portfolio and, accordingly, as of
the date of this Statement of Additional Information, owned all the outstanding
shares of beneficial interest of each such Class. The Trust expects that the
sale of shares of such Classes to the public pursuant to the Prospectuses will
promptly reduce the percentage of such shares owned by AIM to less than 1% of
the total shares outstanding of such Classes.
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 October 30, 1998 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 Onlya
---------------- ------------
<S> <C>
Bank of New York.......................................... 57.31%
One Wall Street
5Th Floor
Stif/Master Note
New York, NY 10286
Fund Services Associates, Inc............................. 12.08%
1875 Century Park East -- Suite 1345
Los Angeles, CA 90067
Chase Bank of Texas....................................... 8.91%
600 Travis St., 8th Floor
8-CBT-39
Houston, TX 77252-8009
Bank of Oklahoma.......................................... 5.87%
P.O. Box 2180
Tulsa, OK 74101
</TABLE>
A-13
<PAGE> 105
INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Onlya
---------------- ------------
<S> <C>
Trust Company Bank........................................ 8.20%
Center 3139
P.O. Box 105504
Atlanta, GA 30348
City of New York Deferred Compensation Plan............... 7.25%
40 Rector Street, 3rd Floor
New York, NY 10006
Weststar Bank Trust Dept.................................. 5.96%
P.O. Box 1156
Bartlesville, OK 74005-1156
First Trust/Var & Co...................................... 5.03%
Funds Control Suite 0404
180 East Fifth Street
St. Paul, MN 55101
</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.
PERSONAL INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Onlya
---------------- ------------
<S> <C>
Cullen/Frost Discount Brokers............................. 67.44%
P.O. Box 2358
San Antonio, TX 78299
Bank of New York.......................................... 24.64%
4 Fisher Lane
White Plains, NY 10603
</TABLE>
A-14
<PAGE> 106
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Onlya
---------------- ------------
<S> <C>
The Bank of New York...................................... 26.49%
One Wall Street
5Th Floor
Stif/Master Note
New York, NY 10286
Huntington Capital Corp................................... 19.84%
41 S. High St., Ninth Floor
Columbus, OH 43287
Zions First National Bank................................. 13.19%
P.O. Box 30880
Salt Lake City, UT 84130
First Trust/Var & Co...................................... 8.45%
Funds Control Suite 0404
180 East 5th Street
St. Paul, MN 55101
New Haven Savings Bank Trust Department................... 6.74%
P.O. Box 302
Trust Department
New Haven, CT 06502
Midland First American.................................... 6.53%
One Erieview Plaza Ste. 500
Cleveland, OH 44114
Cullen/Frost Discount Brokers............................. 6.39%
P.O. Box 2358
San Antonio, TX 78299
</TABLE>
RESOURCE CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Onlya
---------------- ------------
<S> <C>
First Union Capital Markets............................... 80.64%
8739 Research Drive
Capital Markets
Charlotte, NC 28262-0675
Mellon Bank NA............................................ 11.26%
P.O. Box 710
Pittsburgh, PA 15230-0710
</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.
AIM provided the initial capitalization of the Reserve Class of the Portfolio
and, accordingly, as of the date of this Statement of Additional Information,
owned all the outstanding shares of beneficial interest of such Class. The Trust
expects that the sale of shares of such Class to the public pursuant to its
Prospectus will promptly reduce the percentage of such shares owned by AIM to
less than 1% of the total shares outstanding of such Class.
A-15
<PAGE> 107
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 October 30, 1998 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 Onlya
---------------- ------------
<S> <C>
First Trust/Var & Co...................................... 26.43%
Funds Control Suite 0404
180 East Fifth Street
St. Paul, MN 55101
Peoples Two Ten Company................................... 20.85%
P.O. Box 821
C/O Summit Bank
Hackensack, NJ 07602
Frost National Bank Tx.................................... 12.17%
Muir & Co.
C/O Frost
P.O. Box 2479
San Antonio, TX 78298-2479
Everen Clearing Corp...................................... 6.60%
111 East Kilbourn Ave.
Milwaukee, WI 53202
Key Trust Company......................................... 6.48%
Mail Code OH-01-49-3040
4900 Tiedeman
Cleveland, OH 44101-5971
Nationsbank Texas......................................... 6.21%
1401 Elm Street 11Th Floor
P.O. Box 831000
Dallas, TX 75202-2911
Mason-Dixon Trust Company................................. 5.57%
45 W. Main Street
Westminister, MD 21158-0199
</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.
A-16
<PAGE> 108
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Onlya
---------------- --------------
<S> <C>
Huntington Capital Corp .................................. 26.45%
41 S High St., Ninth Floor
Columbus, OH 43287
Bank of New York.......................................... 24.01%
One Wall Street
5Th Floor
Stif/Master Note
New York, NY 10286
First National Bank of Chicago............................ 18.69%
Mail Suite 0126
Attention Sweep Coordinator
Chicago, IL 60670-0126
Oppenheimer & Co., Inc.................................... 11.15%
Oppenheimer Tower
World Financial Center
New York, NY 10281
Hambrecht & Quist LLC..................................... 8.79%
1100 Newport Center Drive, Second Floor
Newport Beach, CA 92660
First Union Capital Markets............................... 8.65%
8739 Research Drive
Capital Markets
Charlotte, NC 28262-0675
</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.
AIM provided the initial capitalization of the Cash Management Class, Personal
Investment Class, Reserve Class and Resource Class of the Treasury Tax Advantage
Portfolio and, accordingly, as of the date of this Statement of Additional
Information, owned all the outstanding shares of beneficial interest of each
such Class. The Trust expects that the sale of shares of each such Class to the
public pursuant to its Prospectuses will promptly reduce the percentage of such
shares owned by AIM to less than 1% of the total shares outstanding of each such
Class.
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 October 30, 1998, the
trustees and officers of the Trust beneficially owned less than 1% of each class
of the Trust's outstanding shares.
A-17
<PAGE> 109
PURCHASES AND REDEMPTIONS
A complete description of the manner by which shares of a particular class may
be purchased, redeemed or exchanged appears in each Prospectus under the heading
"Purchase of Shares."
The right of redemption may be suspended or the date of payment postponed when
(a) trading on the New York Stock Exchange ("NYSE") is restricted, as determined
by applicable rules and regulations of the SEC, (b) the NYSE is closed for other
than customary weekend and 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
Fund not reasonably practicable.
A "business day" of the Portfolio is any day on which commercial banks in the
New York Federal Reserve district are open for business. The Portfolio, however,
reserves the right to change the time for which purchase and redemption requests
must be submitted to the Portfolio for execution on the same day on any day when
the U.S. primary broker-dealer community is closed for business or trading is
restricted due to national holidays.
NET ASSET VALUE DETERMINATION
Shares of each class 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.
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 (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 100, 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 continue in effect from year to year 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. 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.
A-18
<PAGE> 110
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, Reserve Class and Resource Class of
the Portfolio. These services may include among other things: (i) answering
customer inquiries regarding the shares of these classes 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 these classes 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 these classes, 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, 1998, FMC received compensation pursuant
to the Plan in the amount of $826,277, or an amount equal to 0.08% of the
average daily net assets of the Cash Management Class, $1,803,733, or an amount
equal to 0.50% of the average daily net assets of the Personal Investment Class,
$1,159,606, or an amount equal to 0.30% of the average daily net assets of the
Private Investment Class, 512,860 or an amount equal to 0.16% of the average
daily net assets of the Resource Class. With respect to the Cash Management
Class, $826,277 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 $0
(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, $1,460,207 of
such amount (or an amount equal to 0.40% of the average daily net assets of the
class) was paid to dealers and financial institutions and $343,526 (or an amount
equal to 0.10% of the average daily net assets of the class) was retained by
FMC. With respect to the Private Investment Class, $937,844 of such amount (or
an amount equal to 0.24% of the average daily net assets of the class) was paid
to dealers and financial institutions and $221,762 (or an amount equal to 0.06%
of the average daily net assets of the class) was retained by FMC. With respect
to the Resource Class, $512,200 of such amount (or an amount equal to 0.16% of
the average daily net assets of the class) was paid to dealers and financial
institutions and $660 (or an amount equal to 0% of the average daily net assets
of the class) was retained by FMC.
FMC is a wholly owned subsidiary of AIM, a wholly owned subsidiary of AIM
Management. Charles T. Bauer, a Trustee and Chairman of the 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 each 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, 1998, 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 5.45% and 5.60%, for the Cash Management Class, were 5.53% and
5.69%, for the Institutional Class, were 5.03% and 5.16%, for the Personal
Investment Class, were 5.23% and 5.37%, for the Private Investment Class and
were 5.37% and 5.52%, 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;
A-19
<PAGE> 111
- 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.
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
The Trust will invest in "Eligible Securities" as defined in Rule 2a-7 under
the 1940 Act, which the Trust's Board of Trustees has determined to present
minimal credit risk.
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) 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; or
(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;
A-20
<PAGE> 112
(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;
or
(9) invest in any obligation not payable as to principal and interest
in United States currency.
OTHER INVESTMENT POLICIES
The Portfolio does not intend to invest in companies for the purpose of
exercising control or management, except that the Portfolio may purchase
securities of other investment companies to the extent permitted by applicable
law or exemptive order. 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
GENERAL BROKERAGE POLICY
AIM makes decisions to buy and sell securities for the Portfolio, selects
broker-dealers, effects the Portfolio's investment portfolio transactions,
allocates brokerage fees in such transactions, and where applicable, negotiates
commissions and spreads on transactions. Since purchases and sales of portfolio
securities by the Portfolio are usually principal transactions, the Portfolio
incurs little or no brokerage commissions. AIM's primary consideration in
effecting a security transaction is to obtain the most favorable execution of
the order, which includes the best price on the security and a low commission
rate (as applicable). While AIM seeks reasonable competitive commission rates,
the Portfolio may not pay the lowest commission or spread available. See
"Section 28(e) Standards" below.
In the event the Portfolio purchases securities traded in over-the-counter
markets, the Portfolio deals directly with dealers who make markets in the
securities involved, except when better prices are available elsewhere.
Portfolio transactions placed through dealers who are primary market makers are
effected at net prices without commissions, but which include compensation in
the form of a mark up or mark down.
AIM may determine target levels of commission business with various brokers on
behalf of its clients (including the Portfolio) over a certain time period. The
target levels will be based upon the following factors, among others: (1) the
execution services provided by the broker; (2) the research services provided by
the broker; and (3) the broker's interest in mutual funds in general and in the
Portfolio and other mutual funds advised by AIM or A I M Capital Management,
Inc. (collectively, the "AIM Funds") in particular, including sales of the
Portfolio and of the other AIM Funds. In connection with (3) above, the
Portfolio's trades may be executed directly by dealers which sell shares of the
AIM Funds or by other broker-dealers with which such dealers have clearing
arrangements. AIM will not use a specific formula in connection with any of
these considerations to determine the target levels.
AIM will seek, whenever possible, to recapture for the benefit of a Portfolio
any commissions, fees, brokerage or similar payments paid by the Portfolio on
portfolio transactions. Normally, the only fees which AIM can recapture are the
soliciting dealer fees on the tender of the Portfolio's securities in a tender
or exchange offer.
The Portfolio may engage in certain principal and agency transactions with
banks and their affiliates that own 5% or more of the outstanding voting
securities of the Portfolio provided the conditions of an exemptive order
received by the Portfolio from the SEC are met. In addition, the Portfolio may
purchase or sell a security from or to another AIM Fund provided the Portfolio
A-21
<PAGE> 113
follows procedures adopted by the Board of Directors/Trustees of the various AIM
Funds, including the Trust. These inter-fund transactions do not generate
brokerage commissions but may result in custodial fees or taxes or other related
expenses.
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. 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.
ALLOCATION OF PORTFOLIO TRANSACTIONS
AIM and its affiliates manage several other investment accounts. Some of these
accounts may have investment objectives similar to the Portfolio. Occasionally,
identical securities will be appropriate for investment by the Portfolio and by
another fund or one or more of these investment accounts. However, the position
of each account in the same securities and the length of time that each account
may hold its investment in the same securities may 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, AIM will fairly allocate transactions in such securities among the
Portfolio and these accounts. AIM may combine such transactions, in accordance
with applicable laws and regulations, to obtain the most favorable execution.
Simultaneous transactions could, however, adversely affect the Portfolio's
ability to obtain or dispose of the full amount of a security which it seeks to
purchase or sell.
Sometimes the procedure for allocating portfolio transactions among the
various investment accounts advised by AIM could have an adverse effect on the
price or amount of securities available to the Portfolio. In making such
allocations, AIM considers the investment objectives and policies of its
advisory clients, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment, the size of
investment commitments generally held, and the judgments of the persons
responsible for recommending the investment.
SECTION 28(e) STANDARDS
Section 28(e) of the Securities Exchange Act of 1934 provides that AIM, under
certain circumstances, lawfully may cause an account to pay a higher commission
than the lowest available. Under Section 28(e), AIM must make a good faith
determination that the commissions paid are "reasonable in relation to the value
of the brokerage and research services provided . . . viewed in terms of either
that particular transaction or [AIM's] overall responsibilities with respect to
the accounts as to which it exercises investment discretion." The services
provided by the broker also must lawfully and appropriately assist AIM in the
performance of its investment decision-making responsibilities. Accordingly, in
recognition of research services provided to it, a Fund may pay a broker higher
commissions than those available from another broker.
Research services received from broker-dealers supplement AIM's own research
(and the research of its affiliates), and may include the following types of
information: statistical and background information on the U.S. and foreign
economies, industry groups and individual companies; forecasts and
interpretations with respect to the U.S. and foreign economies, securities,
markets, specific industry groups and individual companies; information on
federal, state, local and foreign political developments; portfolio management
strategies; performance information on securities, indexes and investment
accounts; information concerning prices of securities; and information supplied
by specialized services to AIM and to the Trust's trustees with respect to the
performance, investment activities, and fees and expenses of other mutual funds.
Broker-dealers may communicate such information electronically, orally or in
written form. Research services may also include the providing of custody
services, as well as the providing of equipment used to communicate research
information, the providing of specialized consultations with AIM personnel with
respect to computerized systems and data furnished to AIM as a component of
other research services, the arranging of meetings with management of companies,
and the providing of access to consultants who supply research information.
The outside research assistance is useful to AIM since the broker-dealers used
by AIM tend to follow a broader universe of securities and other matters than
AIM's staff can follow. In addition, the research provides AIM with a diverse
perspective on financial markets. Research services provided to AIM by
broker-dealers are available for the benefit of all accounts managed or
A-22
<PAGE> 114
advised by AIM or by its affiliates. Some broker-dealers may indicate that the
provision of research services is dependent upon the generation of certain
specified levels of commissions and underwriting concessions by AIM's clients,
including the Portfolio. However, the Portfolio is not under any obligation to
deal with any broker-dealer in the execution of transactions in portfolio
securities.
In some cases, the research services are available only from the broker-dealer
providing them. In other cases, the research services may be obtainable from
alternative sources in return for cash payments. AIM believes that the research
services are beneficial in supplementing AIM's research and analysis and that
they improve the quality of AIM's investment advice. The advisory fee paid by
the Portfolio is not reduced because AIM receives such services. However, to the
extent that AIM would have purchased research services had they not been
provided by broker-dealers, the expenses to AIM could be considered to have been
reduced accordingly.
Under the 1940 Act, certain 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 certain persons
affiliated with the Trust are members 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.
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 (1) must 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) must satisfy an asset
diversification test in order to qualify for tax purposes as a regulated
investment company (the "Asset Diversification Test"). Under the Asset
Diversification 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.
A-23
<PAGE> 115
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, 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
in accordance with the guidance that has been provided by the Internal Revenue
Service.
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.
A-24
<PAGE> 116
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; 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
18, 1998. 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.
A-25
<PAGE> 117
FINANCIAL STATEMENTS
FS
<PAGE> 118
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, 1998, and the related
statement of operations for the year then ended, the statements 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.
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, 1998 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, 1998, 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, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
October 2, 1998
FS-1
<PAGE> 119
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, 1998, and the related
statement of operations for the year then ended, the statements 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.
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, 1998 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, 1998, 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, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
October 2, 1998
FS-2
<PAGE> 120
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, 1998, and the related
statement of operations for the year then ended, the statements 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.
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, 1998 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, 1998, 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, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
October 2, 1998
FS-3
<PAGE> 121
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, 1998, and the related
statement of operations for the year then ended, the statements 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.
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, 1998 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, 1998, 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, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
October 2, 1998
FS-4
<PAGE> 122
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, 1998, 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 two-year period then ended
and the period March 12, 1996 (date sales commenced for the Resource Class)
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, 1998 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, 1998, 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 two-year period then ended and the period March 12, 1996 (date sales
commenced for the Resource Class) through August 31, 1996, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
October 2, 1998
FS-5
<PAGE> 123
SCHEDULE OF INVESTMENTS
August 31, 1998
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
U.S. TREASURY SECURITIES - 13.05%
U.S. TREASURY BILLS(a) - 4.25%
5.245% 12/10/98 $ 50,000 $ 49,271,528
- ---------------------------------------------------------------------------
5.125% 02/04/99 50,000 48,889,583
- ---------------------------------------------------------------------------
5.135% 04/29/99 50,000 48,288,333
- ---------------------------------------------------------------------------
5.173% 04/29/99 50,000 48,275,833
- ---------------------------------------------------------------------------
5.15% 05/27/99 25,000 24,041,528
- ---------------------------------------------------------------------------
218,766,805
- ---------------------------------------------------------------------------
U.S. TREASURY NOTES - 8.80%
6.00% 09/30/98 50,000 50,013,521
- ---------------------------------------------------------------------------
5.75% 12/31/98 50,000 50,056,102
- ---------------------------------------------------------------------------
6.375% 01/15/99 125,000 125,389,622
- ---------------------------------------------------------------------------
6.25% 03/31/99 25,000 25,099,746
- ---------------------------------------------------------------------------
6.75% 06/30/99 150,000 151,536,559
- ---------------------------------------------------------------------------
6.375% 07/15/99 50,000 50,383,358
- ---------------------------------------------------------------------------
452,478,908
- ---------------------------------------------------------------------------
Total U.S. Treasury Securities
(Cost $671,245,713) 671,245,713
- ---------------------------------------------------------------------------
Total Investments
(excluding Repurchase Agreements) 671,245,713
- ---------------------------------------------------------------------------
REPURCHASE AGREEMENTS(b) - 86.42%
B.T. Securities Corp.
5.80%(c) -- 250,000 250,000,000
- ---------------------------------------------------------------------------
Barclays Capital Inc.
5.78%(d) 09/01/98 250,000 250,000,000
- ---------------------------------------------------------------------------
Bear, Stearns & Co. Inc.
5.80%(e) -- 250,000 250,000,000
- ---------------------------------------------------------------------------
CIBC Oppenheimer Corp.
5.78%(f) 09/01/98 250,000 250,000,000
- ---------------------------------------------------------------------------
Credit Suisse First Boston Corp.
5.80%(g) 09/01/98 250,000 250,000,000
- ---------------------------------------------------------------------------
Deutsche Morgan Grenfell Inc.
5.80%(h) -- 800,000 800,000,000
- ---------------------------------------------------------------------------
Deutsche Morgan Grenfell Inc.
5.80%(i) 09/01/98 300,000 300,000,000
- ---------------------------------------------------------------------------
Goldman, Sachs & Co.
5.78%(j) 09/01/98 500,000 500,000,000
- ---------------------------------------------------------------------------
</TABLE>
FS-6
<PAGE> 124
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
REPURCHASE AGREEMENTS -
(Continued)
Greenwich Capital
Markets, Inc. 5.80%(k) 09/01/98 $250,000 $ 250,000,000
- ------------------------------------------------------------------------------
HSBC Securities, Inc. 5.78%(l) 09/01/98 250,000 250,000,000
- ------------------------------------------------------------------------------
J.P. Morgan Securities Inc. 5.78%(m) 09/01/98 250,000 250,000,000
- ------------------------------------------------------------------------------
Merrill Lynch Government
Securities, Inc. 5.80%(n) 09/01/98 250,000 250,000,000
- ------------------------------------------------------------------------------
Morgan Stanley & Co.
Inc. 5.79%(o) 09/01/98 250,000 250,000,000
- ------------------------------------------------------------------------------
Warburg Dillon Read LLC 5.79%(p) 09/01/98 345,779 345,778,648
- ------------------------------------------------------------------------------
Total Repurchase Agreements
(Cost $4,445,778,648) 4,445,778,648
- ------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 99.47% 5,117,024,361(q)
- ------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES -- 0.53% 27,209,803
- ------------------------------------------------------------------------------
NET ASSETS -- 100.00% $5,144,234,164
==============================================================================
</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 is at least 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) Open joint repurchase agreement. Either party may terminate the agreement
upon demand. Interest rates, par and collateral are redetermined daily.
Collateralized by $392,000,000 U. S. Government obligations, 0% to 8.875%
due 08/15/99 to 02/15/19 with an aggregate market value at 08/31/98 of
$402,895,145.
(d) Entered into 08/31/98 with a maturing value of $250,040,139. Collateralized
by $251,907,000 U.S. Government obligations, 3.625% to 5.375% due 07/31/00
to 07/15/02 with an aggregate market value at 08/31/98 of $255,001,457.
(e) Open joint repurchase agreement. Either party may terminate the agreement
upon demand. Interest rates, par and collateral are redetermined daily.
Collateralized by $951,236,000 U. S. Government obligations, 0% to 11.25%
due 08/15/02 to 08/15/27 with an aggregate market value at 08/31/98 of
$306,453,166.
(f) Entered into 08/31/98 with a maturing value of $250,040,139. Collateralized
by $244,175,000 U.S. Government obligations, 5.375% to 7.00% due 12/31/99
to 07/15/06 with an aggregate market value at 08/31/98 of $255,002,569.
(g) Entered into 08/31/98 with a maturing value of $250,040,278. Collateralized
by $761,518,000 U.S. Government obligations, 0% to 9.125% due 05/15/99 to
02/15/20 with an aggregate market value at 08/31/98 of $258,228,014.
(h) Open repurchase agreement. Either party may terminate the agreement upon
demand. Interest rates, par and collateral are redetermined daily.
Collateralized by $747,659,000 U. S. Government obligations, 4.75% to
12.50% due 10/31/98 to 11/15/16 with an aggregate market value at 08/31/98
of $816,001,319.
(i) Entered into 08/31/98 with a maturing value of $300,048,333. Collateralized
by $249,951,000 U.S. Government obligations, 5.25% to 14.00% due 08/15/03
to 02/15/23 with an aggregate market value at 08/31/98 of $306,001,371.
(j) Entered into 08/31/98 with a maturing value of $500,080,278. Collateralized
by $389,385,000 U.S. Government obligations, 5.125% to 12.75% due 09/30/98
to 02/15/27 with an aggregate market value at 08/31/98 of $510,503,342.
FS-7
<PAGE> 125
NOTES TO SCHEDULE OF INVESTMENTS - (CONTINUED)
(k) Entered into 08/31/98 with a maturing value of $250,040,278. Collateralized
by $248,093,000 U.S. Government obligations, 5.50% to 5.625% due 12/31/02
to 08/15/28 with an aggregate market value at 08/31/98 of $255,000,827.
(l) Entered into 08/31/98 with a maturing value of $250,040,139. Collateralized
by $237,607,000 U.S. Government obligations, 6.00% to 9.00% due 08/15/99 to
11/15/27 with an aggregate market value at 08/31/98 of $255,004,329.
(m) Entered into 08/31/98 with a maturing value of $250,040,139. Collateralized
by $227,527,000 U.S. Government obligations, 0% to 12.75% due 09/17/98 to
08/15/28 with an aggregate market value at 08/31/98 of $255,000,985.
(n) Entered into 08/31/98 with a maturing value of $250,040,278. Collateralized
by $622,995,000 U.S. Government obligations, 0% due 05/15/05 to 02/15/24
with an aggregate market value at 08/31/98 of $255,001,523.
(o) Entered into 08/31/98 with a maturing value of $250,040,208. Collateralized
by $247,284,000 U.S. Government obligations, 5.375% to 5.75% due 07/31/00
to 11/30/02 with an aggregate market value at 08/31/98 of $255,308,242.
(p) Joint repurchase agreement entered into 08/31/98 with a maturing value of
$1,000,160,833. Collateralized by $1,958,825,000 U.S. Government
obligations, 0% to 5.50% due 11/15/98 to 04/15/28 with an aggregate market
value at 08/31/98 of $1,020,108,316.
(q) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
FS-8
<PAGE> 126
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1998
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase agreements, at value
(amortized cost) $ 671,245,713
- ------------------------------------------------------------------------
Repurchase agreements 4,445,778,648
- ------------------------------------------------------------------------
Receivables for:
Investments sold 47,702,222
- ------------------------------------------------------------------------
Interest receivable 6,315,744
- ------------------------------------------------------------------------
Investment for deferred compensation plan 82,793
- ------------------------------------------------------------------------
Other assets 68,410
- ------------------------------------------------------------------------
Total assets 5,171,193,530
- ------------------------------------------------------------------------
LIABILITIES:
Payables for:
Dividends 25,813,818
- ------------------------------------------------------------------------
Deferred compensation 82,793
- ------------------------------------------------------------------------
Accrued administrative services fees 9,609
- ------------------------------------------------------------------------
Accrued advisory fees 275,392
- ------------------------------------------------------------------------
Accrued distribution fees 456,303
- ------------------------------------------------------------------------
Accrued transfer agent fees 79,567
- ------------------------------------------------------------------------
Accrued trustees' fees 4,209
- ------------------------------------------------------------------------
Accrued operating expenses 237,675
- ------------------------------------------------------------------------
Total liabilities 26,959,366
- ------------------------------------------------------------------------
NET ASSETS $5,144,234,164
========================================================================
NET ASSETS:
Institutional Class $2,988,374,938
========================================================================
Private Investment Class $ 360,307,220
========================================================================
Personal Investment Class $ 405,800,587
========================================================================
Cash Management Class $ 933,790,915
========================================================================
Resource Class $ 455,960,504
========================================================================
SHARES OF BENEFICIAL INTEREST, $.01 PAR VALUE PER SHARE:
Institutional Class 2,987,867,418
========================================================================
Private Investment Class 360,260,819
========================================================================
Personal Investment Class 405,742,920
========================================================================
Cash Management Class 933,641,495
========================================================================
Resource Class 455,898,901
========================================================================
NET ASSET VALUE PER SHARE:
Net asset value, offering and redemption price per share $ 1.00
========================================================================
</TABLE>
See Notes to Financial Statements.
FS-9
<PAGE> 127
STATEMENT OF OPERATIONS
For the year ended August 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $291,070,704
- -------------------------------------------------------------------
EXPENSES:
Advisory fees 3,026,608
- -------------------------------------------------------------------
Custodian fees 253,600
- -------------------------------------------------------------------
Administrative services fees 102,543
- -------------------------------------------------------------------
Trustees' fees and expenses 34,137
- -------------------------------------------------------------------
Transfer agent fees 579,287
- -------------------------------------------------------------------
Distribution fees (Note 2) 6,312,198
- -------------------------------------------------------------------
Other 406,649
- -------------------------------------------------------------------
Total expenses 10,715,022
- -------------------------------------------------------------------
Less: Fee waivers (2,009,722)
- -------------------------------------------------------------------
Net expenses 8,705,300
- -------------------------------------------------------------------
Net investment income 282,365,404
- -------------------------------------------------------------------
Net realized gain on sales of investments 17,887
- -------------------------------------------------------------------
Net increase in net assets resulting from operations $282,383,291
===================================================================
</TABLE>
See Notes to Financial Statements.
FS-10
<PAGE> 128
STATEMENT OF CHANGES IN NET ASSETS
For the years ended August 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 282,365,404 $ 236,779,733
- -----------------------------------------------------------------------------
Net realized gain on sales of investments 17,887 215,978
- -----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 282,383,291 236,995,711
- -----------------------------------------------------------------------------
Distributions to shareholders from net
investment income:
Institutional Class (171,162,611) (153,610,717)
- -----------------------------------------------------------------------------
Private Investment Class (20,105,302) (20,120,440)
- -----------------------------------------------------------------------------
Personal Investment Class (18,031,165) (11,733,992)
- -----------------------------------------------------------------------------
Cash Management Class (55,954,060) (41,058,376)
- -----------------------------------------------------------------------------
Resource Class (17,112,266) (10,256,208)
- -----------------------------------------------------------------------------
Distributions to shareholders from net
realized gains -- (59,575)
- -----------------------------------------------------------------------------
Share transactions-net (See Note 4) (116,572,228) 1,556,740,962
- -----------------------------------------------------------------------------
Net increase (decrease) in net assets (116,554,341) 1,556,897,365
- -----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 5,260,788,505 3,703,891,140
- -----------------------------------------------------------------------------
End of period $5,144,234,164 $5,260,788,505
=============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $5,143,411,553 $5,259,983,781
- -----------------------------------------------------------------------------
Undistributed net realized gain on sales of
investments 822,611 804,724
- -----------------------------------------------------------------------------
$5,144,234,164 $5,260,788,505
=============================================================================
</TABLE>
See Notes to Financial Statements.
FS-11
<PAGE> 129
NOTES TO FINANCIAL STATEMENTS
August 31, 1998
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 three different portfolios, each of which offers separate series
of shares: the Treasury Portfolio, the Government & Agency Portfolio and the
Treasury TaxAdvantage Portfolio. The Government & Agency Portfolio commenced
operations on September 1, 1998. Information presented in these financial
statements pertains only to the Treasury Portfolio (the "Portfolio"), with the
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
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 preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of significant accounting policies followed by the
Portfolio in the preparation of its financial statements.
A. Security Valuations - The Portfolio's 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 - Distribution expenses directly attributable to a class of shares
are charged to that class' operations. All other expenses are allocated
among the classes.
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 investment 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>
FS-12
<PAGE> 130
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, 1998,
the Fund reimbursed AIM $102,543 for such services.
The Portfolio, pursuant to a transfer agency and service agreement, has agreed
to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agent and
shareholder services to the Portfolio. On September 20, 1997, the Board of
Trustees approved the appointment of AFS as transfer agent of the Fund
effective December 29, 1997. During the year ended August 31, 1998, the
Portfolio paid AFS $366,571 for such services. Prior to the effective date of
the agreement with AFS, the Portfolio paid A I M Institutional Fund Services,
Inc. $212,716 pursuant to a transfer agency and shareholder services agreement
for the period September 1, 1997 through December 28, 1997.
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. 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 each class. During the year ended
August 31, 1998, the Private Investment Class, the Personal Investment Class,
the Cash Management Class and the Resource Class paid $1,159,606, $1,803,733,
$826,277 and $512,860, respectively, as compensation under the Plan. FMC waived
fees of $2,009,722 for the same period. Certain officers and trustees of the
Trust are officers of AIM, FMC and AFS.
During the year ended August 31, 1998, the Portfolio paid legal fees of
$15,485 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.
FS-13
<PAGE> 131
NOTE 4-SHARE INFORMATION
Changes in shares outstanding during the years ended August 31, 1998 and 1997
were as follows:
<TABLE>
<CAPTION>
1998 1997
-------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
Sold:
Institutional Class 18,385,087,568 $18,385,087,568 15,820,439,672 $ 15,820,439,672
- --------------------------------------------------------------------------------------------
Private Investment
Class 1,991,337,616 1,991,337,616 2,377,066,232 2,377,066,232
- --------------------------------------------------------------------------------------------
Personal Investment
Class 3,949,434,631 3,949,434,631 2,585,293,225 2,585,293,225
- --------------------------------------------------------------------------------------------
Cash Management Class 6,742,292,291 6,742,292,291 4,354,698,981 4,354,698,981
- --------------------------------------------------------------------------------------------
Resource Class 2,712,585,402 2,712,585,402 2,558,140,941 2,558,140,941
- --------------------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Institutional Class 34,740,376 34,740,376 15,531,436 15,531,436
- --------------------------------------------------------------------------------------------
Private Investment
Class 5,517,795 5,517,795 3,858,592 3,858,592
- --------------------------------------------------------------------------------------------
Personal Investment
Class 16,025,048 16,025,048 9,897,559 9,897,559
- --------------------------------------------------------------------------------------------
Cash Management Class 20,427,201 20,427,201 12,944,226 12,944,226
- --------------------------------------------------------------------------------------------
Resource Class 15,915,270 15,915,270 9,274,277 9,274,277
- --------------------------------------------------------------------------------------------
Reacquired:
Institutional Class (18,839,453,624) (18,839,453,624) (14,763,510,184) (14,763,510,184)
- --------------------------------------------------------------------------------------------
Private Investment
Class (2,099,963,668) (2,099,963,668) (2,270,031,466) (2,270,031,466)
- --------------------------------------------------------------------------------------------
Personal Investment
Class (3,882,639,209) (3,882,639,209) (2,465,181,087) (2,465,181,087)
- --------------------------------------------------------------------------------------------
Cash Management Class (6,658,189,744) (6,658,189,744) (4,328,020,236) (4,328,020,236)
- --------------------------------------------------------------------------------------------
Resource Class (2,509,689,181) (2,509,689,181) (2,363,661,206) (2,363,661,206)
- --------------------------------------------------------------------------------------------
Net increase (decrease) (116,572,228) $ (116,572,228) 1,556,740,962 $ 1,556,740,962
============================================================================================
</TABLE>
FS-14
<PAGE> 132
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Cash Management
Class outstanding during each of the years in the five-year period ended
August 31, 1998.
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
-------- -------- -------- ------- -------
<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 0.05 0.05 0.03
- -------------------------- -------- -------- -------- ------- -------
Less distributions:
Dividends from net
investment income (0.05) (0.05) (0.05) (0.05) (0.03)
- -------------------------- -------- -------- -------- ------- -------
Net asset value, end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========================== ======== ======== ======== ======= =======
Total return 5.56% 5.39% 5.48% 5.57% 3.44%
========================== ======== ======== ======== ======= =======
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $933,791 $829,243 $789,627 $81,219 $73,619
========================== ======== ======== ======== ======= =======
Ratio of expenses to
average net assets(a) 0.17%(b) 0.17% 0.17% 0.18% 0.16%
========================== ======== ======== ======== ======= =======
Ratio of net investment
income to average net
assets(c) 5.42%(b) 5.25% 5.25% 5.42% 3.48%
========================== ======== ======== ======== ======= =======
</TABLE>
(a) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
0.19%, 0.19%, 0.19%, 0.20% and 0.21% for the periods 1998-1994,
respectively.
(b) Ratios are based on average net assets of $1,032,845,745.
(c) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 5.40%, 5.24%, 5.23%, 5.40% and 3.43% for the periods
1998-1994, respectively.
FS-15
<PAGE> 133
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Institutional Class
outstanding during each of the years in the five-year period ended August 31,
1998.
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<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 0.05 0.06 0.04
- ----------------------- ---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net
investment income (0.05) (0.05) (0.05) (0.06) (0.04)
- ----------------------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======================= ========== ========== ========== ========== ==========
Total return 5.64% 5.47% 5.57% 5.66% 3.53%
======================= ========== ========== ========== ========== ==========
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $2,988,375 $3,408,010 $2,335,441 $2,669,637 $2,452,389
======================= ========== ========== ========== ========== ==========
Ratio of expenses to
average net assets 0.08%(a) 0.09% 0.09% 0.10% 0.08%
======================= ========== ========== ========== ========== ==========
Ratio of net investment
income to average net
assets 5.50%(a) 5.35% 5.43% 5.53% 3.39%
======================= ========== ========== ========== ========== ==========
</TABLE>
(a)Ratios are based on average net assets of $3,112,551,185.
FS-16
<PAGE> 134
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Personal Investment
Class outstanding during each of the years in the five-year period ended August
31, 1998.
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
-------- -------- -------- -------- -------
<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 0.05 0.05 0.03
- -------------------------- -------- -------- -------- -------- -------
Less distributions:
Dividends from net
investment income (0.05) (0.05) (0.05) (0.05) (0.03)
- -------------------------- -------- -------- -------- -------- -------
Net asset value, end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========================== ======== ======== ======== ======== =======
Total return 5.12% 4.95% 5.04% 5.13% 3.02%
========================== ======== ======== ======== ======== =======
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $405,801 $322,971 $192,947 $114,527 $88,582
========================== ======== ======== ======== ======== =======
Ratio of expenses to
average net assets(a) 0.58%(b) 0.60% 0.59% 0.60% 0.58%
========================== ======== ======== ======== ======== =======
Ratio of net investment
income to average net
assets(c) 5.01%(b) 4.85% 4.91% 5.03% 2.99%
========================== ======== ======== ======== ======== =======
</TABLE>
(a) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
0.83%, 0.86%, 0.92%, 0.90% and 0.91% for the periods 1998-1994,
respectively.
(b) Ratios are based on average net assets of $360,746,624.
(c) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 4.76%, 4.59%, 4.58%, 4.73% and 2.66% for the periods
1998-1994, respectively.
FS-17
<PAGE> 135
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Private Investment
Class outstanding during each of the years in the five-year period ended August
31, 1998.
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<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 0.05 0.05 0.03
- ------------------------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income (0.05) (0.05) (0.05) (0.05) (0.03)
- ------------------------- -------- -------- -------- -------- --------
Net asset value, end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========================= ======== ======== ======== ======== ========
Total return 5.33% 5.16% 5.25% 5.34% 3.22%
========================= ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $360,307 $463,441 $352,537 $394,585 $412,716
========================= ======== ======== ======== ======== ========
Ratio of expenses to
average net assets(a) 0.38%(b) 0.39% 0.39% 0.40% 0.38%
========================= ======== ======== ======== ======== ========
Ratio of net investment
income to average net
assets(c) 5.20%(b) 5.05% 5.14% 5.23% 3.26%
========================= ======== ======== ======== ======== ========
</TABLE>
(a) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
0.58%, 0.59%, 0.59%, 0.60% and 0.60% for the periods 1998-1994,
respectively.
(b) Ratios are based on average net assets of $386,535,328.
(c) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 5.00%, 4.85%, 4.94%, 5.03% and 3.05% for the periods
1998-1994, respectively.
FS-18
<PAGE> 136
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Resource Class
outstanding during each of the years in the two-year period ended August 31,
1998 and the period March 12, 1996 (date sales commenced) through August 31,
1996.
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- -------
<S> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------- -------- -------- -------
Income from investment operations:
Net investment income 0.05 0.05 0.03
- ----------------------------------------- -------- -------- -------
Less distributions:
Dividends from net investment income (0.05) (0.05) (0.03)
- ----------------------------------------- -------- -------- -------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00
========================================= ======== ======== =======
Total return 5.47% 5.30% 5.09%(a)
========================================= ======== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $455,961 $237,123 $33,339
========================================= ======== ======== =======
Ratio of expenses to average net
assets(b) 0.24%(c) 0.25% 0.25%(a)
========================================= ======== ======== =======
Ratio of net investment income to average
net assets(d) 5.34%(c) 5.19% 5.07%(a)
========================================= ======== ======== =======
</TABLE>
(a) Annualized.
(b) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursement were
0.28%, 0.29% and 0.29% (annualized) for the periods 1998-1996,
respectively.
(c) Ratios are based on average net assets of $320,537,856.
(d) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursement were 5.30%, 5.15% and 5.03% (annualized) for the periods
1998-1996, respectively.
FS-19
<PAGE> 137
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS TRUST
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 659-1005
INVESTMENT ADVISOR
A I M ADVISORS, INC.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(713) 626-1919
DISTRIBUTOR
FUND MANAGEMENT COMPANY
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 659-1005
AUDITORS
KPMG PEAT MARWICK LLP
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 FUND SERVICES, INC.
P.O. Box 4497
Houston, Texas 77210-4497
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROSPECTUS
December 18, 1998
SHORT-TERM
INVESTMENTS TRUST
---------------------
TREASURY PORTFOLIO
---------------------
INSTITUTIONAL CLASS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Summary.......................................... 2
Table of Fees and Expenses....................... 4
Financial Highlights............................. 5
Suitability For Investors........................ 6
Investment Program............................... 6
Purchase of Shares............................... 8
Redemption of Shares............................. 9
Dividends........................................ 10
Taxes............................................ 10
Net Asset Value.................................. 11
Yield Information................................ 11
Reports to Shareholders.......................... 11
Management of the Trust.......................... 11
General Information.............................. 13
Appendix......................................... A-1
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 138
SHORT-TERM
INVESTMENTS TRUST
Prospectus
- --------------------------------------------------------------------------------
TREASURY The Treasury Portfolio is a money market fund
PORTFOLIO whose investment objective is the maximization of
current income to the extent consistent with the
PERSONAL preservation of capital and the maintenance of
INVESTMENT liquidity. The Treasury Portfolio seeks to achieve its
CLASS objective by investing in direct obligations of the
U.S. Treasury and repurchase agreements secured by such
DECEMBER 18, 1998 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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE 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 18, 1998, 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.
[AIM LOGO APPEARS HERE]
Fund Management Company
11 Greenway Plaza
Suite 100
Houston, Texas 77046-1173
(800) 877-4744
<PAGE> 139
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 other classes of
shares of beneficial interest representing interests in the Portfolio: the Cash
Management Class, Institutional Class, Private Investment Class, Reserve Class
and Resource Class. Such classes have different distribution arrangements and
are designed for institutional and other categories of investors. The Trust also
offers shares of six classes of the Treasury TaxAdvantage Portfolio and shares
of six classes of Government & Agency 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."
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
5:00 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 5:00 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 6:00 p.m. Eastern Time on that day.
See "Dividends."
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, 1998, AIM received advisory fees with respect to the
Portfolio which represented 0.06% of the average daily net assets of the
Portfolio. AIM is
2
<PAGE> 140
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." Under a Transfer
Agency and Service Agreement, AIM Fund Services, Inc. ("Transfer Agent"), AIM's
wholly owned subsidiary and a registered transfer agent, receives a fee for its
provision of transfer agency, dividend distribution and disbursement, and
shareholder services to the Trust. See "General Information -- Transfer Agent
and Custodian."
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, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design and Invest With
Discipline are registered service marks and AIM Bank Connection is a service
mark of A I M Management Group Inc.
3
<PAGE> 141
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)**................. 0.01%
--------
Total other expenses.............................. 0.02%
----
Total portfolio operating expenses -- Personal Investment
Class**................................................ 0.58%
====
</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 and
Total portfolio operating expenses would be 0.75% and 0.83%, 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.................................................... $32
10 years.................................................... $73
</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, 1998, as stated to reflect current agreements. 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.
4
<PAGE> 142
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 seven-year period ended
August 31, 1998 and the period August 8, 1991 (date sales commenced) through
August 31, 1991. The data has been audited by KPMG Peat Marwick LLP, independent
auditors, whose report on the financial statements and the related notes appears
in the Statement of Additional Information.
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994 1993 1992 1991
-------- -------- -------- -------- -------- -------- -------- --------
<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 0.05 0.05 0.05 0.03 0.03 0.04 0.003
-------- -------- -------- -------- ------- ------- ------- -------
Less distributions:
Dividends (from net
investment income)..... (0.05) (0.05) (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 $ 1.00 $ 1.00
======== ======== ======== ======== ======= ======= ======= =======
Total return............... 5.12% 4.95% 5.04% 5.13% 3.02% 2.77% 4.07% 5.04%(a)
======== ======== ======== ======== ======= ======= ======= =======
Ratios/supplemental data:
Net assets, end of period
(000s omitted)........... $405,801 $322,971 $192,947 $114,527 $88,582 $69,867 $23,853 $ 330
======== ======== ======== ======== ======= ======= ======= =======
Ratio of expenses to
average net assets(b).... 0.58%(c) 0.60% 0.59% 0.60% 0.58% 0.53% 0.49% 0.81%(a)
======== ======== ======== ======== ======= ======= ======= =======
Ratio of net investment
income to average net
assets(d)................ 5.01%(c) 4.85% 4.91% 5.03% 2.99% 2.70% 3.55% 5.03%(a)
======== ======== ======== ======== ======= ======= ======= =======
</TABLE>
- ---------------
(a) Annualized.
(b) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to waiver of distribution fees and/or expense
reimbursements were 0.83%, 0.86%, 0.92%, 0.90%, 0.91%, 0.93%, 1.03% and
12.68% (annualized) for the periods 1998-1991, respectively.
(c) Ratios are based on average net assets of $360,746,624.
(d) After fee waivers and/or expense reimbursements. Ratios of net investment
income (loss) to average net assets prior to waiver of distribution fees
and/or expense reimbursements were 4.76%, 4.59%, 4.58%, 4.73%, 2.66%, 2.29%,
3.01% and (6.84%) (annualized) for the periods 1998-1991, respectively.
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.
5
<PAGE> 143
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.
Briefly, "First Tier" securities are securities that are rated in the highest
rating category for short-term debt obligations 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 the Portfolio's investment advisor (under the supervision of and
pursuant to guidelines established by the Board of Directors) to be of
comparable quality to a rated security that meets the foregoing quality
standards, as well as securities issued by a registered investment company that
is a money market fund and U.S. government securities. 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) 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. The Portfolio will give shareholders notice of its
intent to enter into a reverse repurchase agreement in sufficient time to permit
shareholder redemptions before the Portfolio enters into any reverse repurchase
agreements. 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
6
<PAGE> 144
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 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 of funds available for
investment on the settlement date. Until the settlement date, liquid 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 liquid 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.
INVESTMENT IN OTHER INVESTMENT COMPANIES. The Trust is permitted to invest
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 investment policies described above may be changed by the Board of
Trustees without the affirmative vote of a majority of the outstanding shares of
beneficial interest of the Trust.
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
7
<PAGE> 145
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, and
except that the Portfolio may purchase securities of other investment
companies to the extent permitted by applicable law or exemptive order; or
(2) borrow money or issue senior securities except (a) for temporary
or emergency purposes (e.g., in order to facilitate the orderly sale of
portfolio securities or to accommodate abnormally heavy redemption
requests), the Portfolio may borrow money from banks or obtain funds by
entering into reverse repurchase agreements, and (b) to the extent that
entering into commitments to purchase securities in accordance with the
Portfolio's investment program may be considered the issuance of senior
securities. The Portfolio will not purchase securities while borrowings in
excess of 5% of its total assets are outstanding.
The foregoing investment restrictions of the Portfolio (as well as certain
others set forth in the Statement of Additional Information) are matters of
fundamental policy which may not be changed without the affirmative vote of a
majority of the outstanding shares of the Portfolio.
In addition to the restrictions described above, the Portfolio must also
comply with the requirements of Rule 2a-7 under the 1940 Act, as such Rule may
be amended from time to time, which govern the operations of money market funds,
and may be more restrictive than the policies described herein. 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 Transfer Agent prior to 5:00 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. Following the
initial investment, subsequent purchases of shares of the Class may also be made
via AIM LINK(R) Remote, a personal computer application software product. 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. The Portfolio, however, reserves the right to change the
time for which purchases and redemption requests must be submitted to the
Portfolio for execution on the same day or any day when the U.S. primary
broker-dealer community is closed for business or trading is restricted due to
national holidays. 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
8
<PAGE> 146
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, 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 the Transfer Agent, must be completed
and sent to the Transfer Agent at P.O. Box 4497, Houston, Texas 77210-4497. 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 the Transfer Agent.
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 the Transfer Agent.
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 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 the Transfer
Agent 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 5:00 p.m.
Eastern Time will earn the dividend declared on the date of purchase.
Any request for a correction to a transaction of Portfolio shares must be
submitted in writing to the Transfer Agent. The Transfer Agent reserves the
right to reject any such request. When a correction results in a dividend
adjustment, the institution must agree in writing to reimburse the Portfolio for
any loss resulting from the correction. Failure to deliver purchase proceeds on
the requested settlement date may result in a claim against the institution for
an amount equal to the overdraft charge incurred by the Portfolio.
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
9
<PAGE> 147
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(R) Remote. 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 the Transfer Agent prior to 5:00 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 Transfer Agent after
5:00 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 5:00 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. The Portfolio reserves the right to change the time for which
redemption requests must be submitted to and received by the Transfer Agent for
execution on the same day on any day when the U.S. primary broker-dealer
community is closed for business or trading is restricted due to national
holidays.
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 the
Transfer Agent.
Shareholders may request a redemption by telephone. Neither the Transfer
Agent nor FMC will 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 may 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.
10
<PAGE> 148
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
5:00 p.m. Eastern Time on the day of declaration. Net income for dividend
purposes is determined daily as of 5:00 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 and accounting and legal
expenses, based upon such class's pro rata share of the net assets of the
Portfolio, less (c) expenses directly attributable to such class, 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 5:00 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 the Transfer Agent, P.O. Box 4497, Houston, Texas 77210-4497 and
will become effective with dividends paid after its receipt by the Transfer
Agent. 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.
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.
11
<PAGE> 149
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 portfolios 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 the
Transfer Agent.
NET ASSET VALUE
The net asset value per share of the Portfolio is determined daily as of
5:00 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
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, 1998, 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 5.03% and 5.16%, 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 6:00 p.m.
Eastern Time.
12
<PAGE> 150
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. Information concerning the Board of Trustees may be found in the
Statement of Additional Information. Certain trustees and officers of the Trust
are affiliated with AIM and A I M Management Group Inc. ("AIM Management"), the
parent corporation of AIM.
For a discussion of AIM Management and its subsidiaries' Year 2000
Compliance Project, see "General Information -- Year 2000 Compliance Project."
INVESTMENT ADVISOR
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173, acts as the investment advisor for the Portfolio pursuant to a
Master Investment Advisory Agreement (the "Advisory Agreement"). AIM was
organized in 1976 and, together with its affiliates, manages or advises over 90
investment company portfolios. Certain of the directors and 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. AIM Management is an
indirect, wholly owned subsidiary of AMVESCAP PLC, a publicly-traded holding
company that, through its subsidiaries, engages in institutional investment
management and retail fund businesses in the United States, Europe and the
Pacific Region.
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, 1998, AIM received fees with respect
to the Portfolio from the Trust 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 0.58% of the Class's average daily net assets.
13
<PAGE> 151
ADMINISTRATIVE SERVICES
The Trust has entered into a Master Administrative Services Agreement 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.
DISTRIBUTOR
The Trust has entered into a Master Distribution Agreement (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 100, 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 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. 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.
14
<PAGE> 152
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 has been 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"). In approving the Plan,
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.
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 eighteen classes. Six classes, including the Class, represent
interests in the Portfolio, six classes represent interests in the Treasury
TaxAdvantage Portfolio, and six classes represent interests in the Government &
Agency 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.
15
<PAGE> 153
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 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 Fund Services, Inc., P.O. Box 4497, Houston, Texas 77210-4497, acts as
transfer agent for shares of the Class.
LEGAL COUNSEL
The law firm of Ballard Spahr Andrews & Ingersoll, LLP, Philadelphia,
Pennsylvania, serves as counsel to the Trust and passes upon certain legal
matters for the Trust.
SHAREHOLDER INQUIRIES
Shareholder inquiries concerning the status of an account should be
directed to the Trust at 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173, or may be made by calling (800) 877-4744.
YEAR 2000 COMPLIANCE PROJECT
In providing services to the Trust, AIM Management and its subsidiaries
rely on both internal software systems as well as external software systems
provided by third parties. Many software systems in use today are unable to
distinguish the year 2000 from the year 1900. This defect if not cured will
likely adversely affect the services that AIM Management, its subsidiaries and
other service providers to the Trust provide the Trust and its shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
16
<PAGE> 154
December 31, 1999. Phases (i) and (ii) are complete and phase (iii) has
commenced. The Project is scheduled to be completed during the second quarter of
1999. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm year 2000 compliance
upon installation. No assurance can be given that the Project will be successful
or that AIM Management and its subsidiaries will not otherwise be adversely
affected by the year 2000 issue.
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.
17
<PAGE> 155
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 156
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS TRUST
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 877-4744
INVESTMENT ADVISOR
A I M ADVISORS, INC.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(713) 626-1919
DISTRIBUTOR
FUND MANAGEMENT COMPANY
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 877-4744
AUDITORS
KPMG PEAT MARWICK LLP
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 FUND SERVICES, INC.
P.O. Box 4497
Houston, Texas 77210-4497
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROSPECTUS
December 18, 1998
SHORT-TERM
INVESTMENTS TRUST
---------------------
TREASURY PORTFOLIO
---------------------
PERSONAL INVESTMENT CLASS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Summary........................................... 2
Table of Fees and Expenses........................ 4
Financial Highlights.............................. 5
Suitability for Investors......................... 5
Investment Program................................ 6
Purchase of Shares................................ 8
Redemption of Shares.............................. 10
Dividends......................................... 11
Taxes............................................. 11
Net Asset Value................................... 12
Yield Information................................. 12
Reports to Shareholders........................... 13
Management of the Trust........................... 13
General Information............................... 15
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 157
SHORT-TERM
INVESTMENTS TRUST
Prospectus
- --------------------------------------------------------------------------------
TREASURY The Treasury Portfolio is a money market fund
PORTFOLIO whose investment objective is the maximization of
current income to the extent consistent with the
PRIVATE preservation of capital and the maintenance of
INVESTMENT liquidity. The Treasury Portfolio seeks to achieve its
CLASS objective by investing in direct obligations of the
U.S. Treasury and repurchase agreements secured by such
obligations. The instruments purchased by the Treasury
DECEMBER 18, 1998 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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE 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 18, 1998, 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.
[AIM LOGO APPEARS HERE]
Fund Management Company
11 Greenway Plaza
Suite 100
Houston, Texas 77046-1173
(800) 877-7748
<PAGE> 158
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 classes of
shares of beneficial interest representing interests in the Portfolio: the Cash
Management Class, Institutional Class, Personal Investment Class, Reserve Class
and Resource Class. Such classes have different distribution arrangements and
are designed for institutional and other categories of investors. The Trust also
offers shares of six classes of the Treasury TaxAdvantage Portfolio and shares
of six classes of the Government & Agency Portfolio, each pursuant to separate
prospectuses. 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."
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
5:00 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 5:00 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 6:00 p.m. Eastern Time on that day.
See "Dividends."
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, 1998, the Trust paid AIM advisory
2
<PAGE> 159
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."
Under a Transfer Agency and Service Agreement, A I M Fund Services, Inc.
("Transfer Agent"), AIM's wholly owned subsidiary and a registered transfer
agent, receives a fee for its provision of transfer agency, dividend
distribution and disbursement, and shareholder services to the Trust. See
"General Information -- Transfer Agent and Custodian."
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, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design and Invest With
Discipline are registered service marks and AIM Bank Connection is a service
mark of A I M Management Group Inc.
3
<PAGE> 160
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.................................................. 0.01%
--------
Total other expenses.............................. 0.02%
--------
Total portfolio operating expenses -- Private Investment
Class**................................................ 0.38%
========
</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 be 0.50% and Total portfolio
operating expenses would have been 0.58%.
*** 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.................................................... $12
5 years.................................................... $21
10 years.................................................... $48
</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, 1998. 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 -- 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.
4
<PAGE> 161
FINANCIAL HIGHLIGHTS
Shown below are the per share data, ratios and supplemental data for each
of the years in the six-year period ended August 31, 1998 and the period
November 25, 1991 (date sales commenced) through August 31, 1992. The data has
been audited by KPMG Peat Marwick LLP, independent auditors, whose report on the
financial statements and the related notes appears in the Statement of
Additional Information.
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- -------- --------
<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 0.05 0.05 0.03 0.03 0.03
-------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment
income..................... (0.05) (0.05) (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 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ======== ========
Total return................... 5.33% 5.16% 5.25% 5.34% 3.22% 2.91% 3.92%(a)
======== ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period
(000s omitted)............. $360,307 $463,441 $352,537 $394,585 $412,716 $204,281 $ 525
======== ======== ======== ======== ======== ======== ========
Ratio of expenses to average
net assets(b).............. 0.38%(c) 0.39% 0.39% 0.40% 0.38% 0.38% 0.40%(a)
======== ======== ======== ======== ======== ======== ========
Ratio of net investment
income to average net
assets(d).................. 5.20%(c) 5.05% 5.14% 5.23% 3.26% 2.81% 3.68%(a)
======== ======== ======== ======== ======== ======== ========
</TABLE>
- ---------------
(a) Annualized.
(b) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to waiver of distribution fees and/or expense
reimbursements were 0.58%, 0.59%, 0.59%, 0.60%, 0.60%, 0.67% and 4.54%
(annualized) for the periods 1998-1992, respectively.
(c) Ratios are based on average net assets of $386,535,328.
(d) Ratios of net investment income (loss) to average net assets prior to waiver
of distribution fees and/or expense reimbursements were 5.00%, 4.85%, 4.94%,
5.03%, 3.05%, 2.52% and (0.47%) (annualized) for the periods 1998-1992,
respectively.
5
<PAGE> 162
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.
Briefly, "First Tier" securities are securities that are rated in the highest
rating category for short-term debt obligations 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 the Portfolio's investment advisor (under the supervision of and
pursuant to guidelines established by the Board of Directors) to be of
comparable quality to a rated security that meets the foregoing quality
standards, as well as securities issued by a registered investment company that
is a money market fund and U.S. government securities. 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 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
6
<PAGE> 163
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. The Portfolio will give shareholders notice
of its intent to enter into a reverse repurchase agreement in sufficient time to
permit shareholder redemptions before the Portfolio enters into any reverse
repurchase agreements. 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.
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 of funds available for
investment on the settlement date. Until the settlement date, liquid 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 liquid 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.
7
<PAGE> 164
INVESTMENT IN OTHER INVESTMENT COMPANIES. The Trust is permitted to invest
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 investment policies described above may be changed by the Board of
Trustees without the affirmative vote of a majority of the outstanding shares of
beneficial interest of the Trust.
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, and
except that the Portfolio may purchase securities of other investment
companies to the extent permitted by applicable law or exemptive order; 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.
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. 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 Transfer Agent
prior to 5:00 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. Following the initial investment, subsequent purchases of shares of the
Class may also be made via AIM LINK(R) Remote, a personal computer application
software product. 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. The Portfolio, however, reserves the
8
<PAGE> 165
right to change the time for which purchase and redemption requests must be
submitted to the Portfolio for execution or the same day on any day when the
U.S. primary broker-dealer community is closed for business or trading is
restricted due to national holiday. 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.
Prior to the initial purchase of shares of the Class, an Account
Application, which can be obtained from the Transfer Agent, must be completed
and sent to the Transfer Agent at P.O. Box 4497, Houston, Texas 77210-4497. 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 the Transfer Agent.
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 the
Transfer Agent.
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 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 the Transfer
Agent
9
<PAGE> 166
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 5:00 p.m.
Eastern Time will earn the dividend declared on the date of purchase.
Any request for a correction to a transaction of Portfolio shares must be
submitted in writing to the Transfer Agent. The Transfer Agent reserves the
right to reject any such request. When a correction results in a dividend
adjustment, the institution must agree in writing to reimburse the Portfolio for
any loss resulting from the correction. Failure to deliver purchase proceeds on
the requested settlement date may result in a claim against the institution for
an amount equal to the overdraft charge incurred by 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 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) Remote. 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 Transfer Agent prior to 5:00 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 Transfer Agent after
5:00 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 5:00 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. The Portfolio reserves the right to change the time of which
redemption requests must be submitted to and received by the Transfer Agent for
execution on the same day on any day when the U.S. primary broker-dealer
community is closed for business or trading is restricted due to national
holidays.
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 the
Transfer Agent.
Shareholders may request a redemption by telephone. Neither the Transfer
Agent nor FMC will 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 may be made by check mailed within
seven days after receipt of the redemption request in
10
<PAGE> 167
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.
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
5:00 p.m. Eastern Time on the day of declaration. Net income for dividend
purposes is determined daily as of 5:00 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's 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 5:00 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 the Transfer Agent at P.O. Box 4497, Houston, Texas 77210-4497
and will become effective with dividends paid after its receipt by the Transfer
Agent. 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.
11
<PAGE> 168
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 the
Transfer Agent.
NET ASSET VALUE
The net asset value per share of the Portfolio is determined daily as of
5:00 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
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, 1998, 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
12
<PAGE> 169
current yield for the period) of the Class were 5.23% and 5.37%, 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 6:00 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. Information concerning the Board of Trustees may be found in the
Statement of Additional Information. Certain trustees and officers of the Trust
are affiliated with AIM and A I M Management Group Inc. ("AIM Management"), the
parent corporation of AIM.
For a discussion of AIM Management and its subsidiaries' Year 2000
Compliance Project, see "General Information -- Year 2000 Compliance Project."
INVESTMENT ADVISOR
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173, acts as the investment advisor for the Portfolio pursuant to a
Master Investment Advisory Agreement (the "Advisory Agreement"). AIM was
organized in 1976 and, together with its affiliates, manages or advises over 90
investment company portfolios. Certain of the directors and 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. AIM Management is an indirect, wholly owned
subsidiary of AMVESCAP PLC, a publicly-traded holding company that, through its
subsidiaries, engages in institutional investment management and retail fund
businesses in United States, Europe and the Pacific Region.
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.
13
<PAGE> 170
For the fiscal year ended August 31, 1998, AIM received fees from the Trust
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 0.38% of the Class's average daily net assets.
ADMINISTRATIVE SERVICES
The Trust has entered into a Master Administrative Services Agreement 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.
DISTRIBUTOR
The Trust has entered into a Master Distribution Agreement (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 100, 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 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
14
<PAGE> 171
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 has been 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"). In approving the Plan,
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.
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.
15
<PAGE> 172
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 eighteen classes. Six classes, including the Class, represent
interests in the Portfolio, six classes represent interests in the Treasury
TaxAdvantage Portfolio, and six classes represent interests in the Government &
Agency 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.
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 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 Fund Services, Inc., P.O. Box 4497, Houston, Texas 77210-4497 acts as
transfer agent for the shares of the Class.
LEGAL COUNSEL
The law firm of Ballard Spahr Andrews & Ingersoll, LLP, Philadelphia,
Pennsylvania, serves as counsel to the Trust and passes upon certain legal
matters for the Trust.
16
<PAGE> 173
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 100, Houston, Texas 77046-1173, or may be made by calling (800) 877-7748.
YEAR 2000 COMPLIANCE PROJECT
In providing services to the Trust, AIM Management and its subsidiaries
rely on both internal software systems as well as external software systems
provided by third parties. Many software systems in use today are unable to
distinguish the year 2000 from the year 1900. This defect if not cured will
likely adversely affect the services that AIM Management, its subsidiaries and
other service providers to the Trust provide the Trust and its shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and phase (iii) has
commenced. The Project is scheduled to be completed during the second quarter of
1999. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm year 2000 compliance
upon installation. No assurance can be given that the Project will be successful
or that AIM Management and its subsidiaries will not otherwise be adversely
affected by the year 2000 issue.
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.
17
<PAGE> 174
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 175
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS TRUST
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 877-7748
INVESTMENT ADVISOR
A I M ADVISORS, INC.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(713) 626-1919
DISTRIBUTOR
FUND MANAGEMENT COMPANY
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 877-7748
AUDITORS
KPMG PEAT MARWICK LLP
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 FUND SERVICES, INC.
P.O. Box 4497
Houston, Texas 77210-4497
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROSPECTUS
December 18, 1998
SHORT-TERM
INVESTMENTS TRUST
---------------------
TREASURY PORTFOLIO
---------------------
PRIVATE INVESTMENT CLASS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Summary........................................... 2
Table of Fees and Expenses........................ 3
Financial Highlights.............................. 5
Suitability for Investors......................... 6
Investment Program................................ 6
Purchase of Shares................................ 8
Redemption of Shares.............................. 10
Dividends......................................... 11
Taxes............................................. 11
Net Asset Value................................... 12
Yield Information................................. 12
Reports to Shareholders........................... 13
Management of the Trust........................... 13
General Information............................... 15
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 176
SHORT-TERM
INVESTMENTS TRUST
Prospectus
- --------------------------------------------------------------------------------
TREASURY The Treasury Portfolio is a money market fund
PORTFOLIO whose investment objective is the maximization of
current income to the extent consistent with the
RESERVE 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
DECEMBER 18, 1998 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 Reserve
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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE 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 RESERVE CLASS OF THE TREASURY PORTFOLIO
AND SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE. A
STATEMENT OF ADDITIONAL INFORMATION, DATED DECEMBER 18,
1998, 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) 467-8792. 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.
[AIM LOGO APPEARS HERE]
Fund Management Company
11 Greenway Plaza
Suite 100
Houston, Texas 77046-1173
(800) 467-8792
<PAGE> 177
SUMMARY
THE PORTFOLIO AND ITS INVESTMENT OBJECTIVE
The Trust is an open-end diversified series management investment company.
This Prospectus relates to the Reserve 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 classes of
shares of beneficial interest representing interests in the Portfolio: the Cash
Management Class, Institutional Class, Personal Investment Class, Private
Investment Class, and Resource Class. Such classes have different distribution
arrangements and are designed for institutional and other categories of
investors. The Trust also offers shares of six classes of the Treasury
TaxAdvantage Portfolio and six classes of the Government & Agency Portfolio,
each pursuant to separate prospectuses. 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 $1,000. 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."
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
5:00 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 5:00 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 6:00 p.m. Eastern Time on that day.
See "Dividends."
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
2
<PAGE> 178
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, 1998, 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." Under a Transfer
Agency and Service Agreement, A I M Fund Services, Inc. ("Transfer Agent"),
AIM's wholly owned subsidiary and a registered transfer agent, receives a fee
for its provision of transfer agency, dividend distribution and disbursement,
and shareholder services to the Trust. See "General Information -- Transfer
Agent and Custodian."
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 1.00% 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, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design and Invest With
Discipline are registered service marks and AIM Bank Connection is a service
mark of A I M Management Group Inc.
3
<PAGE> 179
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 -- RESERVE CLASS
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management fees........................................... 0.06%
12b-1 fees (after fee waivers)**.......................... 0.80%***
Other expenses: (estimated)
Custodian fees......................................... 0.01%
Other.................................................. 0.01%
------
Total other expenses.............................. 0.02%
------
Total portfolio operating expenses -- Reserve Class**..... 0.88%
======
</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 be 1.00% and Total portfolio
operating expenses would have been 1.08%.
*** 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...................................................... $ 9
3 years..................................................... $28
</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 "Total Portfolio
Operating Expenses -- Reserve Class" figure is based upon costs of the estimated
size of the Class and fees to be charged for the current fiscal period. The
"other expenses" and "12b-1 fees" figures are based upon estimated costs and the
estimated size of the Class and the Portfolio and estimated fees to be charged
for the current fiscal period. Thus, actual expenses may be greater or less than
such estimates. The Table of Fees and Expenses reflects a voluntary waiver of
management fees and 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.
4
<PAGE> 180
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 -- Reserve 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.
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 $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 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.
Briefly, "First Tier" securities are securities that are rated in the highest
rating category for short-term debt obligations 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 the Portfolio's investment advisor (under the supervision of and
pursuant to guidelines established by the Board of Directors) to be of
comparable quality to a rated security that meets the foregoing quality
standards, as well as securities issued by a registered investment company that
is a money market fund and U.S. government securities. 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
5
<PAGE> 181
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 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. The Portfolio will give shareholders notice of its
intent to enter into a reverse repurchase agreement in sufficient time to permit
shareholder redemptions before the Portfolio enters into any reverse repurchase
agreements. 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.
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 of funds available for
investment on the settlement date. Until the settlement date, liquid assets of
the Portfolio with a dollar value sufficient at all times to make payment for
the delayed delivery securities will be
6
<PAGE> 182
segregated. The total amount of segregated liquid 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.
INVESTMENT IN OTHER INVESTMENT COMPANIES. The Trust is permitted to invest
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 investment policies described above may be changed by the Board of
Trustees without the affirmative vote of a majority of the outstanding shares of
beneficial interest of the Trust.
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, and
except that the Portfolio may purchase securities of other investment
companies to the extent permitted by applicable law or exemptive order; 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.
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. 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
7
<PAGE> 183
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 Transfer Agent prior to 5:00 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. Following the
initial investment, subsequent purchases of shares of the Class may also be made
via AIM LINK(R) Remote, a personal computer application software product. 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. The Portfolio, however, reserves the right to change the
time for which purchase and redemption requests must be submitted to the
Portfolio for execution or the same day on any day when the U.S. primary
broker-dealer community is closed for business or trading is restricted due to
national holiday. 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.
Prior to the initial purchase of shares of the Class, an Account
Application, which can be obtained from the Transfer Agent, must be completed
and sent to the Transfer Agent at P.O. Box 4497, Houston, Texas 77210-4497. 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 the Transfer Agent.
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, 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
8
<PAGE> 184
Bank) for portfolio securities purchased. Accordingly, payment for shares of the
Class purchased by Institutions on behalf of their customers must be in federal
funds. If an investor's order to purchase shares of the Class is paid for other
than in federal funds, the Institution, acting on behalf of the investor,
completes the conversion into federal funds (which may take two business days),
or itself advances federal funds prior to conversion, and promptly transmits the
order and payment in the form of federal funds to the Transfer Agent.
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 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 the 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
5:00 p.m. Eastern Time will earn the dividend declared on the date of purchase.
Any request for a correction to a transaction of Portfolio shares must be
submitted in writing to the Transfer Agent. The Transfer Agent reserves the
right to reject any such request. When a correction results in a dividend
adjustment, the institution must agree in writing to reimburse the Portfolio for
any loss resulting from the correction. Failure to deliver purchase proceeds on
the requested settlement date may result in a claim against the institution for
an amount equal to the overdraft charge incurred by 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 must specify that it is for the purchase of Shares of the
"Reserve 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) Remote. 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 Transfer Agent prior to 5:00 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 Transfer Agent after
5:00 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 5:00 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. The Portfolio reserves the right to change the time of which
redemption requests must be submitted to and received by the Transfer Agent for
execution on the same day on any day when the U.S. primary broker-dealer
community is closed for business or trading is restricted due to national
holidays.
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 the
Transfer Agent.
Shareholders may request a redemption by telephone. Neither the Transfer
Agent nor FMC will be liable for any loss, expense or cost arising out of any
telephone redemption request effected in accordance with the
9
<PAGE> 185
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 may 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.
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
5:00 p.m. Eastern Time on the day of declaration. Net income for dividend
purposes is determined daily as of 5:00 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's 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 5:00 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 the Transfer Agent at P.O. Box 4497, Houston, Texas 77210-4497
and will become effective with dividends paid after its receipt by the Transfer
Agent. 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
10
<PAGE> 186
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 the
Transfer Agent.
NET ASSET VALUE
The net asset value per share of the Portfolio is determined daily as of
5:00 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) 467-8792. Yields will fluctuate from time to time and are not necessarily
indicative of future results. Accordingly, the yield
11
<PAGE> 187
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.
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 6:00 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. Information concerning the Board of Trustees may be found in the
Statement of Additional Information. Certain trustees and officers of the Trust
are affiliated with AIM and A I M Management Group Inc. ("AIM Management"), the
parent corporation of AIM.
For a discussion of AIM Management and its subsidiaries' Year 2000
Compliance Project, see "General Information -- Year 2000 Compliance Project."
INVESTMENT ADVISOR
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173, acts as the investment advisor for the Portfolio pursuant to a
Master Investment Advisory Agreement (the "Advisory Agreement"). AIM was
organized in 1976 and, together with its affiliates, manages or advises over 90
investment company portfolios. Certain of the directors and 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. AIM Management is an indirect, wholly owned
subsidiary of AMVESCAP PLC, a publicly-traded holding company that, through its
subsidiaries, engages in institutional investment management and retail fund
businesses in the United States, Europe and the Pacific Region.
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
12
<PAGE> 188
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, 1998, AIM received fees from the Trust
under the Advisory Agreement with respect to the Portfolio which represented
0.06% of such Portfolio's average daily net assets.
ADMINISTRATIVE SERVICES
The Trust has entered into a Master Administrative Services Agreement 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.
DISTRIBUTOR
The Trust has entered into a Master Distribution Agreement (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 100, 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 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 1.00% 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
13
<PAGE> 189
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 has been 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"). In approving the Plan,
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.
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
14
<PAGE> 190
thereof). Shares of beneficial interest of the Trust are divided into eighteen
classes. Six classes, including the Class, represent interests in the Portfolio,
six classes represent interests in the Treasury TaxAdvantage Portfolio, and six
classes represent interests in the Government & Agency 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.
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 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 Fund Services, Inc., P.O. Box 4497, Houston, Texas 77210-4497 acts as
transfer agent for the shares of the Class.
LEGAL COUNSEL
The law firm of Ballard Spahr Andrews & Ingersoll, LLP, Philadelphia,
Pennsylvania, serves as counsel to the Trust and passes upon certain legal
matters for the Trust.
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 100, Houston, Texas 77046-1173, or may be made by calling (800) 467-8792.
YEAR 2000 COMPLIANCE PROJECT
In providing services to the Trust, AIM Management and its subsidiaries
rely on both internal software systems as well as external software systems
provided by third parties. Many software systems in use today are unable to
distinguish the year 2000 from the year 1900. This defect if not cured will
likely adversely affect the services that AIM Management, its subsidiaries and
other service providers to the Trust provide the Trust and its shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project
15
<PAGE> 191
consists of three phases, namely (i) inventorying every software application in
use at AIM Management and its subsidiaries, as well as remote, third party
software systems on which AIM Management and its subsidiaries rely, (ii)
identifying those applications that may not function properly after December 31,
1999, and (iii) correcting and subsequently testing those applications that may
not function properly after December 31, 1999. Phases (i) and (ii) are complete
and phase (iii) has commenced. The Project is scheduled to be completed during
the second quarter of 1999. Software applications acquired by AIM Management and
its subsidiaries after completion of the Project will be reviewed to confirm
year 2000 compliance upon installation. No assurance can be given that the
Project will be successful or that the AIM Management and its subsidiaries will
not otherwise be adversely affected by the year 2000 issue.
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.
16
<PAGE> 192
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 193
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS TRUST
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 467-8792
INVESTMENT ADVISOR
A I M ADVISORS, INC.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(713) 626-1919
DISTRIBUTOR
FUND MANAGEMENT COMPANY
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 467-8792
AUDITORS
KPMG PEAT MARWICK LLP
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 FUND SERVICES, INC.
P.O. Box 4497,
Houston, Texas 77210-4497.
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROSPECTUS
December 18, 1998
SHORT-TERM
INVESTMENTS TRUST
---------------------
TREASURY PORTFOLIO
---------------------
RESERVE CLASS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Summary........................................... 2
Table of Fees and Expenses........................ 4
Suitability for Investors......................... 5
Investment Program................................ 5
Purchase of Shares................................ 7
Redemption of Shares.............................. 9
Dividends......................................... 10
Taxes............................................. 10
Net Asset Value................................... 11
Yield Information................................. 11
Reports to Shareholders........................... 12
Management of the Trust........................... 12
General Information............................... 14
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 194
SHORT-TERM
INVESTMENTS TRUST
Prospectus
- --------------------------------------------------------------------------------
TREASURY The Treasury Portfolio is a money market fund
PORTFOLIO whose investment objective is the maximization of
current income to the extent consistent with the
preservation of capital and the maintenance of
RESOURCE liquidity. The Treasury Portfolio seeks to achieve its
CLASS objective by investing in direct obligations of the
U.S. Treasury and repurchase agreements secured by such
obligations. The instruments purchased by the Treasury
DECEMBER 18, 1998 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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE 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 18,
1998, 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 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.
[AIM LOGO]
SM
Fund Management Company
11 Greenway Plaza
Suite 100
Houston, Texas 77046-1173
(800) 825-6858
<PAGE> 195
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 other classes of
shares of beneficial interest representing interests in the Portfolio: the Cash
Management Class, Institutional Class, Personal Investment Class, Private
Investment Class, and Reserve Class. Such classes have different distribution
arrangements and are designed for institutional and other categories of
investors. The Trust also offers shares of six classes of the Treasury
TaxAdvantage Portfolio and shares of six classes of the Government & Agency
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
5:00 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 6:00 p.m. Eastern Time on that day.
See "Dividends."
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, 1998, 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
2
<PAGE> 196
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." Under a Transfer Agency and Service Agreement, A I M Fund Services,
Inc. ("Transfer Agent"), AIM's wholly owned subsidiary and a registered transfer
agent, receives a fee for its provision of transfer agency, dividend
distribution and disbursement, and shareholder services to the Trust. See
"General Information -- Transfer Agent and Custodian."
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, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design and Invest With
Discipline are registered service marks and AIM Bank Connection is a service
mark of A I M Management Group Inc.
3
<PAGE> 197
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.................................................. 0.01%
------
Total other expenses.............................. 0.02%
------
Total portfolio operating expenses -- Resource Class**.... 0.24%
======
</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 be 0.20% and 0.28%, 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
5 years.................................................... $14
10 years.................................................... $31
</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, 1998. The "Other Expenses" and "12b-1 fees" figures are 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.
4
<PAGE> 198
FINANCIAL HIGHLIGHTS
Shown below are the per share data, ratios and supplemental data for each of
the years in the two-year period ended August 31, 1998 and for the period March
12, 1996 (date sales commenced) through August 31, 1996. The data has been
audited by KPMG Peat Marwick LLP, independent auditors, whose report on the
financial statements and the related notes appears in the Statement of
Additional Information.
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- -------
<S> <C> <C> <C>
Net asset value, beginning of period...................... $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income................................... 0.05 0.05 0.03
-------- -------- -------
Less distributions:
Dividends from net investment income.................... (0.05) (0.05) (0.03)
-------- -------- -------
Net asset value, end of period.......................... $ 1.00 $ 1.00 $ 1.00
======== ======== =======
Total return............................................ 5.47% 5.30% 5.09%(a)
======== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted)................ $455,961 $237,123 $33,339
======== ======== =======
Ratio of expenses to average net assets(b).............. 0.24%(c) 0.25% 0.25%(a)
======== ======== =======
Ratio of net investment income to average net
assets(d)............................................ 5.34%(c) 5.19% 5.07%(a)
======== ======== =======
</TABLE>
- ---------------
(a) Annualized.
(b) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursement were
0.28%, 0.29% and 0.29% (annualized) for the periods 1998-1996, respectively.
(c) Ratios are based on average net assets of $320,537,856.
(d) After fee waivers and/or expense reimbursements. Ratio of net investment
income to average net assets prior to fee waivers and/or expense
reimbursement was 5.30%, 5.15% and 5.03% (annualized) for the periods
1998-1996, 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 $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> 199
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.
Briefly, "First Tier" securities are securities that are rated in the highest
rating category for short-term debt obligations by two nationally recognized
statistical rating organizations ("NRSROs"), or, if only rated by one NRSRO, are
rated in the highest rating category by the NRSRO, or, if unrated, are
determined by the Portfolio's investment advisor (under the supervision of and
pursuant to guidelines established by the Board of Directors) to be of
comparable quality to a rated security that meets the foregoing quality
standards, as well as securities issued by a registered investment company that
is a money market fund and U.S. government securities. 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. The Portfolio will give shareholders notice of its
intent to enter into a reverse repurchase agreement in sufficient time to permit
shareholder redemptions before the Portfolio enters into any reverse repurchase
agreements. 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, liquid 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 liquid 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
6
<PAGE> 200
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.
INVESTMENT IN OTHER INVESTMENT COMPANIES. The Trust is permitted to invest 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 investment policies described above may be changed by the Board of
Trustees without the affirmative vote of a majority of the outstanding shares of
beneficial interest of the Trust.
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, and
except that the Portfolio may purchase securities of other investment
companies to the extent permitted by applicable law or exemptive order; or
(2) borrow money or issue senior securities except (a) for temporary
or emergency purposes (e.g., in order to facilitate the orderly sale of
portfolio securities or to accommodate abnormally heavy redemption
requests), the Portfolio may borrow money from banks or obtain funds by
entering into reverse repurchase agreements, and (b) to the extent that
entering into commitments to purchase securities in accordance with the
Portfolio's investment program may be considered the issuance of senior
securities. The Portfolio will not purchase securities while borrowings in
excess of 5% of its total assets are outstanding.
The foregoing investment restrictions of the Portfolio (as well as certain
others set forth in the Statement of Additional Information) are matters of
fundamental policy which may not be changed without the affirmative vote of a
majority of the outstanding shares of the Portfolio.
In addition to the restrictions described above, the Portfolio must also
comply with the requirements of Rule 2a-7 under the 1940 Act, as such Rule may
be amended from time to time, which govern the operations of money market funds,
and may be more restrictive than the policies described herein. 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 Transfer Agent
prior to 5:00 p.m. Eastern
7
<PAGE> 201
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. Following the initial
investment, subsequent purchases of shares of the Class may also be made via AIM
LINK(R) Remote, a personal computer application software product. 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. The Portfolio, however, reserves the right to change the time for
which purchase and redemption request must be submitted to the Portfolio for
execution on the same day or any day when the U.S. primary broker-dealer
community is closed for business or trading is restricted due to national
holidays. 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 the Transfer Agent, must be completed and sent to the
Transfer Agent at P.O. Box 4497, Houston, Texas 77210-4497. 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 the Transfer Agent. 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 the
Transfer Agent.
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 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 the 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
5:00 p.m. Eastern Time will earn the dividend declared on the date of purchase.
Any request for correction to a transaction of Portfolio shares must be
submitted in writing to the Transfer Agent. The Transfer Agent reserves the
right to reject any such request. When a correction results in a dividend
adjustment, the institution must
8
<PAGE> 202
\agree in writing to reimburse the Portfolio for any loss resulting from the
correction. Failure to deliver purchase proceeds on the requested settlement
date may result in a claim against the institution for an amount equal to the
overdraft charge incurred by 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 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) Remote. 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 Transfer Agent prior to 5:00 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 Transfer Agent after 5:00
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 5:00 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. The Portfolio reserves the right to change the time for which
redemption requests must be submitted to and received by the Transfer Agent for
execution on the same day on any day when the U.S. primary broker-dealer
community is closed for business or trading is restricted due to national
holidays.
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 the
Transfer Agent.
Shareholders may request a redemption by telephone. Neither the Transfer Agent
nor FMC will 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 may 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
5:00 p.m. Eastern Time on the day of declaration. Net income for dividend
purposes is determined daily as of 5:00 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's 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
9
<PAGE> 203
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 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 the Transfer
Agent at P.O. Box 4497, Houston, Texas 77210-4497 and will become effective with
dividends paid after its receipt by the Transfer Agent. 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 portfolios 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 the
Transfer Agent.
NET ASSET VALUE
The net asset value per share of the Portfolio is determined daily as of 5:00
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
10
<PAGE> 204
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, 1998 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 5.37% and 5.52%, 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 6:00 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.
Information concerning the Board of Trustees may be found in the Statement of
Additional Information. Certain trustees and officers of the Trust are
affiliated with AIM and A I M Management Group Inc. ("AIM Management"), the
parent corporation of AIM.
For a discussion of A I M Management and its subsidiaries' Year 2000
Compliance Project, see "General Information -- Year 2000 Compliance Project."
INVESTMENT ADVISOR
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173,
acts as the investment advisor for the Portfolio pursuant to a Master Investment
Advisory Agreement (the "Advisory Agreement"). AIM was organized in 1976 and,
together with its affiliates, manages or advises over 90 investment company
portfolios. Certain of the directors and officers of AIM are also trustees or
executive officers of the Trust. AIM is a wholly owned subsidiary of AIM
Management. AIM Management
11
<PAGE> 205
is a holding company engaged in the financial services business. AIM Management
is an indirect, wholly owned subsidiary of AMVESCAP PLC, a publicly-traded
holding company that, through its subsidiaries, engages in institutional
investment management and retail fund businesses in the United States, Europe
and the Pacific Region.
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, 1998, 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 0.24% of the Class's
average daily net assets.
ADMINISTRATIVE SERVICES
The Trust has entered into a Master Administrative Services Agreement 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.
DISTRIBUTOR
The Trust has entered into a Master Distribution Agreement (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 100, 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
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. 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. 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 ex-
12
<PAGE> 206
penses 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 has been 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"). In approving the Plan,
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 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 eighteen
classes. Six classes, including the Class, represent interests in the Portfolio,
six classes represent interests in the Treasury TaxAdvantage Portfolio, and six
classes represent interests in the Government & Agency 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
13
<PAGE> 207
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 Fund Services, Inc., P.O. Box 4497, Houston, Texas 77210-4497, acts as
transfer agent for the shares of the Class.
LEGAL COUNSEL
The law firm of Ballard Spahr Andrews & Ingersoll, LLP, Philadelphia,
Pennsylvania, serves as counsel to the Trust and passes upon certain legal
matters for the Trust.
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 100,
Houston, Texas 77046-1173, or may be made by calling (800) 825-6858.
YEAR 2000 COMPLIANCE PROJECT
In providing services to the Trust, AIM Management and its subsidiaries rely
on both internal software systems as well as external software systems provided
by third parties. Many software systems in use today are unable to distinguish
the year 2000 from the year 1900. This defect if not cured will likely adversely
affect the services that AIM Management, its subsidiaries and other service
providers to the Trust provide the Trust and its shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and phase (iii) has
commenced. The Project is scheduled to be completed during the second quarter of
1999. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm year 2000 compliance
upon installation. No assurance can be given that the Project will be successful
or that AIM Management and its subsidiaries will not otherwise be adversely
affected by the year 2000 issue.
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.
14
<PAGE> 208
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 209
- ------------------------------------------------------
------------------------------------------------------
- ------------------------------------------------------
------------------------------------------------------
SHORT-TERM INVESTMENTS TRUST
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 825-6858
INVESTMENT ADVISOR
A I M ADVISORS, INC.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(713) 626-1919
DISTRIBUTOR
FUND MANAGEMENT COMPANY
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 825-6858
AUDITORS
KPMG PEAT MARWICK LLP
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 FUND SERVICES, INC.
P.O. Box 4497
Houston, Texas 77210-4497
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.
PROSPECTUS
December 18, 1998
SHORT-TERM
INVESTMENTS TRUST
---------------------
TREASURY PORTFOLIO
---------------------
RESOURCE CLASS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Summary........................................... 2
Table of Fees and Expenses........................ 4
Financial Highlights.............................. 5
Suitability for Investors......................... 5
Investment Program................................ 5
Purchase of Shares................................ 7
Redemption of Shares.............................. 9
Dividends......................................... 9
Taxes............................................. 10
Net Asset Value................................... 10
Yield Information................................. 11
Reports to Shareholders........................... 11
Management of the Trust........................... 11
General Information............................... 13
</TABLE>
- ------------------------------------------------------
------------------------------------------------------
- ------------------------------------------------------
------------------------------------------------------
<PAGE> 210
STATEMENT OF
ADDITIONAL INFORMATION
SHORT-TERM INVESTMENTS TRUST
TREASURY PORTFOLIO
(CASH MANAGEMENT CLASS)
(INSTITUTIONAL CLASS)
(PERSONAL INVESTMENT CLASS)
(PRIVATE INVESTMENT CLASS)
(RESERVE CLASS)
(RESOURCE CLASS)
11 GREENWAY PLAZA
SUITE 100
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
CLASSES
OF THE TREASURY PORTFOLIO, COPIES OF WHICH MAY BE OBTAINED BY WRITING
FUND MANAGEMENT COMPANY, 11 GREENWAY PLAZA,
SUITE 100, HOUSTON, TEXAS 77046-1173
OR CALLING (800) 659-1005
---------------------
STATEMENT OF ADDITIONAL INFORMATION DATED DECEMBER 18, 1998
RELATING TO THE PROSPECTUS OF EACH OF THE FOLLOWING CLASSES OF THE TREASURY
PORTFOLIO:
CASH MANAGEMENT CLASS PROSPECTUS DATED DECEMBER 18, 1998,
INSTITUTIONAL CLASS PROSPECTUS DATED DECEMBER 18, 1998,
PERSONAL INVESTMENT CLASS PROSPECTUS DATED DECEMBER 18, 1998,
PRIVATE INVESTMENT CLASS PROSPECTUS DATED DECEMBER 18, 1998,
RESERVE CLASS PROSPECTUS DATED DECEMBER 18, 1998
AND RESOURCE CLASS PROSPECTUS DATED DECEMBER 18, 1998
1
<PAGE> 211
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Introduction................................................ 3
General Information about the Trust......................... 3
The Trust and Its Shares............................... 3
Management.................................................. 5
Trustees and Officers.................................. 5
Remuneration of Trustees............................... 7
Investment Advisor..................................... 9
Administrative Services................................ 10
Expenses............................................... 10
Banking Regulations.................................... 11
Transfer Agent and Custodian........................... 11
Reports................................................ 11
Fee Waivers............................................ 12
Principal Holders of Securities........................ 12
Purchases and Redemptions................................... 17
Net Asset Value Determination.......................... 17
Distribution Agreement................................. 17
Distribution Plan...................................... 18
Performance Information................................ 18
Investment Program and Restrictions......................... 19
Investment Program..................................... 19
Eligible Securities.................................... 19
Investment Restrictions................................ 19
Other Investment Policies.............................. 20
Portfolio Transactions...................................... 20
General Brokerage Policy............................... 20
Allocation of Portfolio Transactions................... 21
Section 28(e) Standards................................ 21
Tax Matters................................................. 22
Qualification as a Regulated Investment Company........ 22
Excise Tax on Regulated Investment Companies........... 23
Portfolio Distributions................................ 23
Sale or Redemption of Shares........................... 23
Foreign Shareholders................................... 24
Effect of Future Legislation; Local Tax
Considerations........................................ 24
Financial Statements........................................ FS
</TABLE>
2
<PAGE> 212
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
18, 1998, the Institutional Class Prospectus dated December 18, 1998, the
Personal Investment Class Prospectus dated December 18, 1998, the Private
Investment Class Prospectus dated December 18, 1998, the Reserve Class
Prospectus dated December 18, 1998 and the Resource Class Prospectus dated
December 18, 1998 (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 100, 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 Amended and Restated 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 caption "General Information" and "Redemption
of Shares."
The Trust offers on a continuous basis shares representing an interest in one
of three portfolios: the Portfolio, the Government & Agency Portfolio and the
Treasury TaxAdvantage Portfolio (together, the "Portfolios"). The Portfolio
consists of the following six classes of shares: Cash Management Class,
Institutional Class, Personal Investment Class, Private Investment Class,
Reserve 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 and the
Government & Agency Portfolio are offered pursuant to separate prospectuses and
separate statements 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.
3
<PAGE> 213
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, any Portfolio and any class
thereof with respect to which there are fewer than 100 holders of record.
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 property of the Portfolio for all losses and
expenses of any shareholder of the Portfolio 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
Portfolio 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 and officers will
not be liable for any act, omission or obligation of the Trust or any Trustee of
officer. However, nothing in the Declaration of Trust protects a trustee or
officer against any liability to the Trust or to the shareholders to which a
trustee or officer 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 with the Trust. The Declaration of Trust provides for
indemnification by the Trust of the trustees, the officers, employees or agents
of the Trust, if it is determined that such person acted in good faith and
reasonably believed: (1) in the case of conduct in his official capacity for the
Trust, that his conduct was in the Trust's best interests, (2) in all other
cases, that his conduct was at least not opposed to the Trust's best interests
and (3) in a criminal proceeding, that he had no reason to believe that his
conduct was unlawful. 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.
Except as otherwise disclosed in each Prospectus and this Statement of
Additional Information, the Trustees shall continue to hold office and may
appoint their successors.
4
<PAGE> 214
MANAGEMENT
TRUSTEES AND OFFICERS
The trustees and officers of the Trust and their principal occupations during
at least the last five years are set forth below. Unless otherwise indicated,
the address of each trustee and officer is 11 Greenway Plaza, Suite 100,
Houston, Texas 77046.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
POSITIONS HELD
NAME, ADDRESS AND AGE WITH REGISTRANT PRINCIPAL OCCUPATION DURING AT LEAST THE PAST 5 YEARS
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
*CHARLES T. BAUER (79) Trustee and Chairman of the Board of Directors, A I M Management
Chairman Group Inc., A I M Advisors, Inc., A I M Capital
Management, Inc., A I M Distributors, Inc., A I M
Fund Services, Inc. and Fund Management Company; and
Vice Chairman and Director, AMVESCAP PLC.
- -----------------------------------------------------------------------------------------------------------------------
BRUCE L. CROCKETT (54) Trustee Director, ACE Limited (insurance company). Formerly,
906 Frome Lane Director, President and Chief Executive Officer,
McLean, VA 22102 COMSAT Corporation; and Chairman, Board of Governors
of INTELSAT (international communications company).
- -----------------------------------------------------------------------------------------------------------------------
OWEN DALY II (74) Trustee Director, Cortland Trust Inc. (investment company).
Six Blythewood Road Formerly, Director, CF & I Steel Corp., Monumental
Baltimore, MD 21210 Life Insurance Company and Monumental General
Insurance Company; and Chairman of the Board of
Equitable Bancorporation.
- -----------------------------------------------------------------------------------------------------------------------
EDWARD K. DUNN (63) Trustee Chairman of the Board of Directors, Mercantile
2 Hopkins Plaza, 20th Floor Mortgage Corp. Formerly, Vice Chairman of the Board
Baltimore, MD 21201 of Directors and President, Mercantile-Safe Deposit &
Trust Co., and President, Mercantile Bankshares
- -----------------------------------------------------------------------------------------------------------------------
JACK M. FIELDS (46) Trustee Chief Executive Officer, Texana Global, Inc. (foreign
8810 Will Clayton Parkway trading company) and Twenty First Century Group, Inc.
Jetero Plaza, Suite E (a governmental affairs company). Formerly, Member of
Humble, TX 77338 the U.S. House of Representatives.
- -----------------------------------------------------------------------------------------------------------------------
**CARL FRISCHLING (61) Trustee Partner, Kramer, Levin, Naftalis & Frankel (law
919 Third Avenue firm). Formerly, Partner, Reid & Priest (law firm).
New York, NY 10022
- -----------------------------------------------------------------------------------------------------------------------
*ROBERT H. GRAHAM (51) Trustee and Director, President and Chief Executive Officer,
President 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. and
Fund Management Company; and Director, AMVESCAP PLC.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
* A trustee who is an "interested person" of the Trust and AIM as defined in
the 1940 Act.
** A trustee who is an "interested person" of the Trust as defined in the 1940
Act.
5
<PAGE> 215
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
POSITIONS HELD
NAME, ADDRESS AND AGE WITH REGISTRANT PRINCIPAL OCCUPATION DURING AT LEAST THE PAST 5 YEARS
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
PREMA MATHAI-DAVIS (48) Trustee Chief Executive Officer, YWCA of the U.S.A.;
350 Fifth Avenue, Suite 301 Commissioner, New York City Department for the Aging;
New York, NY 10118 and Member of the Board of Directors, Metropolitan
Transportation Authority of New York State.
- -----------------------------------------------------------------------------------------------------------------------
LEWIS F. PENNOCK (56) Trustee Attorney in private practice in Houston, Texas.
6363 Woodway, Suite 825
Houston, TX 77057
- -----------------------------------------------------------------------------------------------------------------------
IAN W. ROBINSON (75) Trustee Formerly, Executive Vice President and Chief
183 River Drive Financial Officer, Bell Atlantic Management Services,
Tequesta, FL 33469 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.
- -----------------------------------------------------------------------------------------------------------------------
LOUIS S. SKLAR (59) Trustee Executive Vice President, Development and Operations,
Transco Tower, 50th Floor Hines Interests Limited Partnership (real estate
2800 Post Oak Blvd. development).
Houston, TX 77056
- -----------------------------------------------------------------------------------------------------------------------
***JOHN J. ARTHUR (54) Senior Vice Director, Senior Vice President and Treasurer, A I M
President and Advisors, Inc.; and Vice President and Treasurer,
Treasurer A I M Management Group Inc., A I M Capital
Management, Inc., A I M Distributors, Inc., A I M
Fund Services, Inc. and Fund Management Company.
- -----------------------------------------------------------------------------------------------------------------------
GARY T. CRUM (51) Senior Vice Director and President, A I M Capital Management,
President Inc.; Director and Senior Vice President, A I M
Management Group Inc., A I M Advisors, Inc.; and
Director, A I M Distributors, Inc. and AMVESCAP PLC.
- -----------------------------------------------------------------------------------------------------------------------
***CAROL F. RELIHAN (44) Senior Vice Director, Senior Vice President, General Counsel and
President and Secretary, A I M Advisors, Inc.; Vice President,
Secretary General Counsel and Secretary, A I M Management Group
Inc.; Director, Vice President and General Counsel,
Fund Management Company; General Counsel and Vice
President, A I M Fund Services, Inc.; and Vice
President, A I M Capital Management, Inc. and A I M
Distributors, Inc.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
*** Mr. Arthur and Ms. Relihan are married to each other.
6
<PAGE> 216
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
POSITIONS HELD
NAME, ADDRESS AND AGE WITH REGISTRANT PRINCIPAL OCCUPATION DURING AT LEAST THE PAST 5 YEARS
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
DANA R. SUTTON (39) Vice President Vice President and Fund Controller, A I M Advisors,
and Assistant Inc.; and Assistant Vice President and Assistant
Treasurer Treasurer, Fund Management Company.
- -----------------------------------------------------------------------------------------------------------------------
MELVILLE B. COX (55) Vice President 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. and
Fund Management Company.
- -----------------------------------------------------------------------------------------------------------------------
KAREN DUNN KELLEY (38) Vice President Senior Vice President, A I M Capital Management,
Inc.; and Vice President, A I M Advisors, Inc.
- -----------------------------------------------------------------------------------------------------------------------
J. ABBOTT SPRAGUE (43) Vice President Director and President, Fund Management Company;
Director, AIM Fund Services, Inc.; and Senior Vice
President, A I M Advisors, Inc. and A I M Management
Group Inc.
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
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. Crockett, Daly, Dunn, Fields,
Frischling, Pennock, Robinson (Chairman) and Sklar. 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,
Dunn, Fields, Frischling, Pennock, Robinson and Sklar (Chairman). 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.
The members of the Nominating and Compensation Committee are Messrs. Crockett
(Chairman), Daly, Dunn, Fields, Pennock, Robinson 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. Most 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 or her services according to
a fee schedule which recognizes the fact that such trustee also serves as a
director or trustee of certain 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 or she
serves as a director or trustee, which consists of an annual retainer component
and a meeting fee component.
7
<PAGE> 217
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................................. 4,747 67,774 84,000
Owen Daly II...................................... 4,747 103,542 84,000
Edward K. Dunn(4)................................. 2,193 0 0
Jack Fields....................................... 4,747 0 70,500
Carl Frischling................................... 4,747 96,520 84,000(5)
Robert H. Graham.................................. 0 0 0
John F. Kroeger(6)................................ 4,547 94,132 82,500
Prema Mathai-Davis(4)............................. 261 0 0
Lewis F. Pennock.................................. 4,747 55,777 84,000
Ian W. Robinson................................... 4,672 85,912 84,000
Louis S. Sklar.................................... 4,695 84,370 83,500
</TABLE>
- ---------------
(1) The total amount of compensation deferred by all Trustees of the Trust
during the fiscal year ended August 31, 1998, including interest earned
thereon, was $26,330.
(2) During the fiscal year ended August 31, 1998, the total amount of expenses
allocated to the Trust in respect of such retirement benefits was $32,407.
Data reflects compensation for the calendar year ended December 31, 1997.
(3) Each serves as a Director or Trustee of a total of 12 registered investment
companies advised by AIM as of December 31, 1997 (comprised of over 50
portfolios). Data reflects total compensation for the calendar year ended
December 31, 1997.
(4) Mr. Dunn and Ms. Mathai-Davis were not serving as Trustees during the
calendar year ended December 31, 1997.
(5) The Trust paid the law firm of Kramer, Levin, Naftalis & Frankel $15,485 in
legal fees for services provided to the Portfolio during the fiscal year
ended August 31, 1998. Mr. Frischling, a trustee of the Trust, is a partner
in such firm.
(6) Mr. Kroeger resigned as a trustee of the Trust on June 11, 1998 and on that
date became a consultant to the Trust.
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 regulated investment companies
managed, administered or distributed by AIM or its affiliates (the "Applicable
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 Applicable 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 Applicable 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.
8
<PAGE> 218
Set forth below is a table that shows the estimated annual benefits payable to
an eligible trustee upon retirement assuming a specified level of compensation
and years of service classifications. The estimated credited years of service
for Messrs. Crockett, Daly, Dunn, Fields, Frischling, Kroeger, Pennock,
Robinson, Sklar and Ms. Mathai-Davis are 11, 11, 0, 1, 21, 20, 16, 11, 8 and 0
years, respectively.
ANNUAL RETAINER UPON RETIREMENT
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
NUMBER OF
YEARS OF
SERVICE WITH ANNUAL RETAINER PAID BY ALL AIM FUNDS
THE AIM FUNDS $90,000
<S> <C> <C>
- ------------------------------------------------------------------------------------
10 $67,500
- ------------------------------------------------------------------------------------
9 $60,750
- ------------------------------------------------------------------------------------
8 $54,000
- ------------------------------------------------------------------------------------
7 $47,250
- ------------------------------------------------------------------------------------
6 $40,500
- ------------------------------------------------------------------------------------
5 $33,750
- ------------------------------------------------------------------------------------
</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 (5) or ten
(10) years (depending on the Agreement) 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.
During the fiscal year ended August 31, 1998, $34,137 in trustees' fees and
expenses were allocated to the Portfolio.
INVESTMENT ADVISOR
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173,
acts as the investment advisor for the Portfolio pursuant to a Master Investment
Advisory Agreement (the "Advisory Agreement"). AIM was organized in 1976, and
together with its subsidiaries advises or manages over 90 investment company
portfolios.
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. 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.
9
<PAGE> 219
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 and under an investment advisory agreement in effect prior to February
28, 1997 which provided for the same level of compensation to AIM, AIM received
fees from the Trust for the fiscal years ended August 31, 1998, 1997 and 1996
with respect to the Portfolio in the amounts of $3,026,608, $2,666,379 and
$2,227,788, respectively. For the fiscal years ended August 31, 1998, 1997 and
1996, AIM waived no advisory fees with respect to the Portfolio.
The Advisory Agreement will continue from year to year 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 100, Houston, Texas 77046-1173. AIM
Management is an indirect wholly owned subsidiary of AMVESCAP PLC, 11 Devonshire
Square, London EC2M 4YR, United Kingdom. AMVESCAP PLC and its subsidiaries are
an independent investment management group engaged in institutional investment
management and retail fund businesses in the United States, Europe and the
Pacific Region. Certain of the directors and 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 100, 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 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 and under a prior administrative
services agreement which provided for the same level of reimbursement to AIM,
AIM was reimbursed for the fiscal years ended August 31, 1998, 1997 and 1996,
$102,543, $99,273 and $86,796, respectively, for fund accounting services for
the Portfolio.
10
<PAGE> 220
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 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 Fund Services, Inc.("AFS"), a wholly owned subsidiary of AIM, P.O. Box
4497, Houston, Texas 77210-4497, acts as transfer agent for the shares of each
class of the Portfolio. For the services it provides to the Trust, AFS is
entitled to receive a fee based on the average daily net assets of the Trust,
plus out-of-pocket expenses and advances it incurred. Such compensation may be
changed from time to time as is agreed to by AFS and the Trust. AFS has provided
transfer agency and shareholder services to the Portfolio since December 29,
1997 pursuant to a Transfer Agency and Service Agreement. Prior to December 29,
1997, A I M Institutional Fund Services, Inc. ("AIFS") provided transfer agency
and shareholder services to the fund pursuant to a Transfer Agency and Service
Agreement.
11
<PAGE> 221
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, 700 Louisiana, Houston, Texas
77002, as the independent auditors to audit the financial statements and review
the tax returns of the Portfolio.
FEE WAIVERS
AIM or its affiliates may, from time to time, agree to waive voluntarily all
or any portion of its fees or reimburse the Portfolio for certain of its
expenses. Such waivers or reimbursements may be discontinued at any time.
PRINCIPAL HOLDERS OF SECURITIES
GOVERNMENT & AGENCY 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 Government &
Agency Portfolio as of October 30, 1998, 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 Onlya
---------------- ------------
<S> <C>
Fund Services Associates.................................. 59.52%b
1875 Century Park East -- Suite 1345
Los Angeles, CA 90067
Gardnyr Michael Capital, Inc.............................. 40.48%b
2281 Lee Rd. Ste. 104
Winter Park, FL 32789
</TABLE>
INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Onlya
---------------- ------------
<S> <C>
Gardnyr Michael Capital, Inc.............................. 65.79%b
2281 Lee Rd. Ste. 104
Winter Park, FL 32789
Norwest Bank Mpls......................................... 34.11%
733 Marquette Ave.
Minneapolis, MN 55479-0052
</TABLE>
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Onlya
---------------- ------------
<S> <C>
Fund Services Associates, Inc............................. 94.36%b
1875 Century Park East -- Suite 1345
Los Angeles, CA 90067
Huntington Capital Corp................................... 5.64%
41 S. High St., Ninth Floor
Columbus, OH 43287
</TABLE>
12
<PAGE> 222
RESOURCE CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Onlya
---------------- ------------
<S> <C>
Hambrecht & Quist LLC..................................... 97.81%
230 Park Avenue, Floor 19
New York, NY 10169
</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
portfolio may be presumed to be in "control" of such portfolio, as defined
in the 1940 Act.
AIM provided the initial capitalization of the Personal Investment Class and
the Reserve Class of the Government & Agency Portfolio and, accordingly, as of
the date of this Statement of Additional Information, owned all the outstanding
shares of beneficial interest of each such Class. The Trust expects that the
sale of shares of such Classes to the public pursuant to the Prospectuses will
promptly reduce the percentage of such shares owned by AIM to less than 1% of
the total shares outstanding of such Classes.
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 October 30, 1998 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 Onlya
---------------- ------------
<S> <C>
Bank of New York.......................................... 57.31%
One Wall Street
5Th Floor
Stif/Master Note
New York, NY 10286
Fund Services Associates, Inc............................. 12.08%
1875 Century Park East -- Suite 1345
Los Angeles, CA 90067
Chase Bank of Texas....................................... 8.91%
600 Travis St., 8th Floor
8-CBT-39
Houston, TX 77252-8009
Bank of Oklahoma.......................................... 5.87%
P.O. Box 2180
Tulsa, OK 74101
</TABLE>
13
<PAGE> 223
INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Only(a)
---------------- --------------
<S> <C>
Trust Company Bank........................................ 8.20%
Center 3139
P.O. Box 105504
Atlanta, GA 30348
City of New York Deferred Compensation Plan............... 7.25%
40 Rector Street, 3rd Floor
New York, NY 10006
Weststar Bank Trust Dept.................................. 5.96%
P.O. Box 1156
Bartlesville, OK 74005-1156
First Trust/Var & Co...................................... 5.03%
Funds Control Suite 0404
180 East Fifth Street
St. Paul, MN 55101
</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.
PERSONAL INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Only(a)
---------------- --------------
<S> <C>
Cullen/Frost Discount Brokers............................. 67.44%
P.O. Box 2358
San Antonio, TX 78299
Bank of New York.......................................... 24.64%
4 Fisher Lane
White Plains, NY 10603
</TABLE>
14
<PAGE> 224
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Onlya
---------------- ------------
<S> <C>
The Bank of New York...................................... 26.49%
One Wall Street
5Th Floor
Stif/Master Note
New York, NY 10286
Huntington Capital Corp................................... 19.84%
41 S. High St., Ninth Floor
Columbus, OH 43287
Zions First National Bank................................. 13.19%
P.O. Box 30880
Salt Lake City, UT 84130
First Trust/Var & Co...................................... 8.45%
Funds Control Suite 0404
180 East 5th Street
St. Paul, MN 55101
New Haven Savings Bank Trust Department................... 6.74%
P.O. Box 302
Trust Department
New Haven, CT 06502
Midland First American.................................... 6.53%
One Erieview Plaza Ste. 500
Cleveland, OH 44114
Cullen/Frost Discount Brokers............................. 6.39%
P.O. Box 2358
San Antonio, TX 78299
</TABLE>
RESOURCE CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Onlya
---------------- ------------
<S> <C>
First Union Capital Markets............................... 80.64%
8739 Research Drive
Capital Markets
Charlotte, NC 28262-0675
Mellon Bank NA............................................ 11.26%
P.O. Box 710
Pittsburgh, PA 15230-0710
</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.
AIM provided the initial capitalization of the Reserve Class of the Portfolio
and, accordingly, as of the date of this Statement of Additional Information,
owned all the outstanding shares of beneficial interest of such Class. The Trust
expects that the sale of shares of each such Class to the public pursuant to its
Prospectuses will promptly reduce the percentage of such shares owned by AIM to
less than 1% of the total shares outstanding of such Class.
15
<PAGE> 225
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 October 30, 1998 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 Onlya
---------------- ------------
<S> <C>
First Trust/Var & Co...................................... 26.43%
Funds Control Suite 0404
180 East Fifth Street
St. Paul, MN 55101
Peoples Two Ten Company................................... 20.85%
P.O. Box 821
C/O Summit Bank
Hackensack, NJ 07602
Frost National Bank Tx.................................... 12.17%
Muir & Co.
C/O Frost
P.O. Box 2479
San Antonio, TX 78298-2479
Everen Clearing Corp...................................... 6.60%
111 East Kilbourn Ave.
Milwaukee, WI 53202
Key Trust Company......................................... 6.48%
Mail Code OH-01-49-3040
4900 Tiedeman
Cleveland, OH 44101-5971
Nationsbank Texas......................................... 6.21%
1401 Elm Street 11Th Floor
P.O. Box 831000
Dallas, TX 75202-2911
Mason-Dixon Trust Company................................. 5.57%
45 W. Main Street
Westminister, MD 21158-0199
</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.
16
<PAGE> 226
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Only(a)
---------------- --------------
<S> <C>
Huntington Capital Corp .................................. 26.45%
41 S High St., Ninth Floor
Columbus, OH 43287
Bank of New York.......................................... 24.01%
One Wall Street
5Th Floor
Stif/Master Note
New York, NY 10286
First National Bank of Chicago............................ 18.69%
Mail Suite 0126
Attention Sweep Coordinator
Chicago, IL 60670-0126
Oppenheimer & Co., Inc.................................... 11.15%
Oppenheimer Tower
World Financial Center
New York, NY 10281
Hambrecht & Quist LLC..................................... 8.79%
1100 Newport Center Drive, Second Floor
Newport Beach, CA 92660
First Union Capital Markets............................... 8.65%
8739 Research Drive
Capital Markets
Charlotte, NC 28262-0675
</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.
AIM provided the initial capitalization of the Cash Management Class, Personal
Investment Class, Reserve Class and Resource Class of the Treasury Tax Advantage
Portfolio and, accordingly, as of the date of this Statement of Additional
Information, owned all the outstanding shares of beneficial interest of each
such Class. The Trust expects that the sale of shares of each such Class to the
public pursuant to its Prospectuses will promptly reduce the percentage of such
shares owned by AIM to less than 1% of the total shares outstanding of each such
Class.
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 October 30, 1998, the
trustees and officers of the Trust beneficially owned less than 1% of each class
of the Trust's outstanding shares.
17
<PAGE> 227
PURCHASES AND REDEMPTIONS
A complete description of the manner by which shares of a particular class may
be purchased, redeemed or exchanged appears in each Prospectus under the heading
"Purchase of Shares."
The right of redemption may be suspended or the date of payment postponed when
(a) trading on the New York Stock Exchange ("NYSE") is restricted, as determined
by applicable rules and regulations of the SEC, (b) the NYSE is closed for other
than customary weekend and 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
Fund not reasonably practicable.
A "business day" of the Portfolio is any day on which commercial banks in the
New York Federal Reserve district are open for business. The Portfolio, however,
reserves the right to change the time for which purchase and redemption requests
must be submitted to the Portfolio for execution on the same day on any day when
the U.S. primary broker-dealer community is closed for business or trading is
restricted due to national holidays.
NET ASSET VALUE DETERMINATION
Shares of each class 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.
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 (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 100, 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 continue in effect from year to year 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. 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.
18
<PAGE> 228
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, Reserve Class and Resource Class of
the Portfolio. These services may include among other things: (i) answering
customer inquiries regarding the shares of these classes 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 these classes 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 these classes, 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, 1998, FMC received compensation pursuant
to the Plan in the amount of $826,277, or an amount equal to 0.08% of the
average daily net assets of the Cash Management Class, $1,803,733, or an amount
equal to 0.50% of the average daily net assets of the Personal Investment Class,
$1,159,606, or an amount equal to 0.30% of the average daily net assets of the
Private Investment Class, 512,860 or an amount equal to 0.16% of the average
daily net assets of the Resource Class. With respect to the Cash Management
Class, $826,277 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 $0
(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, $1,460,207 of
such amount (or an amount equal to 0.40% of the average daily net assets of the
class) was paid to dealers and financial institutions and $343,526 (or an amount
equal to 0.10% of the average daily net assets of the class) was retained by
FMC. With respect to the Private Investment Class, $937,844 of such amount (or
an amount equal to 0.24% of the average daily net assets of the class) was paid
to dealers and financial institutions and $221,762 (or an amount equal to 0.06%
of the average daily net assets of the class) was retained by FMC. With respect
to the Resource Class, $512,200 of such amount (or an amount equal to 0.16% of
the average daily net assets of the class) was paid to dealers and financial
institutions and $660 (or an amount equal to 0% of the average daily net assets
of the class) was retained by FMC.
FMC is a wholly owned subsidiary of AIM, a wholly owned subsidiary of AIM
Management. Charles T. Bauer, a Trustee and Chairman of the 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 each 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, 1998, 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 5.45% and 5.60%, for the Cash Management Class, were 5.53% and
5.69%, for the Institutional Class, were 5.03% and 5.16%, for the Personal
Investment Class, were 5.23% and 5.37%, for the Private Investment Class and
were 5.37% and 5.52%, 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;
19
<PAGE> 229
- 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.
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
The Trust will invest in "Eligible Securities" as defined in Rule 2a-7 under
the 1940 Act, which the Trust's Board of Trustees has determined to present
minimal credit risk.
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) 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; or
(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;
20
<PAGE> 230
(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;
or
(9) invest in any obligation not payable as to principal and interest
in United States currency.
OTHER INVESTMENT POLICIES
The Portfolio does not intend to invest in companies for the purpose of
exercising control or management, except that the Portfolio may purchase
securities of other investment companies to the extent permitted by applicable
law or exemptive order. 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
GENERAL BROKERAGE POLICY
AIM makes decisions to buy and sell securities for the Portfolio, selects
broker-dealers, effects the Portfolio's investment portfolio transactions,
allocates brokerage fees in such transactions, and where applicable, negotiates
commissions and spreads on transactions. Since purchases and sales of portfolio
securities by the Portfolio are usually principal transactions, the Portfolio
incurs little or no brokerage commissions. AIM's primary consideration in
effecting a security transaction is to obtain the most favorable execution of
the order, which includes the best price on the security and a low commission
rate (as applicable). While AIM seeks reasonable competitive commission rates,
the Portfolio may not pay the lowest commission or spread available. See
"Section 28(e) Standards" below.
In the event the Portfolio purchases securities traded in over-the-counter
markets, the Portfolio deals directly with dealers who make markets in the
securities involved, except when better prices are available elsewhere.
Portfolio transactions placed through dealers who are primary market makers are
effected at net prices without commissions, but which include compensation in
the form of a mark up or mark down.
AIM may determine target levels of commission business with various brokers on
behalf of its clients (including the Portfolio) over a certain time period. The
target levels will be based upon the following factors, among others: (1) the
execution services provided by the broker; (2) the research services provided by
the broker; and (3) the broker's interest in mutual funds in general and in the
Portfolio and other mutual funds advised by AIM or A I M Capital Management,
Inc. (collectively, the "AIM Funds") in particular, including sales of the
Portfolio and of the other AIM Funds. In connection with (3) above, the
Portfolio's trades may be executed directly by dealers which sell shares of the
AIM Funds or by other broker-dealers with which such dealers have clearing
arrangements. AIM will not use a specific formula in connection with any of
these considerations to determine the target levels.
AIM will seek, whenever possible, to recapture for the benefit of a Portfolio
any commissions, fees, brokerage or similar payments paid by the Portfolio on
portfolio transactions. Normally, the only fees which AIM can recapture are the
soliciting dealer fees on the tender of the Portfolio's securities in a tender
or exchange offer.
The Portfolio may engage in certain principal and agency transactions with
banks and their affiliates that own 5% or more of the outstanding voting
securities of the Portfolio provided the conditions of an exemptive order
received by the Portfolio from the SEC are met. In addition, the Portfolio may
purchase or sell a security from or to another AIM Fund provided the Portfolio
21
<PAGE> 231
follows procedures adopted by the Board of Directors/Trustees of the various AIM
Funds, including the Trust. These inter-fund transactions do not generate
brokerage commissions but may result in custodial fees or taxes or other related
expenses.
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. 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.
ALLOCATION OF PORTFOLIO TRANSACTIONS
AIM and its affiliates manage several other investment accounts. Some of these
accounts may have investment objectives similar to the Portfolio. Occasionally,
identical securities will be appropriate for investment by the Portfolio and by
another fund or one or more of these investment accounts. However, the position
of each account in the same securities and the length of time that each account
may hold its investment in the same securities may 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, AIM will fairly allocate transactions in such securities among the
Portfolio and these accounts. AIM may combine such transactions, in accordance
with applicable laws and regulations, to obtain the most favorable execution.
Simultaneous transactions could, however, adversely affect the Portfolio's
ability to obtain or dispose of the full amount of a security which it seeks to
purchase or sell.
Sometimes the procedure for allocating portfolio transactions among the
various investment accounts advised by AIM could have an adverse effect on the
price or amount of securities available to the Portfolio. In making such
allocations, AIM considers the investment objectives and policies of its
advisory clients, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment, the size of
investment commitments generally held, and the judgments of the persons
responsible for recommending the investment.
SECTION 28(e) STANDARDS
Section 28(e) of the Securities Exchange Act of 1934 provides that AIM, under
certain circumstances, lawfully may cause an account to pay a higher commission
than the lowest available. Under Section 28(e), AIM must make a good faith
determination that the commissions paid are "reasonable in relation to the value
of the brokerage and research services provided . . . viewed in terms of either
that particular transaction or [AIM's] overall responsibilities with respect to
the accounts as to which it exercises investment discretion." The services
provided by the broker also must lawfully and appropriately assist AIM in the
performance of its investment decision-making responsibilities. Accordingly, in
recognition of research services provided to it, a Fund may pay a broker higher
commissions than those available from another broker.
Research services received from broker-dealers supplement AIM's own research
(and the research of its affiliates), and may include the following types of
information: statistical and background information on the U.S. and foreign
economies, industry groups and individual companies; forecasts and
interpretations with respect to the U.S. and foreign economies, securities,
markets, specific industry groups and individual companies; information on
federal, state, local and foreign political developments; portfolio management
strategies; performance information on securities, indexes and investment
accounts; information concerning prices of securities; and information supplied
by specialized services to AIM and to the Trust's trustees with respect to the
performance, investment activities, and fees and expenses of other mutual funds.
Broker-dealers may communicate such information electronically, orally or in
written form. Research services may also include the providing of custody
services, as well as the providing of equipment used to communicate research
information, the providing of specialized consultations with AIM personnel with
respect to computerized systems and data furnished to AIM as a component of
other research services, the arranging of meetings with management of companies,
and the providing of access to consultants who supply research information.
The outside research assistance is useful to AIM since the broker-dealers used
by AIM tend to follow a broader universe of securities and other matters than
AIM's staff can follow. In addition, the research provides AIM with a diverse
perspective on financial markets. Research services provided to AIM by
broker-dealers are available for the benefit of all accounts managed or
22
<PAGE> 232
advised by AIM or by its affiliates. Some broker-dealers may indicate that the
provision of research services is dependent upon the generation of certain
specified levels of commissions and underwriting concessions by AIM's clients,
including the Portfolio. However, the Portfolio is not under any obligation to
deal with any broker-dealer in the execution of transactions in portfolio
securities.
In some cases, the research services are available only from the broker-dealer
providing them. In other cases, the research services may be obtainable from
alternative sources in return for cash payments. AIM believes that the research
services are beneficial in supplementing AIM's research and analysis and that
they improve the quality of AIM's investment advice. The advisory fee paid by
the Portfolio is not reduced because AIM receives such services. However, to the
extent that AIM would have purchased research services had they not been
provided by broker-dealers, the expenses to AIM could be considered to have been
reduced accordingly.
Under the 1940 Act, certain 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 certain persons
affiliated with the Trust are members 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.
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 (1) must 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) must satisfy an asset
diversification test in order to qualify for tax purposes as a regulated
investment company (the "Asset Diversification Test"). Under the Asset
Diversification 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.
23
<PAGE> 233
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, 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
in accordance with the guidance that has been provided by the Internal Revenue
Service.
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.
24
<PAGE> 234
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; 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
18, 1998. 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.
25
<PAGE> 235
FINANCIAL STATEMENTS
FS
<PAGE> 236
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, 1998, and the related
statement of operations for the year then ended, the statements 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.
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, 1998 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, 1998, 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, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
October 2, 1998
FS-1
<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 Portfolio (a series portfolio of Short-Term Investments Trust),
including the schedule of investments, as of August 31, 1998, and the related
statement of operations for the year then ended, the statements 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.
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, 1998 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, 1998, 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, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
October 2, 1998
FS-2
<PAGE> 238
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, 1998, and the related
statement of operations for the year then ended, the statements 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.
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, 1998 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, 1998, 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, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
October 2, 1998
FS-3
<PAGE> 239
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, 1998, and the related
statement of operations for the year then ended, the statements 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.
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, 1998 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, 1998, 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, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
October 2, 1998
FS-4
<PAGE> 240
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, 1998, 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 two-year period then ended
and the period March 12, 1996 (date sales commenced for the Resource Class)
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, 1998 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, 1998, 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 two-year period then ended and the period March 12, 1996 (date sales
commenced for the Resource Class) through August 31, 1996, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
October 2, 1998
FS-5
<PAGE> 241
SCHEDULE OF INVESTMENTS
August 31, 1998
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
U.S. TREASURY SECURITIES - 13.05%
U.S. TREASURY BILLS(a) - 4.25%
5.245% 12/10/98 $ 50,000 $ 49,271,528
- ---------------------------------------------------------------------------
5.125% 02/04/99 50,000 48,889,583
- ---------------------------------------------------------------------------
5.135% 04/29/99 50,000 48,288,333
- ---------------------------------------------------------------------------
5.173% 04/29/99 50,000 48,275,833
- ---------------------------------------------------------------------------
5.15% 05/27/99 25,000 24,041,528
- ---------------------------------------------------------------------------
218,766,805
- ---------------------------------------------------------------------------
U.S. TREASURY NOTES - 8.80%
6.00% 09/30/98 50,000 50,013,521
- ---------------------------------------------------------------------------
5.75% 12/31/98 50,000 50,056,102
- ---------------------------------------------------------------------------
6.375% 01/15/99 125,000 125,389,622
- ---------------------------------------------------------------------------
6.25% 03/31/99 25,000 25,099,746
- ---------------------------------------------------------------------------
6.75% 06/30/99 150,000 151,536,559
- ---------------------------------------------------------------------------
6.375% 07/15/99 50,000 50,383,358
- ---------------------------------------------------------------------------
452,478,908
- ---------------------------------------------------------------------------
Total U.S. Treasury Securities
(Cost $671,245,713) 671,245,713
- ---------------------------------------------------------------------------
Total Investments
(excluding Repurchase Agreements) 671,245,713
- ---------------------------------------------------------------------------
REPURCHASE AGREEMENTS(b) - 86.42%
B.T. Securities Corp.
5.80%(c) -- 250,000 250,000,000
- ---------------------------------------------------------------------------
Barclays Capital Inc.
5.78%(d) 09/01/98 250,000 250,000,000
- ---------------------------------------------------------------------------
Bear, Stearns & Co. Inc.
5.80%(e) -- 250,000 250,000,000
- ---------------------------------------------------------------------------
CIBC Oppenheimer Corp.
5.78%(f) 09/01/98 250,000 250,000,000
- ---------------------------------------------------------------------------
Credit Suisse First Boston Corp.
5.80%(g) 09/01/98 250,000 250,000,000
- ---------------------------------------------------------------------------
Deutsche Morgan Grenfell Inc.
5.80%(h) -- 800,000 800,000,000
- ---------------------------------------------------------------------------
Deutsche Morgan Grenfell Inc.
5.80%(i) 09/01/98 300,000 300,000,000
- ---------------------------------------------------------------------------
Goldman, Sachs & Co.
5.78%(j) 09/01/98 500,000 500,000,000
- ---------------------------------------------------------------------------
</TABLE>
FS-6
<PAGE> 242
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
REPURCHASE AGREEMENTS -
(Continued)
Greenwich Capital
Markets, Inc. 5.80%(k) 09/01/98 $250,000 $ 250,000,000
- ------------------------------------------------------------------------------
HSBC Securities, Inc. 5.78%(l) 09/01/98 250,000 250,000,000
- ------------------------------------------------------------------------------
J.P. Morgan Securities Inc. 5.78%(m) 09/01/98 250,000 250,000,000
- ------------------------------------------------------------------------------
Merrill Lynch Government
Securities, Inc. 5.80%(n) 09/01/98 250,000 250,000,000
- ------------------------------------------------------------------------------
Morgan Stanley & Co.
Inc. 5.79%(o) 09/01/98 250,000 250,000,000
- ------------------------------------------------------------------------------
Warburg Dillon Read LLC 5.79%(p) 09/01/98 345,779 345,778,648
- ------------------------------------------------------------------------------
Total Repurchase Agreements
(Cost $4,445,778,648) 4,445,778,648
- ------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 99.47% 5,117,024,361(q)
- ------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES -- 0.53% 27,209,803
- ------------------------------------------------------------------------------
NET ASSETS -- 100.00% $5,144,234,164
==============================================================================
</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 is at least 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) Open joint repurchase agreement. Either party may terminate the agreement
upon demand. Interest rates, par and collateral are redetermined daily.
Collateralized by $392,000,000 U. S. Government obligations, 0% to 8.875%
due 08/15/99 to 02/15/19 with an aggregate market value at 08/31/98 of
$402,895,145.
(d) Entered into 08/31/98 with a maturing value of $250,040,139. Collateralized
by $251,907,000 U.S. Government obligations, 3.625% to 5.375% due 07/31/00
to 07/15/02 with an aggregate market value at 08/31/98 of $255,001,457.
(e) Open joint repurchase agreement. Either party may terminate the agreement
upon demand. Interest rates, par and collateral are redetermined daily.
Collateralized by $951,236,000 U. S. Government obligations, 0% to 11.25%
due 08/15/02 to 08/15/27 with an aggregate market value at 08/31/98 of
$306,453,166.
(f) Entered into 08/31/98 with a maturing value of $250,040,139. Collateralized
by $244,175,000 U.S. Government obligations, 5.375% to 7.00% due 12/31/99
to 07/15/06 with an aggregate market value at 08/31/98 of $255,002,569.
(g) Entered into 08/31/98 with a maturing value of $250,040,278. Collateralized
by $761,518,000 U.S. Government obligations, 0% to 9.125% due 05/15/99 to
02/15/20 with an aggregate market value at 08/31/98 of $258,228,014.
(h) Open repurchase agreement. Either party may terminate the agreement upon
demand. Interest rates, par and collateral are redetermined daily.
Collateralized by $747,659,000 U. S. Government obligations, 4.75% to
12.50% due 10/31/98 to 11/15/16 with an aggregate market value at 08/31/98
of $816,001,319.
(i) Entered into 08/31/98 with a maturing value of $300,048,333. Collateralized
by $249,951,000 U.S. Government obligations, 5.25% to 14.00% due 08/15/03
to 02/15/23 with an aggregate market value at 08/31/98 of $306,001,371.
(j) Entered into 08/31/98 with a maturing value of $500,080,278. Collateralized
by $389,385,000 U.S. Government obligations, 5.125% to 12.75% due 09/30/98
to 02/15/27 with an aggregate market value at 08/31/98 of $510,503,342.
FS-7
<PAGE> 243
NOTES TO SCHEDULE OF INVESTMENTS - (CONTINUED)
(k) Entered into 08/31/98 with a maturing value of $250,040,278. Collateralized
by $248,093,000 U.S. Government obligations, 5.50% to 5.625% due 12/31/02
to 08/15/28 with an aggregate market value at 08/31/98 of $255,000,827.
(l) Entered into 08/31/98 with a maturing value of $250,040,139. Collateralized
by $237,607,000 U.S. Government obligations, 6.00% to 9.00% due 08/15/99 to
11/15/27 with an aggregate market value at 08/31/98 of $255,004,329.
(m) Entered into 08/31/98 with a maturing value of $250,040,139. Collateralized
by $227,527,000 U.S. Government obligations, 0% to 12.75% due 09/17/98 to
08/15/28 with an aggregate market value at 08/31/98 of $255,000,985.
(n) Entered into 08/31/98 with a maturing value of $250,040,278. Collateralized
by $622,995,000 U.S. Government obligations, 0% due 05/15/05 to 02/15/24
with an aggregate market value at 08/31/98 of $255,001,523.
(o) Entered into 08/31/98 with a maturing value of $250,040,208. Collateralized
by $247,284,000 U.S. Government obligations, 5.375% to 5.75% due 07/31/00
to 11/30/02 with an aggregate market value at 08/31/98 of $255,308,242.
(p) Joint repurchase agreement entered into 08/31/98 with a maturing value of
$1,000,160,833. Collateralized by $1,958,825,000 U.S. Government
obligations, 0% to 5.50% due 11/15/98 to 04/15/28 with an aggregate market
value at 08/31/98 of $1,020,108,316.
(q) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
FS-8
<PAGE> 244
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1998
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase agreements, at value
(amortized cost) $ 671,245,713
- ------------------------------------------------------------------------
Repurchase agreements 4,445,778,648
- ------------------------------------------------------------------------
Receivables for:
Investments sold 47,702,222
- ------------------------------------------------------------------------
Interest receivable 6,315,744
- ------------------------------------------------------------------------
Investment for deferred compensation plan 82,793
- ------------------------------------------------------------------------
Other assets 68,410
- ------------------------------------------------------------------------
Total assets 5,171,193,530
- ------------------------------------------------------------------------
LIABILITIES:
Payables for:
Dividends 25,813,818
- ------------------------------------------------------------------------
Deferred compensation 82,793
- ------------------------------------------------------------------------
Accrued administrative services fees 9,609
- ------------------------------------------------------------------------
Accrued advisory fees 275,392
- ------------------------------------------------------------------------
Accrued distribution fees 456,303
- ------------------------------------------------------------------------
Accrued transfer agent fees 79,567
- ------------------------------------------------------------------------
Accrued trustees' fees 4,209
- ------------------------------------------------------------------------
Accrued operating expenses 237,675
- ------------------------------------------------------------------------
Total liabilities 26,959,366
- ------------------------------------------------------------------------
NET ASSETS $5,144,234,164
========================================================================
NET ASSETS:
Institutional Class $2,988,374,938
========================================================================
Private Investment Class $ 360,307,220
========================================================================
Personal Investment Class $ 405,800,587
========================================================================
Cash Management Class $ 933,790,915
========================================================================
Resource Class $ 455,960,504
========================================================================
SHARES OF BENEFICIAL INTEREST, $.01 PAR VALUE PER SHARE:
Institutional Class 2,987,867,418
========================================================================
Private Investment Class 360,260,819
========================================================================
Personal Investment Class 405,742,920
========================================================================
Cash Management Class 933,641,495
========================================================================
Resource Class 455,898,901
========================================================================
NET ASSET VALUE PER SHARE:
Net asset value, offering and redemption price per share $ 1.00
========================================================================
</TABLE>
See Notes to Financial Statements.
FS-9
<PAGE> 245
STATEMENT OF OPERATIONS
For the year ended August 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $291,070,704
- -------------------------------------------------------------------
EXPENSES:
Advisory fees 3,026,608
- -------------------------------------------------------------------
Custodian fees 253,600
- -------------------------------------------------------------------
Administrative services fees 102,543
- -------------------------------------------------------------------
Trustees' fees and expenses 34,137
- -------------------------------------------------------------------
Transfer agent fees 579,287
- -------------------------------------------------------------------
Distribution fees (Note 2) 6,312,198
- -------------------------------------------------------------------
Other 406,649
- -------------------------------------------------------------------
Total expenses 10,715,022
- -------------------------------------------------------------------
Less: Fee waivers (2,009,722)
- -------------------------------------------------------------------
Net expenses 8,705,300
- -------------------------------------------------------------------
Net investment income 282,365,404
- -------------------------------------------------------------------
Net realized gain on sales of investments 17,887
- -------------------------------------------------------------------
Net increase in net assets resulting from operations $282,383,291
===================================================================
</TABLE>
See Notes to Financial Statements.
FS-10
<PAGE> 246
STATEMENT OF CHANGES IN NET ASSETS
For the years ended August 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 282,365,404 $ 236,779,733
- -----------------------------------------------------------------------------
Net realized gain on sales of investments 17,887 215,978
- -----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 282,383,291 236,995,711
- -----------------------------------------------------------------------------
Distributions to shareholders from net
investment income:
Institutional Class (171,162,611) (153,610,717)
- -----------------------------------------------------------------------------
Private Investment Class (20,105,302) (20,120,440)
- -----------------------------------------------------------------------------
Personal Investment Class (18,031,165) (11,733,992)
- -----------------------------------------------------------------------------
Cash Management Class (55,954,060) (41,058,376)
- -----------------------------------------------------------------------------
Resource Class (17,112,266) (10,256,208)
- -----------------------------------------------------------------------------
Distributions to shareholders from net
realized gains -- (59,575)
- -----------------------------------------------------------------------------
Share transactions-net (See Note 4) (116,572,228) 1,556,740,962
- -----------------------------------------------------------------------------
Net increase (decrease) in net assets (116,554,341) 1,556,897,365
- -----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 5,260,788,505 3,703,891,140
- -----------------------------------------------------------------------------
End of period $5,144,234,164 $5,260,788,505
=============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $5,143,411,553 $5,259,983,781
- -----------------------------------------------------------------------------
Undistributed net realized gain on sales of
investments 822,611 804,724
- -----------------------------------------------------------------------------
$5,144,234,164 $5,260,788,505
=============================================================================
</TABLE>
See Notes to Financial Statements.
FS-11
<PAGE> 247
NOTES TO FINANCIAL STATEMENTS
August 31, 1998
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 three different portfolios, each of which offers separate series
of shares: the Treasury Portfolio, the Government & Agency Portfolio and the
Treasury TaxAdvantage Portfolio. The Government & Agency Portfolio commenced
operations on September 1, 1998. Information presented in these financial
statements pertains only to the Treasury Portfolio (the "Portfolio"), with the
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
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 preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of significant accounting policies followed by the
Portfolio in the preparation of its financial statements.
A. Security Valuations - The Portfolio's 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 - Distribution expenses directly attributable to a class of shares
are charged to that class' operations. All other expenses are allocated
among the classes.
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 investment 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>
FS-12
<PAGE> 248
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, 1998,
the Fund reimbursed AIM $102,543 for such services.
The Portfolio, pursuant to a transfer agency and service agreement, has agreed
to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agent and
shareholder services to the Portfolio. On September 20, 1997, the Board of
Trustees approved the appointment of AFS as transfer agent of the Fund
effective December 29, 1997. During the year ended August 31, 1998, the
Portfolio paid AFS $366,571 for such services. Prior to the effective date of
the agreement with AFS, the Portfolio paid A I M Institutional Fund Services,
Inc. $212,716 pursuant to a transfer agency and shareholder services agreement
for the period September 1, 1997 through December 28, 1997.
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. 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 each class. During the year ended
August 31, 1998, the Private Investment Class, the Personal Investment Class,
the Cash Management Class and the Resource Class paid $1,159,606, $1,803,733,
$826,277 and $512,860, respectively, as compensation under the Plan. FMC waived
fees of $2,009,722 for the same period. Certain officers and trustees of the
Trust are officers of AIM, FMC and AFS.
During the year ended August 31, 1998, the Portfolio paid legal fees of
$15,485 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.
FS-13
<PAGE> 249
NOTE 4-SHARE INFORMATION
Changes in shares outstanding during the years ended August 31, 1998 and 1997
were as follows:
<TABLE>
<CAPTION>
1998 1997
-------------------------------- ---------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
Sold:
Institutional Class 18,385,087,568 $18,385,087,568 15,820,439,672 $ 15,820,439,672
- --------------------------------------------------------------------------------------------
Private Investment
Class 1,991,337,616 1,991,337,616 2,377,066,232 2,377,066,232
- --------------------------------------------------------------------------------------------
Personal Investment
Class 3,949,434,631 3,949,434,631 2,585,293,225 2,585,293,225
- --------------------------------------------------------------------------------------------
Cash Management Class 6,742,292,291 6,742,292,291 4,354,698,981 4,354,698,981
- --------------------------------------------------------------------------------------------
Resource Class 2,712,585,402 2,712,585,402 2,558,140,941 2,558,140,941
- --------------------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Institutional Class 34,740,376 34,740,376 15,531,436 15,531,436
- --------------------------------------------------------------------------------------------
Private Investment
Class 5,517,795 5,517,795 3,858,592 3,858,592
- --------------------------------------------------------------------------------------------
Personal Investment
Class 16,025,048 16,025,048 9,897,559 9,897,559
- --------------------------------------------------------------------------------------------
Cash Management Class 20,427,201 20,427,201 12,944,226 12,944,226
- --------------------------------------------------------------------------------------------
Resource Class 15,915,270 15,915,270 9,274,277 9,274,277
- --------------------------------------------------------------------------------------------
Reacquired:
Institutional Class (18,839,453,624) (18,839,453,624) (14,763,510,184) (14,763,510,184)
- --------------------------------------------------------------------------------------------
Private Investment
Class (2,099,963,668) (2,099,963,668) (2,270,031,466) (2,270,031,466)
- --------------------------------------------------------------------------------------------
Personal Investment
Class (3,882,639,209) (3,882,639,209) (2,465,181,087) (2,465,181,087)
- --------------------------------------------------------------------------------------------
Cash Management Class (6,658,189,744) (6,658,189,744) (4,328,020,236) (4,328,020,236)
- --------------------------------------------------------------------------------------------
Resource Class (2,509,689,181) (2,509,689,181) (2,363,661,206) (2,363,661,206)
- --------------------------------------------------------------------------------------------
Net increase (decrease) (116,572,228) $ (116,572,228) 1,556,740,962 $ 1,556,740,962
============================================================================================
</TABLE>
FS-14
<PAGE> 250
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Cash Management
Class outstanding during each of the years in the five-year period ended
August 31, 1998.
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
-------- -------- -------- ------- -------
<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 0.05 0.05 0.03
- -------------------------- -------- -------- -------- ------- -------
Less distributions:
Dividends from net
investment income (0.05) (0.05) (0.05) (0.05) (0.03)
- -------------------------- -------- -------- -------- ------- -------
Net asset value, end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========================== ======== ======== ======== ======= =======
Total return 5.56% 5.39% 5.48% 5.57% 3.44%
========================== ======== ======== ======== ======= =======
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $933,791 $829,243 $789,627 $81,219 $73,619
========================== ======== ======== ======== ======= =======
Ratio of expenses to
average net assets(a) 0.17%(b) 0.17% 0.17% 0.18% 0.16%
========================== ======== ======== ======== ======= =======
Ratio of net investment
income to average net
assets(c) 5.42%(b) 5.25% 5.25% 5.42% 3.48%
========================== ======== ======== ======== ======= =======
</TABLE>
(a) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
0.19%, 0.19%, 0.19%, 0.20% and 0.21% for the periods 1998-1994,
respectively.
(b) Ratios are based on average net assets of $1,032,845,745.
(c) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 5.40%, 5.24%, 5.23%, 5.40% and 3.43% for the periods
1998-1994, respectively.
FS-15
<PAGE> 251
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Institutional Class
outstanding during each of the years in the five-year period ended August 31,
1998.
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<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 0.05 0.06 0.04
- ----------------------- ---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net
investment income (0.05) (0.05) (0.05) (0.06) (0.04)
- ----------------------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======================= ========== ========== ========== ========== ==========
Total return 5.64% 5.47% 5.57% 5.66% 3.53%
======================= ========== ========== ========== ========== ==========
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $2,988,375 $3,408,010 $2,335,441 $2,669,637 $2,452,389
======================= ========== ========== ========== ========== ==========
Ratio of expenses to
average net assets 0.08%(a) 0.09% 0.09% 0.10% 0.08%
======================= ========== ========== ========== ========== ==========
Ratio of net investment
income to average net
assets 5.50%(a) 5.35% 5.43% 5.53% 3.39%
======================= ========== ========== ========== ========== ==========
</TABLE>
(a)Ratios are based on average net assets of $3,112,551,185.
FS-16
<PAGE> 252
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Personal Investment
Class outstanding during each of the years in the five-year period ended August
31, 1998.
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
-------- -------- -------- -------- -------
<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 0.05 0.05 0.03
- -------------------------- -------- -------- -------- -------- -------
Less distributions:
Dividends from net
investment income (0.05) (0.05) (0.05) (0.05) (0.03)
- -------------------------- -------- -------- -------- -------- -------
Net asset value, end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========================== ======== ======== ======== ======== =======
Total return 5.12% 4.95% 5.04% 5.13% 3.02%
========================== ======== ======== ======== ======== =======
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $405,801 $322,971 $192,947 $114,527 $88,582
========================== ======== ======== ======== ======== =======
Ratio of expenses to
average net assets(a) 0.58%(b) 0.60% 0.59% 0.60% 0.58%
========================== ======== ======== ======== ======== =======
Ratio of net investment
income to average net
assets(c) 5.01%(b) 4.85% 4.91% 5.03% 2.99%
========================== ======== ======== ======== ======== =======
</TABLE>
(a) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
0.83%, 0.86%, 0.92%, 0.90% and 0.91% for the periods 1998-1994,
respectively.
(b) Ratios are based on average net assets of $360,746,624.
(c) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 4.76%, 4.59%, 4.58%, 4.73% and 2.66% for the periods
1998-1994, respectively.
FS-17
<PAGE> 253
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Private Investment
Class outstanding during each of the years in the five-year period ended August
31, 1998.
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<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 0.05 0.05 0.03
- ------------------------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income (0.05) (0.05) (0.05) (0.05) (0.03)
- ------------------------- -------- -------- -------- -------- --------
Net asset value, end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========================= ======== ======== ======== ======== ========
Total return 5.33% 5.16% 5.25% 5.34% 3.22%
========================= ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $360,307 $463,441 $352,537 $394,585 $412,716
========================= ======== ======== ======== ======== ========
Ratio of expenses to
average net assets(a) 0.38%(b) 0.39% 0.39% 0.40% 0.38%
========================= ======== ======== ======== ======== ========
Ratio of net investment
income to average net
assets(c) 5.20%(b) 5.05% 5.14% 5.23% 3.26%
========================= ======== ======== ======== ======== ========
</TABLE>
(a) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
0.58%, 0.59%, 0.59%, 0.60% and 0.60% for the periods 1998-1994,
respectively.
(b) Ratios are based on average net assets of $386,535,328.
(c) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 5.00%, 4.85%, 4.94%, 5.03% and 3.05% for the periods
1998-1994, respectively.
FS-18
<PAGE> 254
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Resource Class
outstanding during each of the years in the two-year period ended August 31,
1998 and the period March 12, 1996 (date sales commenced) through August 31,
1996.
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- -------
<S> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------- -------- -------- -------
Income from investment operations:
Net investment income 0.05 0.05 0.03
- ----------------------------------------- -------- -------- -------
Less distributions:
Dividends from net investment income (0.05) (0.05) (0.03)
- ----------------------------------------- -------- -------- -------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00
========================================= ======== ======== =======
Total return 5.47% 5.30% 5.09%(a)
========================================= ======== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $455,961 $237,123 $33,339
========================================= ======== ======== =======
Ratio of expenses to average net
assets(b) 0.24%(c) 0.25% 0.25%(a)
========================================= ======== ======== =======
Ratio of net investment income to average
net assets(d) 5.34%(c) 5.19% 5.07%(a)
========================================= ======== ======== =======
</TABLE>
(a) Annualized.
(b) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursement were
0.28%, 0.29% and 0.29% (annualized) for the periods 1998-1996,
respectively.
(c) Ratios are based on average net assets of $320,537,856.
(d) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursement were 5.30%, 5.15% and 5.03% (annualized) for the periods
1998-1996, respectively.
FS-19
<PAGE> 255
SHORT-TERM
INVESTMENTS TRUST
Prospectus
- --------------------------------------------------------------------------------
TREASURY The Treasury TaxAdvantage Portfolio is a money
TAXADVANTAGE market fund whose investment objective is the
PORTFOLIO maximization of current income to the extent consistent
with the preservation of capital and the maintenance of
CASH liquidity. The Treasury TaxAdvantage Portfolio seeks to
MANAGEMENT achieve its objective by investing in direct
CLASS obligations of the U.S. Treasury. The Treasury
TaxAdvantage Portfolio's investment strategy is
intended to enable the Portfolio to provide its
DECEMBER 18, 1998 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 Cash Management 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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE 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
TAXADVANTAGE PORTFOLIO AND SHOULD BE READ AND RETAINED
FOR FUTURE REFERENCE. A STATEMENT OF ADDITIONAL
INFORMATION, DATED DECEMBER 18, 1998, 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) 877-7745. 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
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.
[AIM LOGO APPEARS HERE]
Fund Management Company
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 877-7745
<PAGE> 256
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 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 separate prospectuses, the Trust also offers other classes of
shares of beneficial interest representing interests in the Portfolio: the
Institutional Class, the Personal Investment Class, the Private Investment
Class, the Reserve Class and the Resource Class. Such classes have different
distribution arrangements and are designed for different types of investors. The
Trust also offers shares of several classes representing interests in each of
two other portfolios, the Government & Agency Portfolio and the Treasury
Portfolio, pursuant to separate prospectuses. 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 $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 Trust. 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
3:00 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 3:00 p.m. Eastern Time. Dividends are
paid monthly by check or wire transfer unless the shareholder has previously
elected to have such dividends automatically reinvested in additional shares of
the Class. Information concerning the amount of the dividends declared on any
particular day will normally be available by 4:00 p.m. Eastern Time on that day.
See "Dividends."
CONSTANT NET ASSET VALUE
The 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
2
<PAGE> 257
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, 1998, the Trust paid AIM advisory fees with respect to the
Portfolio which represented 0.12% 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." Under a Transfer
Agency and Service Agreement, A I M Fund Services, Inc., ("Transfer Agent"),
AIM's wholly owned subsidiary and a registered transfer agent, receives a fee
for its provision of transfer agency, dividend distribution and disbursement,
and shareholder services to the Trust. See "General Information -- Transfer
Agent and Custodian."
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 0.10% 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. 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, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design and Invest With
Discipline are registered service marks and AIM Bank Connection is a service
mark of A I M Management Group Inc.
3
<PAGE> 258
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 (after fee waivers)**..................... 0.12%
12b-1 fees (after fee waivers)**.......................... 0.08%
Other expenses (estimated):
Custodian fees......................................... 0.01%
Other.................................................. 0.07%
------
Total other expenses.............................. 0.08%
------
Total portfolio operating expenses -- Cash Management
Class**................................................ 0.28%
======
</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 be 0.20%, 0.10% and 0.38%, 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.................................................... $ 9
</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 "Total portfolio
operating expenses -- Cash Management Class" is based upon costs and the
estimated size of the Class and fees to be charged for the current fiscal
period. The "Other expenses" and "12b-1 fees" figures are based upon estimated
costs and the estimated size of the Class and the Portfolio and estimated fees
to be charged for the current fiscal period. Thus, actual expenses may be
greater or less than such estimates. 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 -- Cash Management Class" remain the same in the
years shown.
4
<PAGE> 259
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.
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 $1,000,000.
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 the repurchase price of the securities sold by the Portfolio which it is
obligated to repurchase. The risk, if
5
<PAGE> 260
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, liquid 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 liquid 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.
INVESTMENT IN OTHER INVESTMENT COMPANIES. The Trust is permitted to invest
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 investment policies described above may be changed by the Board of
Trustees without the affirmative vote of a majority of the outstanding shares of
beneficial interest of the Trust.
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.
6
<PAGE> 261
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. 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 Transfer Agent
prior to 3:00 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. Following the initial investment, subsequent purchases of shares of the
Class may also be made via AIM LINK(R) Remote, a personal computer application
software product. 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. The Portfolio, however, reserves the right to change the
time for which purchase and redemption requests must be submitted to the
Portfolio for execution on the same day or any day when the U.S. primary
broker-dealer community is closed for business or trading is restricted due to
national holiday. 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.
Prior to the initial purchase of shares of the Class, an Account
Application, which can be obtained from the Transfer Agent, must be completed
and sent to the Transfer Agent at P.O. Box 4497, Houston, TX 77210-4497. 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 the Transfer Agent.
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
7
<PAGE> 262
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 the
Transfer Agent.
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 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 the 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
3:00 p.m. Eastern Time will earn the dividend declared on the date of purchase.
Any request for a correction to a transaction of Portfolio shares must be
submitted in writing to the Transfer Agent. The Transfer Agent reserves the
right to reject any such request. When a correction results in a dividend
adjustment, the Institution must agree in writing to reimburse the Portfolio for
any loss resulting from the correction. Failure to deliver purchase proceeds on
the requested settlement date may result in a claim against the Institution for
an amount equal to the overdraft charge incurred by 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 must specify that it is for the purchase of Shares of the
"Cash Management 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.
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) Remote. 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
8
<PAGE> 263
by a shareholder. If a redemption request is received by the Transfer Agent
prior to 3:00 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 Transfer Agent after 3:00 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 3:00 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. The Portfolio reserves the
right to change the time for which redemption requests must be submitted to and
received by the Transfer Agent for execution on the same day on any day when the
U.S. primary broker-dealer community is closed for business or trading is
restricted due to national holidays.
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 the
Transfer Agent.
Shareholders may request a redemption by telephone. Neither the Transfer
Agent nor FMC will 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 may 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
3:00 p.m. Eastern Time on the day of declaration. Net income for dividend
purposes is determined daily as of 3:00 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's 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 3:00 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 the Transfer Agent at P.O. Box 4497, Houston, TX 77210-4497, and
will become effective with dividends paid after its receipt by the Transfer
Agent. If a shareholder redeems all
9
<PAGE> 264
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 portfolios 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 the
Transfer Agent.
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
10
<PAGE> 265
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
3:00 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) 877-7745. 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 the investor before making an investment in the
Portfolio.
To assist banks and other institutions performing their own sub-accounting,
same day information as to the daily dividend per share for the Portfolio to
eight decimal places and current yield normally will be available by 4:00 p.m.
Eastern Time.
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.
11
<PAGE> 266
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. Information concerning the Board of Trustees may be found in the
Statement of Additional Information. Certain trustees and officers of the Trust
are affiliated with AIM and A I M Management Group Inc. ("AIM Management"), the
parent corporation of AIM.
For a discussion of AIM Management and its subsidiaries' Year 2000
Compliance Project, see "General Information -- Year 2000 Compliance Project."
INVESTMENT ADVISOR
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173, acts as the investment advisor for the Portfolio pursuant to a
Master Investment Advisory Agreement (the "Advisory Agreement"). AIM was
organized in 1976 and, together with its affiliates, manages or advises over 90
investment company portfolios. Certain of the directors and 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. AIM Management is an indirect, wholly owned
subsidiary of AMVESCAP PLC, a publicly-traded holding company that, through its
subsidiaries, engages in institutional investment management and retail fund
businesses in the United States, Europe and the Pacific Region.
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, 1998, AIM received fees from the Trust
under the Advisory Agreement with respect to the Portfolio which represented
0.12% of the Portfolio's average daily net assets.
ADMINISTRATIVE SERVICES
The Trust has entered into a Master Administrative Services Agreement 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 waived
advisory fees of $167,622 on the Portfolio during the year ended August 31,
1998.
DISTRIBUTOR
The Trust has entered into a Master Distribution Agreement (the
"Distribution Agreement") with FMC, a registered broker-dealer and a wholly
owned subsidiary of AIM, to act as the exclusive distributor of
12
<PAGE> 267
the shares of the Class. The address of FMC is 11 Greenway Plaza, Suite 100,
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 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 0.10% 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 0.10% 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 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 has been 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"). 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.
13
<PAGE> 268
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 eighteen classes. Six classes, including the Class,
represent interests in the Portfolio, six classes represent interests in the
Government & Agency Portfolio and six 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.
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.
14
<PAGE> 269
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 Fund Services, Inc., P.O. Box 4497, Houston, TX 77210-4497, acts as
transfer agent for the shares of the Portfolio.
LEGAL COUNSEL
The law firm of Ballard Spahr Andrews & Ingersoll, LLP, Philadelphia,
Pennsylvania, serves as counsel to the Trust and passes upon certain legal
matters for the Trust.
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 100, Houston, Texas 77046-1173, or may be made by calling (800) 877-7745.
YEAR 2000 COMPLIANCE PROJECT
In providing services to the Trust, AIM Management and its subsidiaries
rely on both internal software systems as well as external software systems
provided by third parties. Many software systems in use today are unable to
distinguish the year 2000 from the year 1900. This defect if not cured will
likely adversely affect the services that AIM Management, its subsidiaries and
other service providers to the Trust provide the Trust and its shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and phase (iii) has
commenced. The Project is scheduled to be completed during the second quarter of
1999. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm year 2000 compliance
upon installation. No assurance can be given that the Project will be successful
or that AIM Management and its subsidiaries will not otherwise be adversely
affected by the year 2000 issue.
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.
15
<PAGE> 270
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS TRUST
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 877-7745
INVESTMENT ADVISOR
A I M ADVISORS, INC.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(713) 626-1919
DISTRIBUTOR
FUND MANAGEMENT COMPANY
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 877-7745
AUDITORS
KPMG PEAT MARWICK LLP
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 FUND SERVICES, INC.
P.O. Box 4497
Houston, Texas 77210-4497
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROSPECTUS
December 18, 1998
SHORT-TERM
INVESTMENTS TRUST
---------------------
TREASURY
TAXADVANTAGE
PORTFOLIO
---------------------
CASH MANAGEMENT CLASS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Summary........................................... 2
Table of Fees and Expenses........................ 4
Suitability for Investors......................... 5
Investment Program................................ 5
Purchase of Shares................................ 7
Redemption of Shares.............................. 8
Dividends......................................... 9
Taxes............................................. 10
Net Asset Value................................... 11
Yield Information................................. 11
Reports to Shareholders........................... 11
Management of the Trust........................... 12
General Information............................... 14
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 271
SHORT-TERM
INVESTMENTS TRUST
Prospectus
- --------------------------------------------------------------------------------
TREASURY The Treasury TaxAdvantage Portfolio is a money
TAXADVANTAGE market fund whose investment objective is the
PORTFOLIO maximization of current income to the extent consistent
with the preservation of capital and the maintenance of
INSTITUTIONAL liquidity. The Treasury TaxAdvantage Portfolio seeks to
CLASS achieve its objective by investing in direct
obligations of the U.S. Treasury. The Treasury
TaxAdvantage Portfolio's investment strategy is
DECEMBER 18, 1998 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 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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE 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 18,
1998, 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.
[AIM LOGO APPEARS HERE]
Fund Management Company
11 Greenway Plaza
Suite 100
Houston, Texas 77046-1173
(800) 659-1005
<PAGE> 272
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 separate prospectuses, the Trust offers other classes of shares of
beneficial interest representing interests in the Portfolio: the Cash Management
Class, the Personal Investment Class, the Private Investment Class, the Reserve
Class and the Resource Class. Such classes have different distribution
arrangements and are designed for different categories of investors. The Trust
also offers shares of several classes of the Trust representing interests in
each of two other portfolios, the Government & Agency Portfolio and 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
3:00 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 3:00 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 4:00 p.m. Eastern Time on that day.
See "Dividends."
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
2
<PAGE> 273
$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 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, 1998, the Trust paid AIM fees with respect to the Portfolio which
represented 0.12% 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." Under a Transfer Agency and Service Agreement,
A I M Fund Services, Inc. ("Transfer Agent"), AIM's wholly owned subsidiary and
a registered transfer agent, receives a fee for its provision of transfer
agency, dividend distribution and disbursement, and shareholder services to the
Trust. See "General Information -- Transfer Agent and Custodian."
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, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design and Invest With
Discipline are registered service marks and AIM Bank Connection is a service
mark of A I M Management Group Inc.
3
<PAGE> 274
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**......................................... 0.12%
12b-1 fees................................................ None
Other expenses:
Custodian fees......................................... 0.01%
Other.................................................. 0.07%
-----
Total other expenses................................. 0.08%
----
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 be 0.20% and 0.28%, 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, 1998. 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 -- 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> 275
FINANCIAL HIGHLIGHTS
Shown below are the per share ratios and supplemental data (collectively
"data") for the years in the eight-year period
ended August 31, 1998 and the period August 17, 1990 (date sales commenced)
through August 31, 1990. The data has been audited by KPMG Peat Marwick LLP,
independent auditors, whose report on the financial statements and the related
notes appears in the Statement of Additional Information.
<TABLE>
<CAPTION>
AUGUST 31,
---------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- -------- --------
<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 0.05 0.05 0.03 0.03 0.04
-------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income.... (0.05) (0.05) (0.05) (0.05) (0.03) (0.03) (0.04)
-------- -------- -------- -------- -------- -------- --------
Net asset value, end of
period................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ======== ========
Total return............. 5.30% 5.13% 5.19% 5.35% 3.29% 2.96% 4.32%
======== ======== ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of
period (000s
omitted)............. $113,084 $258,251 $407,218 $394,376 $403,882 $434,693 $573,283
======== ======== ======== ======== ======== ======== ========
Ratio of expenses to
average net
assets(b)............ 0.20%(c) 0.20% 0.20% 0.20% 0.20% 0.20% 0.17%
======== ======== ======== ======== ======== ======== ========
Ratio of net investment
income to average net
assets(d)............ 5.05%(c) 5.00% 5.06% 5.21% 3.23% 2.93% 4.16%
======== ======== ======== ======== ======== ======== ========
<CAPTION>
AUGUST 31,
--------------------
1991 1990
-------- --------
<S> <C> <C>
Net asset value,
beginning of period.... $ 1.00 $ 1.00
Income from investment
operations:
Net investment
income............... 0.07 0.003
-------- --------
Less distributions:
Dividends from net
investment income.... (0.07) (0.003)
-------- --------
Net asset value, end of
period................. $ 1.00 $ 1.00
======== ========
Total return............. 6.70% 7.79%(a)
======== ========
Ratios/supplemental data:
Net assets, end of
period (000s
omitted)............. $403,846 $ 16,201
======== ========
Ratio of expenses to
average net
assets(b)............ 0.14% 0.10%(a)
======== ========
Ratio of net investment
income to average net
assets(d)............ 6.16% 7.74%(a)
======== ========
</TABLE>
- ------------
(a) Annualized.
(b) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to waiver of advisory fees were 0.28%, 0.23%,
0.23%, 0.23% and 0.23% for the periods 1998-1994, respectively, and 0.21%,
0.25% and 1.24% (annualized) for the periods 1992-1990, respectively.
(c) Ratios are based on average net assets of $169,918,161.
(d) Ratios of net investment income to average net assets prior to waiver of
advisory fees were 4.97%, 4.97%, 5.04%, 5.18% and 3.20% for the periods
1998-1994, respectively, and 4.13%, 6.04% and 6.60% (annualized) for the
periods 1992-1990, respectively.
5
<PAGE> 276
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 record keeping. It is anticipated
that most institutions will perform their own subaccounting. To assist these
institutions, information concerning the dividends declared by the Portfolio on
any particular day will normally be available by 4:00 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. 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.
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's 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> 277
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, liquid 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 liquid 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.
INVESTMENT IN OTHER INVESTMENT COMPANIES. The Trust is permitted to invest 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 investment policies described above may be changed by the Board of
Trustees without the affirmative vote of a majority of the outstanding shares of
beneficial interest of the Trust.
INVESTMENT RESTRICTIONS
The Portfolio's investment program is subject to a number of investment
restrictions which reflect self-imposed standards as well as federal and state
regulatory limitations. These restrictions are designed to minimize certain
risks associated with investing in specified types of securities or engaging in
certain transactions and to limit the amount of the Portfolio's assets which may
be concentrated in any specific industry or issuer. The most significant of
these restrictions provides that the Portfolio will not:
borrow money or issue senior securities except (a) for
temporary or emergency purposes (e.g., in order to facilitate
the orderly sale of portfolio securities to accommodate
abnormally heavy redemption requests), the Portfolio may
borrow money from banks or obtain funds by entering into
reverse repurchase agreements, and (b) to the extent that
entering into commitments to purchase securities in accordance
with the Portfolio's investment program may be considered the
issuance of senior securities. The Portfolio will not purchase
securities while borrowings in excess of 5% of its total
assets are outstanding.
The foregoing investment restriction of the Portfolio (as well as certain
others set forth in the Statement of Additional Information) is a matter of
fundamental policy which may not be changed without the affirmative vote of a
majority of the outstanding shares of the Portfolio.
In addition to the restrictions described above, the Portfolio must also
comply with the requirements of Rule 2a-7 under the 1940 Act, as such Rule may
be amended from time to time, which governs the operations of money market
funds, and may be more restrictive than the policies described herein. A
description of further investment restrictions applicable to the Portfolio is
contained in the Statement of Additional Information.
7
<PAGE> 278
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 Transfer Agent
prior to 3:00 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. Following the initial investment, subsequent purchases of shares of the
Class may also be made via AIM LINK(R) Remote, a personal computer application
software product. 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. The Portfolio, however, reserves the right to change the time for
which purchase and redemption requests must be submitted to the Portfolio for
execution on the same day or any day when the U.S. primary broker-dealer
community is closed for business or trading is restricted due to national
holidays. 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 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 the 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
3:00 p.m. Eastern Time will earn the dividend declared on the date of purchase.
Any request for a correction to a transaction of Portfolio shares must be
submitted in writing to the Transfer Agent. The Transfer Agent reserves the
right to reject any such request. When a correction results in a dividend
adjustment, the institution must agree in writing to reimburse the Portfolio for
any loss resulting from the correction. Failure to deliver purchase proceeds on
the requested settlement date may result in a claim against the institution for
an amount equal to the overdraft charge incurred by the Portfolio.
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 the Transfer Agent, P.O. Box 4497, Houston, TX 77210-4497.
Account Applications may be obtained from the Transfer Agent. 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 the Transfer Agent.
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) Remote. 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 the Transfer Agent prior to 3:00 p.m. Eastern Time on a business
day of the Portfolio, the redemption will be ef-
8
<PAGE> 279
fected at the net 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 the Transfer Agent after 3:00
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 3:00 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. The Portfolio reserves the right to change the time for which
redemption requests must be submitted to and received by the Transfer Agent for
execution on the same day or any day when the U.S. primary broker-dealer
community is closed for business or trading is restricted due to national
holidays.
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 the
Transfer Agent.
Shareholders may request a redemption by telephone. Neither the Transfer Agent
nor FMC will 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 may 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 3:00 p.m. Eastern
Time on the day of declaration. Net income for dividend purposes is determined
daily as of 3:00 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 and accounting and legal expenses, based upon such class's pro
rata share of the net assets of the Portfolio, less (c) expenses directly
attributable to such class, 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 3:00 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 the Transfer Agent at P.O. Box 4497, Houston, Texas 77210-4497
and will become effective with dividends paid after its receipt by the Transfer
Agent. 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.
9
<PAGE> 280
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 portfolios 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 AFS.
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 3:00
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
10
<PAGE> 281
the Portfolio's investments, the Portfolio's maturity and the operating expense
ratio of the Class. 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, 1998, 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 4.99% and 5.11%, 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 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 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.
Information concerning the Board of Trustees may be found in the Statement of
Additional Information. Certain trustees and officers of the Trust are
affiliated with AIM and A I M Management Group Inc. ("AIM Management"), the
parent corporation of AIM.
For a discussion of AIM Management and its subsidiaries' Year 2000 Compliance
Project, see "General Information -- Year 2000 Compliance Project."
INVESTMENT ADVISOR
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173,
acts as the investment advisor for the Portfolio pursuant to a Master Investment
Advisory Agreement (the "Advisory Agreement"). AIM, organized in 1976, together
with its affiliates, manages or advises over 90 investment company portfolios.
Certain of the directors and 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. AIM
Management is an indirect, wholly owned subsidiary of AMVESCAP PLC, a
publicly-traded holding company that, through its subsidiaries, engages in
institutional investment management and retail fund businesses in the United
States, Europe and the Pacific Region.
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, 1998, AIM received fees from the Trust
under the Advisory Agreement with respect to the Portfolio which represented
0.12% 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's
average daily net assets.
11
<PAGE> 282
ADMINISTRATIVE SERVICES
The Trust has entered into a Master Administrative Services Agreement 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 waived
advisory fees of $167,622 on the Portfolio during the year ended August 31,
1998.
DISTRIBUTOR
The Trust has entered into a Master Distribution Agreement (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 100, 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 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. 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 eighteen
classes of which six represent interests in the Government & Agency Portfolio,
six represent interests in the Treasury Portfolio and six 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 ex-
12
<PAGE> 283
penses 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 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 Fund Services, Inc., P.O. Box 4497, Houston, TX 77210-4479, acts as
transfer agent for the shares of the Class.
LEGAL COUNSEL
The law firm of Ballard Spahr Andrews & Ingersoll, LLP, Philadelphia,
Pennsylvania, serves as counsel to the Trust and has passed upon certain legal
matters for the Trust.
SHAREHOLDER INQUIRIES
Shareholder inquiries concerning the status of an account should be directed
to the Trust at 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173, or may
be made by calling (800) 659-1005.
YEAR 2000 COMPLIANCE PROJECT
In providing services to the Trust, AIM Management and its subsidiaries rely
on both internal software systems as well as external software systems provided
by third parties. Many software systems in use today are unable to distinguish
the year 2000 from the year 1900. This defect if not cured will likely adversely
affect the services that AIM Management, its subsidiaries and other service
providers to the Trust provide the Trust and its shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and phase (iii) has
commenced. The Project is scheduled to be completed during the second quarter of
1999. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm year 2000 compliance
upon installation. No assurance can be given that the Project will be successful
or that A I M Management and its subsidiaries will not otherwise be adversely
affected by the year 2000 issue.
13
<PAGE> 284
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. The Statement of Additional Information
is attached as Appendix A to this Prospectus. 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.
14
<PAGE> 285
APPENDIX
STATEMENT OF
ADDITIONAL INFORMATION
SHORT-TERM INVESTMENTS TRUST
TREASURY TAXADVANTAGE PORTFOLIO
(CASH MANAGEMENT CLASS)
(INSTITUTIONAL CLASS)
(PERSONAL INVESTMENT CLASS)
(PRIVATE INVESTMENT CLASS)
(RESERVE CLASS)
(RESOURCE CLASS)
11 GREENWAY PLAZA
SUITE 100
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 CLASSES
OF THE TREASURY TAXADVANTAGE PORTFOLIO,
COPIES OF WHICH MAY BE OBTAINED BY WRITING
FUND MANAGEMENT COMPANY, 11 GREENWAY PLAZA,
SUITE 100, HOUSTON, TEXAS 77046-1173
OR CALLING (800) 659-1005
---------------------
STATEMENT OF ADDITIONAL INFORMATION DATED DECEMBER 18, 1998
RELATING TO THE PROSPECTUS OF EACH OF THE FOLLOWING CLASSES OF THE
TREASURY TAXADVANTAGE PORTFOLIO:
CASH MANAGEMENT CLASS PROSPECTUS DATED DECEMBER 18, 1998,
INSTITUTIONAL CLASS PROSPECTUS DATED DECEMBER 18, 1998,
PERSONAL INVESTMENT CLASS PROSPECTUS DATED DECEMBER 18, 1998,
PRIVATE INVESTMENT CLASS PROSPECTUS DATED DECEMBER 18, 1998,
RESERVE CLASS PROSPECTUS DATED DECEMBER 18, 1998 AND
RESOURCE CLASS PROSPECTUS DATED DECEMBER 18, 1998
A-1
<PAGE> 286
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Introduction................................................ A-3
General Information about the Trust......................... A-3
The Trust and Its Shares............................... A-3
Management.................................................. A-5
Trustees and Officers.................................. A-5
Remuneration of Trustees............................... A-8
Investment Advisor..................................... A-9
Administrative Services................................ A-10
Expenses............................................... A-10
Banking Regulations.................................... A-11
Transfer Agent and Custodian........................... A-11
Reports................................................ A-12
Fee Waivers............................................ A-12
Principal Holders of Securities........................ A-12
Purchases and Redemptions................................... A-15
Net Asset Value Determination.......................... A-16
Distribution Agreement................................. A-16
Distribution Plan...................................... A-16
Performance Information................................ A-17
Investment Program and Restrictions......................... A-17
Investment Program..................................... A-17
Eligible Securities.................................... A-17
Investment Restrictions................................ A-18
Other Investment Policies.............................. A-18
Portfolio Transactions...................................... A-18
General Brokerage Policy............................... A-18
Allocation of Portfolio Transactions................... A-19
Section 28(e) Standards................................ A-19
Tax Matters................................................. A-20
Qualifications as a Regulated Investment Company....... A-20
Excise Tax on Regulated Investment Companies........... A-21
Portfolio Distributions................................ A-21
Sale or Redemption of Shares........................... A-21
Foreign Shareholders................................... A-22
Effect of Future Legislation; State and Local Tax
Considerations........................................ A-22
Financial Statements........................................ FS-1
</TABLE>
A-2
<PAGE> 287
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 Cash Management Class Prospectus
dated December 18, 1998, the Institutional Class Prospectus dated December 18,
1998, the Personal Investment Class Prospectus dated December 18, 1998, the
Private Investment Class Prospectus dated December 18, 1998, the Reserve Class
Prospectus dated December 18, 1998 and the Resource Class Prospectus dated
December 18, 1998 (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 100, 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 Amended and Restated 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 three portfolios: the Portfolio, the Government & Agency Portfolio and the
Treasury Portfolio (together, the "Portfolios"). The Portfolio consists of the
following six classes of shares: Cash Management Class, Institutional Class,
Personal Investment Class, Private Investment Class, Reserve 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 the shares of each class of the Portfolio. The
Treasury Portfolio and the Government & Agency Portfolio each consists of the
following six classes of shares: Cash Management Class, Institutional Class,
Personal Investment Class, Private Investment Class, Reserve Class and Resource
Class. Shares of the six classes of the Treasury Portfolio and the six classes
of the Government & Agency Portfolio are offered pursuant to separate
prospectuses and separate statements 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 each 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.
A-3
<PAGE> 288
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, any 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, any Portfolio and any class
thereof with respect to which there are fewer than 100 holders of record.
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 property of the Portfolio for all losses and
expenses of any shareholder of the Portfolio 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
Portfolio 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 and officers will
not be personally liable for any act, omission or obligation of the Trust or any
Trustee or officer. However, nothing in the Declaration of Trust protects a
trustee or officer against any liability to the Trust or to the shareholders to
which a trustee or officer 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 or her office with the Trust. The Declaration of
Trust provides for indemnification by the Trust of the trustees, the officers,
employees or agents of the Trust if it is determined that such person acted in
good faith and reasonably believed: (1) in the case of conduct in his or her
official capacity for the Trust, that his or her conduct was in the Trust's best
interests, (2) in all other cases, that his or her conduct was at least not
opposed to the Trust's best interests and (3) in a criminal proceeding, that he
or she had no reason to believe that his or her conduct was unlawful. 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 each 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.
Except as otherwise disclosed in each Prospectus and in the Statement of
Additional Information, the trustees shall continue to hold office and may
appoint their successors.
A-4
<PAGE> 289
MANAGEMENT
TRUSTEES AND OFFICERS
The trustees and officers of the Trust and their principal occupations during
at least the last five years are set forth below. Unless otherwise indicated,
the address of each trustee and officer is 11 Greenway Plaza, Suite 100,
Houston, Texas 77046.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
POSITIONS HELD
NAME, ADDRESS AND AGE WITH REGISTRANT PRINCIPAL OCCUPATION DURING AT LEAST THE PAST 5 YEARS
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
*CHARLES T. BAUER (79) Trustee and Chairman of the Board of Directors, A I M Management
Chairman Group Inc., A I M Advisors, Inc., A I M Capital
Management, Inc., A I M Distributors, Inc., A I M
Fund Services, Inc. and Fund Management Company; and
Vice Chairman and Director, AMVESCAP PLC.
- --------------------------------------------------------------------------------------------------------------------------
BRUCE L. CROCKETT (54) Trustee Director, ACE Limited (insurance company). Formerly,
906 Frome Lane Director, President and Chief Executive Officer,
McLean, VA 22102 COMSAT Corporation; and Chairman, Board of Governors
of INTELSAT (international communications company).
- --------------------------------------------------------------------------------------------------------------------------
OWEN DALY II (74) Trustee Director, Cortland Trust Inc. (investment company).
Six Blythewood Road Formerly, Director, CF & I Steel Corp., Monumental
Baltimore, MD 21210 Life Insurance Company and Monumental General
Insurance Company; and Chairman of the Board of
Equitable Bancorporation.
- --------------------------------------------------------------------------------------------------------------------------
EDWARD K. DUNN (63) Trustee Chairman of the Board of Directors, Mercantile
2 Hopkins Plaza, 20th Floor Mortgage Corp. Formerly, Vice Chairman of the Board
Baltimore, MD 21201 of Directors and President, Mercantile-Safe Deposit &
Trust Co.; and President, Mercantile Bankshares.
- --------------------------------------------------------------------------------------------------------------------------
JACK M. FIELDS (46) Trustee Chief Executive Officer, Texana Global, Inc. (foreign
8810 Will Clayton Parkway trading company) and Twenty First Century Group, Inc.
Jetero Plaza, Suite E (a governmental affairs company). Formerly, Member of
Humble, TX 77338 the U.S. House of Representatives.
- --------------------------------------------------------------------------------------------------------------------------
**CARL FRISCHLING (61) Trustee Partner, Kramer, Levin, Naftalis & Frankel (law
919 Third Avenue firm). Formerly, Partner, Reid & Priest (law firm).
New York, NY 10022
- --------------------------------------------------------------------------------------------------------------------------
*ROBERT H. GRAHAM (51) Trustee and Director, President and Chief Executive Officer,
President A I M Management Group Inc.; Director and President,
A I M Advisors, Inc.; Director and Senior Vice
President, A I M Capital Management, Inc., A I M
Distributors, Inc., A I M Fund Services, Inc., and
Fund Management Company; and Director, AMVESCAP PLC.
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
*A trustee who is an "interested person" of the Trust and AIM as defined in the
1940 Act.
**A trustee who is an "interested person" of the Trust as defined in the 1940
Act.
A-5
<PAGE> 290
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
POSITIONS HELD
NAME, ADDRESS AND AGE WITH REGISTRANT PRINCIPAL OCCUPATION DURING AT LEAST THE PAST 5 YEARS
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PREMA MATHAI-DAVIS (48) Trustee Chief Executive Officer, YWCA of the U.S.A.;
350 Fifth Avenue, Suite 301 Commissioner, New York City Department for the Aging;
New York, NY 10118 and Member of the Board of Directors, Metropolitan
Transportation Authority of New York State.
- --------------------------------------------------------------------------------------------------------------------------
LEWIS F. PENNOCK (56) Trustee Attorney in private practice in Houston, Texas.
6363 Woodway, Suite 825
Houston, TX 77057
- --------------------------------------------------------------------------------------------------------------------------
IAN W. ROBINSON (75) Trustee Formerly, Executive Vice President and Chief
183 River Drive Financial Officer, Bell Atlantic Management Services,
Tequesta, FL 33469 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.
- --------------------------------------------------------------------------------------------------------------------------
LOUIS S. SKLAR (59) Trustee Executive Vice President, Development and Operations,
Transco Tower, 50th Floor Hines Interests Limited Partnership (real estate
2800 Post Oak Blvd. development).
Houston, TX 77056
- --------------------------------------------------------------------------------------------------------------------------
***JOHN J. ARTHUR (54) Senior Vice Director, Senior Vice President and Treasurer, A I M
President and Advisors, Inc.; and Vice President and Treasurer,
Treasurer A I M Management Group Inc., A I M Capital
Management, Inc., A I M Distributors, Inc., A I M
Fund Services, Inc. and Fund Management Company.
- --------------------------------------------------------------------------------------------------------------------------
GARY T. CRUM (51) Senior Vice Director and President, A I M Capital Management,
President 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. and AMVESCAP PLC.
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
***Mr. Arthur and Ms. Relihan are married to each other.
A-6
<PAGE> 291
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
POSITIONS HELD
NAME, ADDRESS AND AGE WITH REGISTRANT PRINCIPAL OCCUPATION DURING AT LEAST THE PAST 5 YEARS
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
***CAROL F. RELIHAN (44) Senior Vice Director, Senior Vice President, General Counsel and
President and Secretary, A I M Advisors, Inc.; Vice President,
Secretary General Counsel and Secretary, A I M Management Group
Inc.; Director, Vice President and General Counsel,
Fund Management Company; General Counsel and Vice
President, A I M Fund Services, Inc. and Vice
President, A I M Capital Management, Inc. and A I M
Distributors, Inc.
- --------------------------------------------------------------------------------------------------------------------------
DANA R. SUTTON (39) Vice President Vice President and Fund Controller, A I M Advisors,
and Assistant Inc.; and Assistant Vice President and Assistant
Treasurer Treasurer, Fund Management Company.
- --------------------------------------------------------------------------------------------------------------------------
MELVILLE B. COX (55) Vice President 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. and
Fund Management Company.
- --------------------------------------------------------------------------------------------------------------------------
KAREN DUNN KELLEY (38) Vice President Senior Vice President, A I M Capital Management, Inc.
and Vice President, A I M Advisors, Inc.
- --------------------------------------------------------------------------------------------------------------------------
J. ABBOTT SPRAGUE (43) Vice President Director and President, Fund Management Company;
11 Greenway Plaza, Suite 100 Director, A I M Fund Services, Inc.; and Senior Vice
Houston, TX 77046 President, A I M Advisors, Inc. and A I M Management
Group Inc.
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
***Mr. Arthur and Ms. Relihan are married to each other.
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. Crockett, Daly, Dunn, Fields,
Frischling, Pennock, Robinson (Chairman) and Sklar. 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,
Dunn, Fields, Frischling, Pennock, Robinson, and Sklar (Chairman). 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.
The members of the Nominating and Compensation Committee are Messrs. Crockett
(Chairman), Daly, Dunn, Fields, Pennock, Robinson 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. Most of the Trust's executive
officers hold similar offices with some or all of such investment companies.
A-7
<PAGE> 292
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 or her services according to
a fee schedule which recognizes the fact that such trustee also serves as a
director or trustee of certain 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 or she
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
BENEFITS TOTAL
AGGREGATE ACCRUED COMPENSATION
COMPENSATION BY ALL FROM ALL
TRUSTEE FROM TRUST(1) AIM FUNDS(2) AIM FUNDS(3)
------- ------------- ------------- ------------
<S> <C> <C> <C>
Charles T. Bauer................................ $ -0- $ -0- $ -0-
Bruce L. Crockett............................... 4,747 67,774 84,000
Owen Daly II.................................... 4,747 103,542 84,000
Edward K. Dunn, Jr.(4).......................... 2,193 -0- -0-
Jack Fields..................................... 4,747 -0- 70,500
Carl Frischling................................. 4,747 96,520 84,000(5)
Robert H. Graham................................ -0- -0- -0-
John F. Kroeger(6).............................. 4,547 94,132 82,500
Prema Mathai-Davis(4)........................... 261 -0- -0-
Lewis F. Pennock................................ 4,747 55,777 84,000
Ian W. Robinson................................. 4,672 85,912 84,000
Louis S. Sklar.................................. 4,695 84,370 83,500
</TABLE>
- ---------------
(1) The total amount of compensation deferred by all Trustees of the Trust
during the fiscal year ended August 31, 1998, including interest earned
thereon, was $26,330.
(2) During the fiscal year ended August 31, 1998, the total amount of expenses
allocated to the Trust in respect of such retirement benefits was $32,407.
Data reflects compensation for the calendar year ended December 31, 1997.
(3) Each serves as a Director or Trustee of a total of 12 registered investment
companies advised by AIM as of December 31, 1997 (comprised of over 50
portfolios). Data reflects total compensation for the calendar year ended
December 31, 1997.
(4) Mr. Dunn and Ms. Mathai-Davis were not serving as Trustees during the
calendar year ended December 31, 1997.
(5) The Portfolio paid the law firm of Kramer, Levin, Naftalis & Frankel $4,488
in legal fees for services provided to the Portfolio during the fiscal year
ended August 31, 1998. Mr. Frischling, a trustee of the Trust, is a partner
in such firm.
(6) Mr. Kroeger resigned as a trustee on June 11, 1998 and on that date became a
consultant to the Trust.
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.
A-8
<PAGE> 293
Set forth below is a table that shows the estimated annual benefits payable to
an eligible trustee upon retirement assuming a specified level of compensation
and years of service classifications. The estimated credited years of service
for Messrs. Crockett, Daly, Fields, Dunn, Frischling, Kroeger, Pennock,
Robinson, Sklar and Ms. Mathai-Davis are 11, 10, 0, 1, 21, 20, 16, 11, 8 and 0
years, respectively.
ANNUAL RETAINER UPON RETIREMENT
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
NUMBER OF
YEARS OF
SERVICE WITH ANNUAL RETAINER PAID BY ALL AIM FUNDS
THE AIM FUNDS $90,000
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------
10 $67,500
- ------------------------------------------------------------------------------------
9 $60,750
- ------------------------------------------------------------------------------------
8 $54,000
- ------------------------------------------------------------------------------------
7 $47,250
- ------------------------------------------------------------------------------------
6 $40,500
- ------------------------------------------------------------------------------------
5 $33,750
- ------------------------------------------------------------------------------------
</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 (5) or ten
(10) years (depending on the Agreement) 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.
During the fiscal year ended August 31, 1998, $10,704 in trustees' fees and
expenses were allocated to the Portfolio.
INVESTMENT ADVISOR
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173,
acts as the investment advisor of the Portfolio pursuant to a Master Investment
Advisory Agreement (the "Advisory Agreement"). AIM was organized in 1976, and
together with its subsidiaries advises or manages over 90 investment company
portfolios.
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.
A-9
<PAGE> 294
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>
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 and under an investment advisory agreement in effect prior to February
28, 1997 which provided for the same level of compensation to AIM, AIM received
fees (net of fee waivers, if any) from the Trust for the fiscal years ended
August 31, 1998, 1997 and 1996, with respect to the Portfolio in the amounts of
$412,610, $705,397 and $675,795, respectively. For the fiscal years ended August
31, 1998, 1997 and 1996, AIM waived fees with respect to the Portfolio in the
amounts of $167,622, $123,468 and $116,126, 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 will continue in effect from year to year, 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' written 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 100, Houston, Texas 77046-1173, a holding
company that has been engaged in the financial service business since 1976. AIM
Management is an indirect wholly owned subsidiary of AMVESCAP PLC, 11 Devonshire
Square, London EC2M 4YR, United Kingdom. AMVESCAP PLC and its subsidiaries are
an independent investment management group engaged in institutional investment
management and retail fund businesses in the United States, Europe and the
Pacific Region. Certain of the directors and 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 100, 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 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 and under a prior administrative
services agreement which provided for the same level of reimbursement to AIM,
AIM was reimbursed for the fiscal years ended August 31, 1998, 1997 and 1996, in
the amounts of $46,759, $56,844 and $30,056, respectively, for fund accounting
services for the Portfolio.
A-10
<PAGE> 295
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 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 Fund Services, Inc. ("AFS"), a wholly owned subsidiary of AIM, P.O. Box
4497, Houston, TX 77210-4497, acts as transfer agent for the shares of all
classes of the Portfolio. For the services it provides to the Trust, AFS is
entitled to receive a fee based on the average daily net assets of the Trust,
plus out-of-pocket expenses and advances it has incurred. Such compensation may
be changed from time to time as is agreed to by AFS and the Trust. AFS has
provided transfer agency and shareholder services to the Portfolio since
December 29, 1997 pursuant to a Transfer Agency and Service Agreement. Prior to
December 29, 1997, A I M Institutional Fund Services, Inc., ("AIFS") provided
transfer agency and shareholder services to the Fund pursuant to a Transfer
Agency and Service Agreement.
A-11
<PAGE> 296
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, 700 Louisiana, Houston, Texas
77002, as the independent auditors to audit the financial statements and review
the tax returns of the Portfolio.
FEE WAIVERS
AIM or its affiliates may, from time to time, agree to waive voluntarily all
or any portion of its fees or reimburse the Portfolio for certain of its
expenses. Such waivers or reimbursements may be discontinued at any time.
PRINCIPAL HOLDERS OF SECURITIES
GOVERNMENT & AGENCY 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 Government &
Agency Portfolio as of October 30, 1998, 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>
Fund Services Associates.................................. 59.52%b
1875 Century Park East -- Suite 1345
Los Angeles, CA 90067
Gardnyr Michael Capital, Inc.............................. 40.48%b
2281 Lee Rd. Ste. 104
Winter Park, FL 32789
</TABLE>
INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Only a
---------------- -------------
<S> <C>
Gardnyr Michael Capital, Inc.............................. 65.79%b
2281 Lee Rd. Ste. 104
Winter Park, FL 32789
Norwest Bank Mpls......................................... 34.11%
733 Marquette Ave.
Minneapolis, MN 55479-0052
</TABLE>
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Only a
---------------- -------------
<S> <C>
Fund Services Associates, Inc............................. 94.36%b
1875 Century Park East -- Suite 1345
Los Angeles, CA 90067
Huntington Capital Corp................................... 5.64%
41 S. High St., Ninth Floor
Columbus, OH 43287
</TABLE>
RESOURCE CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Only a
---------------- -------------
<S> <C>
Hambrecht & Quist LLC..................................... 97.81%
230 Park Avenue, Floor 19
New York, NY 10169
</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 portfolio
may be presumed to be in "control" of such portfolio, as defined in the 1940
Act.
A-12
<PAGE> 297
AIM provided the initial capitalization of the Personal Investment Class and
the Reserve Class of the Government & Agency Portfolio and, accordingly, as of
the date of this Statement of Additional Information, owned all the outstanding
shares of beneficial interest of each such Class. The Trust expects that the
sale of shares of such Classes to the public pursuant to the Prospectuses will
promptly reduce the percentage of such shares owned by AIM to less than 1% of
the total shares outstanding of such Classes.
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 Treasury
Portfolio as of October 30, 1998 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>
Bank of New York.......................................... 57.31%
One Wall Street
5Th Floor
Stif/Master Note
New York, NY 10286
Fund Services Associates, Inc............................. 12.08%
1875 Century Park East -- Suite 1345
Los Angeles, CA 90067
Chase Bank of Texas....................................... 8.91%
600 Travis St., 8th Floor
8-CBT-39
Houston, TX 77252-8009
Bank of Oklahoma.......................................... 5.87%
P.O. Box 2180
Tulsa, OK 74101
</TABLE>
INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Only a
---------------- -------------
<S> <C>
Trust Company Bank........................................ 8.20%
Center 3139
P.O. Box 105504
Atlanta, GA 30348
City of New York Deferred Compensation Plan............... 7.25%
40 Rector Street, 3rd Floor
New York, NY 10006
Weststar Bank Trust Dept.................................. 5.96%
P.O. Box 1156
Bartlesville, OK 74005-1156
First Trust/Var & Co...................................... 5.03%
Funds Control Suite 0404
180 East Fifth Street
St. Paul, MN 55101
</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.
A-13
<PAGE> 298
PERSONAL INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Only a
---------------- -------------
<S> <C>
Cullen/Frost Discount Brokers............................. 67.44%
P.O. Box 2358
San Antonio, TX 78299
Bank of New York.......................................... 24.64%
4 Fisher Lane
White Plains, NY 10603
</TABLE>
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Only a
---------------- -------------
<S> <C>
The Bank of New York...................................... 26.49%
One Wall Street
5Th Floor
Stif/Master Note
New York, NY 10286
Huntington Capital Corp................................... 19.84%
41 S. High St., Ninth Floor
Columbus, OH 43287
Zions First National Bank................................. 13.19%
P.O. Box 30880
Salt Lake City, UT 84130
First Trust/Var & Co...................................... 8.45%
Funds Control Suite 0404
180 East 5th Street
St. Paul, MN 55101
New Haven Savings Bank Trust Department................... 6.74%
P.O. Box 302
Trust Department
New Haven, CT 06502
Midland First American.................................... 6.53%
One Erieview Plaza Ste. 500
Cleveland, OH 44114
Cullen/Frost Discount Brokers............................. 6.39%
P.O. Box 2358
San Antonio, TX 78299
</TABLE>
RESOURCE CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Only a
---------------- -------------
<S> <C>
First Union Capital Markets............................... 80.64%
8739 Research Drive
Capital Markets
Charlotte, NC 28262-0675
Mellon Bank NA............................................ 11.26%
P.O. Box 710
Pittsburgh, PA 15230-0710
</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.
A-14
<PAGE> 299
AIM provided the initial capitalization of the Reserve Class of the Treasury
Portfolio and, accordingly, as of the date of this Statement of Additional
Information, owned all the outstanding shares of beneficial interest of such
Class. The Trust expects that the sale of shares of such Class to the public
pursuant to its Prospectus will promptly reduce the percentage of such shares
owned by AIM to less than 1% of the total shares outstanding of such Class.
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 Portfolio as
of October 30, 1998 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...................................... 26.43%
Funds Control Suite 0404
180 East Fifth Street
St. Paul, MN 55101
Peoples Two Ten Company................................... 20.85%
P.O. Box 821
C/O Summit Bank
Hackensack, NJ 07602
Frost National Bank TX.................................... 12.17%
Muir & Co.
C/O Frost
P.O. Box 2479
San Antonio, TX 78298-2479
Everen Clearing Corp...................................... 6.60%
111 East Kilbourn Ave.
Milwaukee, WI 53202
Key Trust Company......................................... 6.48%
Mail Code OH-01-49-3040
4900 Tiedeman
Cleveland, OH 44101-5971
Nationsbank Texas......................................... 6.21%
1401 Elm Street 11Th Floor
P.O. Box 831000
Dallas, TX 75202-2911
Mason-Dixon Trust Company................................. 5.57%
45 W. Main Street
Westminister, MD 21158-0199
</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.
A-15
<PAGE> 300
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Only a
---------------- -------------
<S> <C>
Huntington Capital Corp. ................................. 26.45%
41 S High St., Ninth Floor
Columbus, OH 43287
Bank of New York.......................................... 24.01%
One Wall Street
5Th Floor
Stif/Master Note
New York, NY 10286
First National Bank of Chicago............................ 18.69%
Mail Suite 0126
Attention Sweep Coordinator
Chicago, IL 60670-0126
Oppenheimer & Co., Inc.................................... 11.15%
Oppenheimer Tower
World Financial Center
New York, NY 10281
Hambrecht & Quist LLC..................................... 8.79%
1100 Newport Center Drive, Second Floor
Newport Beach, CA 92660
First Union Capital Markets............................... 8.65%
8739 Research Drive
Capital Markets
Charlotte, NC 28262-0675
</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.
AIM provided the initial capitalization of the Cash Management Class, Personal
Investment Class, Reserve Class and Resource Class of the Portfolio and,
accordingly, as of the date of this Statement of Additional Information, owned
all the outstanding shares of beneficial interest of each such Class. The Trust
expects that the sale of shares of each such Class to the public pursuant to its
Prospectuses will promptly reduce the percentage of such shares owned by AIM to
less than 1% of the total shares outstanding of each such Class.
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 October 30, 1998, the
trustees and officers of the Trust beneficially owned less than 1% of each class
of the Trust's outstanding shares.
PURCHASES AND REDEMPTIONS
A complete description of the manner by which shares of a particular class may
be purchased, redeemed or exchanged appears in each Prospectus under the heading
"Purchase of Shares."
The right of redemption may be suspended or the date of payment postponed when
(a) trading on the New York Stock Exchange ("NYSE") is restricted, as determined
by applicable rules and regulations of the SEC, (b) the NYSE is closed for other
than customary weekend and 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
Fund not reasonably practicable.
A "business day" of the Portfolio is any day on which commercial banks in the
New York Federal Reserve district are open for business. The Portfolio, however,
reserves the right to change the time for which purchase and redemption requests
must be
A-16
<PAGE> 301
submitted to the Portfolio for execution on the same day on any day when the
U.S. primary broker-dealer community is closed for business or trading is
restricted due to national holidays.
NET ASSET VALUE DETERMINATION
Shares of each class 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.
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 (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 100, 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 continue in effect from year to year 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. 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 Cash Management Class, Personal
Investment Class, Private Investment Class, Reserve Class and Resource Class of
the Portfolio. These services may include among other things: (i) answering
customer inquiries regarding the shares of these classes 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 in shares of these classes; (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;
A-17
<PAGE> 302
(viii) arranging for bank wires; and (ix) such other services as the Trust may
request on behalf of the shares of these classes, 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, 1998, FMC received compensation pursuant
to the Plan in the amount of $90,969, 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 each 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, 1998, 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 4.99% and 5.11% and for the Private
Investment Class were 4.74% and 4.85%, 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 particular 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 the yield of a class 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.
A-18
<PAGE> 303
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 Trust will invest in "Eligible Securities" as defined in Rule 2a-7 under
the 1940 Act, which the Trust's Board of Trustees has determined to present
minimal credit risk.
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;
(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;
or
(8) invest in any obligation not payable as to principal and interest
in United States currency.
OTHER INVESTMENT POLICIES
The Portfolio does not intend to invest in companies for the purpose of
exercising control or management, except that the Portfolio may purchase
securities of other investment companies to the extent permitted by applicable
law or exemptive order. 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.
A-19
<PAGE> 304
PORTFOLIO TRANSACTIONS
GENERAL BROKERAGE POLICY
AIM makes decisions to buy and sell securities for the Portfolio, selects
broker-dealers, effects the Portfolio's investment portfolio transactions,
allocates brokerage fees in such transactions, and where applicable, negotiates
commissions and spreads on transactions. Since purchases and sales of portfolio
securities by the Portfolio are usually principal transactions, the Portfolio
incurs little or no brokerage commissions. AIM's primary consideration in
effecting a security transaction is to obtain the most favorable execution of
the order, which includes the best price on the security and a low commission
rate (as applicable). While AIM seeks reasonable competitive commission rates,
the Portfolio may not pay the lowest commission or spread available. See
"Section 28(e) Standards" below.
In the event the Portfolio purchases securities traded in over-the-counter
markets, the Portfolio deals directly with dealers who make markets in the
securities involved, except when better prices are available elsewhere.
Portfolio transactions placed through dealers who are primary market makers are
effected at net prices without commissions, but which include compensation in
the form of a mark up or mark down.
AIM may determine target levels of commission business with various brokers on
behalf of its clients (including the Portfolio) over a certain time period. The
target levels will be based upon the following factors, among others: (1) the
execution services provided by the broker; (2) the research services provided by
the broker; and (3) the broker's interest in mutual funds in general and in the
Portfolio and other mutual funds advised by AIM or A I M Capital Management,
Inc. (collectively, the "AIM Funds") in particular, including sales of the
Portfolio and of the other AIM Funds. In connection with (3) above, the
Portfolio's trades may be executed directly by dealers which sell shares of the
AIM Funds or by other broker-dealers with which such dealers have clearing
arrangements. AIM will not use a specific formula in connection with any of
these considerations to determine the target levels.
AIM will seek, whenever possible, to recapture for the benefit of a Portfolio
any commissions, fees, brokerage or similar payments paid by the Portfolio on
portfolio transactions. Normally, the only fees which AIM can recapture are the
soliciting dealer fees on the tender of the Portfolio's securities in a tender
or exchange offer.
The Portfolio may engage in certain principal and agency transactions with
banks and their affiliates that own 5% or more of the outstanding voting
securities of the Portfolio provided the conditions of an exemptive order
received by the Portfolio from the SEC are met. In addition, the Portfolio may
purchase or sell a security from or to another AIM Fund provided the Portfolio
follows procedures adopted by the Board of Directors/Trustees of the various AIM
Funds, including the Trust. These inter-fund transactions do not generate
brokerage commissions but may result in custodial fees or taxes or other related
expenses.
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. 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.
ALLOCATION OF PORTFOLIO TRANSACTIONS
AIM and its affiliates manage several other investment accounts. Some of these
accounts may have investment objectives similar to the Portfolio. Occasionally,
identical securities will be appropriate for investment by the Portfolio and by
another fund or one or more of these investment accounts. However, the position
of each account in the same securities and the length of time that each account
may hold its investment in the same securities may 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, AIM will fairly allocate transactions in such securities among the
Portfolio and these accounts. AIM may combine such transactions, in accordance
with applicable laws and regulations, to obtain the most favorable execution.
Simultaneous transactions could, however, adversely affect the Portfolio's
ability to obtain or dispose of the full amount of a security which it seeks to
purchase or sell.
A-20
<PAGE> 305
Sometimes the procedure for allocating portfolio transactions among the
various investment accounts advised by AIM could have an adverse effect on the
price or amount of securities available to the Portfolio. In making such
allocations, AIM considers the investment objectives and policies of its
advisory clients, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment, the size of
investment commitments generally held, and the judgments of the persons
responsible for recommending the investment.
SECTION 28(e) STANDARDS
Section 28(e) of the Securities Exchange Act of 1934 provides that AIM, under
certain circumstances, lawfully may cause an account to pay a higher commission
than the lowest available. Under Section 28(e), AIM must make a good faith
determination that the commissions paid are "reasonable in relation to the value
of the brokerage and research services provided . . . viewed in terms of either
that particular transaction or [AIM's] overall responsibilities with respect to
the accounts as to which it exercises investment discretion." The services
provided by the broker also must lawfully and appropriately assist AIM in the
performance of its investment decision-making responsibilities. Accordingly, in
recognition of research services provided to it, a Fund may pay a broker higher
commissions than those available from another broker.
Research services received from broker-dealers supplement AIM's own research
(and the research of its affiliates), and may include the following types of
information: statistical and background information on the U.S. and foreign
economies, industry groups and individual companies; forecasts and
interpretations with respect to the U.S. and foreign economies, securities,
markets, specific industry groups and individual companies; information on
federal, state, local and foreign political developments; portfolio management
strategies; performance information on securities, indexes and investment
accounts; information concerning prices of securities; and information supplied
by specialized services to AIM and to the Trust's trustees with respect to the
performance, investment activities, and fees and expenses of other mutual funds.
Broker-dealers may communicate such information electronically, orally or in
written form. Research services may also include the providing of custody
services, as well as the providing of equipment used to communicate research
information, the providing of specialized consultations with AIM personnel with
respect to computerized systems and data furnished to AIM as a component of
other research services, the arranging of meetings with management of companies,
and the providing of access to consultants who supply research information.
The outside research assistance is useful to AIM since the broker-dealers used
by AIM tend to follow a broader universe of securities and other matters than
AIM's staff can follow. In addition, the research provides AIM with a diverse
perspective on financial markets. Research services provided to AIM by
broker-dealers are available for the benefit of all accounts managed or advised
by AIM or by its affiliates. Some broker-dealers may indicate that the provision
of research services is dependent upon the generation of certain specified
levels of commissions and underwriting concessions by AIM's clients, including
the Portfolio. However, the Portfolio is not under any obligation to deal with
any broker-dealer in the execution of transactions in portfolio securities.
In some cases, the research services are available only from the broker-dealer
providing them. In other cases, the research services may be obtainable from
alternative sources in return for cash payments. AIM believes that the research
services are beneficial in supplementing AIM's research and analysis and that
they improve the quality of AIM's investment advice. The advisory fee paid by
the Portfolio is not reduced because AIM receives such services. However, to the
extent that AIM would have purchased research services had they not been
provided by broker-dealers, the expenses to AIM could be considered to have been
reduced accordingly.
Under the 1940 Act, certain 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 certain persons
affiliated with the Trust are members 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.
A-21
<PAGE> 306
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
each 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
each Prospectus is not intended as a substitute for careful tax planning.
QUALIFICATIONS 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 (1) must 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) must satisfy an asset
diversification test in order to qualify for tax purposes as a regulated
investment company (the "Asset Diversification Test"). Under the Asset
Diversification 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 in accordance with the guidance that has been
provided by the Internal Revenue Service.
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.
A-22
<PAGE> 307
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 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
18, 1998. 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.
A-23
<PAGE> 308
FINANCIAL STATEMENTS
FS
<PAGE> 309
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, 1998, and the
related statement of operations for the year then ended, the statements 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. 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, 1998, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Treasury TaxAdvantage Portfolio as of August 31, 1998, 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, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
October 2, 1998
FS-1
<PAGE> 310
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, 1998, and the
related statement of operations for the year then ended, the statements 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 December 21, 1994 (date sales commenced for the
Private Investment Class) 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, 1998, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Treasury TaxAdvantage Portfolio as of August 31, 1998, 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 December
21, 1994 (date sales commenced for the Private Investment Class) through August
31, 1995, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
October 2, 1998
FS-2
<PAGE> 311
SCHEDULE OF INVESTMENTS
August 31, 1998
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
U.S. TREASURY SECURITIES - 98.98%
U.S. TREASURY BILLS(a) - 42.76%
5.38% 09/15/98 $17,000 $ 16,964,432
- ------------------------------------------------------------------------
4.91% 10/08/98 1,500 1,492,430
- ------------------------------------------------------------------------
4.92% 10/08/98 1,500 1,492,415
- ------------------------------------------------------------------------
4.94% 10/22/98 6,200 6,156,610
- ------------------------------------------------------------------------
4.95% 10/22/98 6,000 5,957,925
- ------------------------------------------------------------------------
4.90% 10/29/98 1,700 1,686,580
- ------------------------------------------------------------------------
4.94% 10/29/98 4,500 4,464,185
- ------------------------------------------------------------------------
4.96% 10/29/98 3,000 2,976,027
- ------------------------------------------------------------------------
4.88% 11/12/98 3,000 2,970,720
- ------------------------------------------------------------------------
4.89% 11/12/98 3,500 3,465,770
- ------------------------------------------------------------------------
4.92% 11/12/98 3,900 3,861,624
- ------------------------------------------------------------------------
4.925% 11/12/98 4,000 3,960,600
- ------------------------------------------------------------------------
4.83% 11/27/98 6,300 6,226,463
- ------------------------------------------------------------------------
61,675,781
- ------------------------------------------------------------------------
U.S. TREASURY NOTES - 56.22%
6.00% 09/30/98 20,000 20,011,434
- ------------------------------------------------------------------------
5.875% 10/31/98 30,000 30,015,678
- ------------------------------------------------------------------------
5.50% 11/15/98 10,000 10,002,191
- ------------------------------------------------------------------------
8.875% 11/15/98 6,000 6,041,836
- ------------------------------------------------------------------------
5.625% 11/30/98 15,000 15,014,104
- ------------------------------------------------------------------------
81,085,243
- ------------------------------------------------------------------------
Total U.S. Treasury Securities
(Cost $142,761,024) 142,761,024
- ------------------------------------------------------------------------
TOTAL INVESTMENTS -- 98.98% 142,761,024(b)
- ------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES -- 1.02% 1,466,178
- ------------------------------------------------------------------------
NET ASSETS -- 100.00% $144,227,202
========================================================================
</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> 312
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1998
<TABLE>
<S> <C>
ASSETS:
Investments, at value (amortized cost) $142,761,024
- ----------------------------------------------------------------------
Cash 535,982
- ----------------------------------------------------------------------
Interest receivable 1,633,831
- ----------------------------------------------------------------------
Investment for deferred compensation plan 25,086
- ----------------------------------------------------------------------
Other assets 1,534
- ----------------------------------------------------------------------
Total assets 144,957,457
- ----------------------------------------------------------------------
LIABILITIES:
Payables for:
Dividends 636,264
- ----------------------------------------------------------------------
Deferred compensation 25,086
- ----------------------------------------------------------------------
Accrued administrative services fees 3,987
- ----------------------------------------------------------------------
Accrued advisory fees 12,942
- ----------------------------------------------------------------------
Accrued distribution fees 7,410
- ----------------------------------------------------------------------
Accrued transfer agent fees 6,199
- ----------------------------------------------------------------------
Accrued trustees' fees 2,195
- ----------------------------------------------------------------------
Accrued operating expenses 36,172
- ----------------------------------------------------------------------
Total liabilities 730,255
- ----------------------------------------------------------------------
NET ASSETS $144,227,202
======================================================================
NET ASSETS:
Institutional Class $113,084,306
======================================================================
Private Investment Class $ 31,142,896
======================================================================
SHARES OF BENEFICIAL INTEREST, $.01 PAR VALUE PER SHARE:
Institutional Class 113,050,692
======================================================================
Private Investment Class 31,133,639
======================================================================
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> 313
STATEMENT OF OPERATIONS
For the year ended August 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $10,833,975
- ------------------------------------------------------------------
EXPENSES:
Advisory fees 412,610
- ------------------------------------------------------------------
Custodian fees 10,804
- ------------------------------------------------------------------
Administrative services fees 46,759
- ------------------------------------------------------------------
Trustees' fees and expenses 10,704
- ------------------------------------------------------------------
Transfer agent fees 34,933
- ------------------------------------------------------------------
Distribution fees (Note 2) 181,938
- ------------------------------------------------------------------
Other 66,389
- ------------------------------------------------------------------
Total expenses 764,137
- ------------------------------------------------------------------
Less: Fee waivers (258,591)
- ------------------------------------------------------------------
Net expenses 505,546
- ------------------------------------------------------------------
Net investment income 10,328,429
- ------------------------------------------------------------------
Net realized gain on sales of investments 42,871
- ------------------------------------------------------------------
Net increase in net assets resulting from operations $10,371,300
==================================================================
</TABLE>
See Notes to Financial Statements.
FS-5
<PAGE> 314
STATEMENT OF CHANGES IN NET ASSETS
For the years ended August 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
------------ -------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 10,328,429 $ 19,242,512
- --------------------------------------------------------------------------
Net realized gain on sales of investments 42,871 77,371
- --------------------------------------------------------------------------
Net increase in net assets resulting from
operations 10,371,300 19,319,883
- --------------------------------------------------------------------------
Distributions to shareholders from net
investment income:
Institutional Class (8,586,021) (16,879,485)
- --------------------------------------------------------------------------
Private Class (1,742,408) (2,363,027)
- --------------------------------------------------------------------------
Distributions to shareholders from capital
gains:
Institutional Class (154,304) --
- --------------------------------------------------------------------------
Private Class (47,000) --
- --------------------------------------------------------------------------
Share transactions-net (See Note 4) (153,177,145) (159,710,741)
- --------------------------------------------------------------------------
Net increase (decrease) in net assets (153,335,578) (159,633,370)
- --------------------------------------------------------------------------
NET ASSETS:
Beginning of period 297,562,780 457,196,150
- --------------------------------------------------------------------------
End of period $144,227,202 $ 297,562,780
==========================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $144,184,331 $ 297,361,476
- --------------------------------------------------------------------------
Undistributed net realized gain on sales of
investments 42,871 201,304
- --------------------------------------------------------------------------
$144,227,202 $ 297,562,780
==========================================================================
</TABLE>
See Notes to Financial Statements.
FS-6
<PAGE> 315
NOTES TO FINANCIAL STATEMENTS
August 31, 1998
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 three different portfolios, each of which offers separate series
of shares: the Treasury TaxAdvantage Portfolio, the Government & Agency
Portfolio and the Treasury Portfolio. The Government & Agency Portfolio
commenced operations on September 1, 1998. Information presented in these
financial statements pertains only to the Treasury TaxAdvantage Portfolio (the
"Portfolio") with the assets, liabilities and operations of each portfolio
accounted for separately. 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 the shareholders of each
class. 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 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. The
following is a summary of the significant accounting policies followed by the
Portfolio in the preparation of its financial statements.
A. Security Valuations - The Portfolio's 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 - Distribution expenses directly attributable to a class of shares
are charged to that class' operations. All other expenses which are
attributable to more than one class are allocated between the classes.
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 investment 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>
During the year ended August 31, 1998, AIM voluntarily waived advisory fees of
$167,622.
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, 1998,
the Portfolio reimbursed AIM $46,759 for such services.
The Portfolio, pursuant to a transfer agency and service agreement, has agreed
to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agent and
shareholder services to the Portfolio. On September 20, 1997, the Board of
Trustees
FS-7
<PAGE> 316
approved the appointment of AFS as transfer agent of the Fund effective
December 29, 1997. During the year ended August 31, 1998, the Portfolio paid
AFS $19,384 for such services. Prior to the effective date of this agreement
with AFS, the Portfolio paid A I M Institutional Fund Services, Inc. $8,009
pursuant to a transfer agency and shareholder services agreement for the period
September 1, 1997 through December 28, 1997.
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 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 Fund 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 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, 1998, the Private Investment Class paid $90,969 as compensation
under the Plan. FMC waived fees of $90,969 for the same period. Certain
officers and trustees of the Trust are officers of AIM, FMC and AFS.
During the year ended August 31, 1998, the Portfolio paid legal fees of $4,488
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 during the years ended August 31, 1998 and 1997
were as follows:
<TABLE>
<CAPTION>
1998 1997
--------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ------------- -------------- --------------
<S> <C> <C> <C> <C>
Sold:
Institutional Class 758,084,286 $ 758,084,286 1,249,698,433 $1,249,698,433
- -----------------------------------------------------------------------------------
Private Investment
Class 314,695,955 314,695,955 274,981,089 274,981,089
- -----------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Institutional Class 368,100 368,100 425,111 425,111
- -----------------------------------------------------------------------------------
Private Investment
Class 774,188 774,188 479,712 479,712
- -----------------------------------------------------------------------------------
Reacquired:
Institutional Class (903,477,854) (903,477,854) (1,399,155,040) (1,399,155,040)
- -----------------------------------------------------------------------------------
Private Investment
Class (323,621,820) (323,621,820) (286,140,046) (286,140,046)
- -----------------------------------------------------------------------------------
Net increase
(decrease) (153,177,145) $(153,177,145) (159,710,741) $ (159,710,741)
- -----------------------------------------------------------------------------------
</TABLE>
FS-8
<PAGE> 317
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Institutional Class
outstanding during each of the years in the five-year period ended August 31,
1998.
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<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 0.05 0.05 0.03
- ------------------------- -------- -------- -------- -------- --------
Total from investment
operations 0.05 0.05 0.05 0.05 0.03
- ------------------------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income (0.05) (0.05) (0.05) (0.05) (0.03)
- ------------------------- -------- -------- -------- -------- --------
Total distributions (0.05) (0.05) (0.05) (0.05) (0.03)
- ------------------------- -------- -------- -------- -------- --------
Net asset value, end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========================= ======== ======== ======== ======== ========
Total return 5.30% 5.13% 5.19% 5.35% 3.29%
========================= ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $113,084 $258,251 $407,218 $394,376 $403,882
========================= ======== ======== ======== ======== ========
Ratio of expenses to
average net assets(a) 0.20%(b) 0.20% 0.20% 0.20% 0.20%
========================= ======== ======== ======== ======== ========
Ratio of net investment
income to average net
assets(c) 5.05%(b) 5.00% 5.06% 5.21% 3.23%
========================= ======== ======== ======== ======== ========
</TABLE>
(a) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
0.28%, 0.23%, 0.23%, 0.23% and 0.23% for the periods 1998-1994,
respectively.
(b) Ratios are based on average net assets of $169,918,161.
(c) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 4.97%, 4.97%, 5.04%, 5.18% and 3.20% for the periods
1998-1994, respectively.
FS-9
<PAGE> 318
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Private Investment
Class outstanding during each of the years in the three-year period ended
August 31, 1998 and the period December 21, 1994 (date sales commenced) through
August 31, 1995.
<TABLE>
<CAPTION>
1998 1997 1996 1995
------- ------- ------- ------
<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 0.05 0.04
- ------------------------------------- ------- ------- ------- ------
Total from investment operations 0.05 0.05 0.05 0.04
- ------------------------------------- ------- ------- ------- ------
Less distributions:
Dividends from net investment income (0.05) (0.05) (0.05) (0.04)
- -------------------------------------- ------ ------- ------- ------
Total distributions (0.05) (0.05) (0.05) (0.04)
- -------------------------------------- ------ ------- ------- ------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
====================================== ======= ======= ======= ======
Total return 5.04% 4.87% 4.93% 5.32%(a)
====================================== ======= ======= ======= ======
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $31,143 $39,312 $49,978 $5,423
====================================== ======= ======= ======= ======
Ratio of expenses to average net
assets(b) 0.45%(c) 0.45% 0.45% 0.45%(a)
====================================== ======= ======= ======= ======
Ratio of net investment income to
average net assets(d) 4.80%(c) 4.75% 4.72% 5.21%(a)
====================================== ======= ======= ======= ======
</TABLE>
(a) Annualized.
(b) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
0.78%, 0.74%, 0.85% and 1.02% (annualized) for the periods 1998-1995,
respectively.
(c) Ratios are based on average net assets of $36,387,542.
(d) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 4.47%, 4.46%, 4.32% and 4.64% (annualized) for the
periods 1998-1995, respectively.
FS-10
<PAGE> 319
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS TRUST
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 659-1005
INVESTMENT ADVISOR
A I M ADVISORS, INC.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(713) 626-1919
DISTRIBUTOR
FUND MANAGEMENT COMPANY
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 659-1005
AUDITORS
KPMG PEAT MARWICK LLP
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 FUND SERVICES, INC.
P.O. Box 4497,
Houston, TX 77210-4497
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROSPECTUS
December 18, 1998
SHORT-TERM
INVESTMENTS TRUST
---------------------
TREASURY TAXADVANTAGE
PORTFOLIO
---------------------
INSTITUTIONAL CLASS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Summary........................................... 2
Table of Fees and Expenses........................ 4
Financial Highlights.............................. 5
Suitability for Investors......................... 6
Investment Program................................ 6
Purchase of Shares................................ 8
Redemption of Shares.............................. 8
Dividends......................................... 9
Taxes............................................. 10
Net Asset Value................................... 10
Yield Information................................. 10
Reports to Shareholders........................... 11
Management of the Trust........................... 11
General Information............................... 12
Appendix.......................................... A-1
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 320
SHORT-TERM
INVESTMENTS TRUST
Prospectus
- --------------------------------------------------------------------------------
TREASURY The Treasury TaxAdvantage Portfolio is a money
TAXADVANTAGE market fund whose investment objective is the
PORTFOLIO maximization of current income to the extent consistent
with the preservation of capital and the maintenance of
PERSONAL liquidity. The Treasury TaxAdvantage Portfolio seeks to
INVESTMENT achieve its objective by investing in direct
CLASS obligations of the U.S. Treasury. The Treasury
TaxAdvantage Portfolio's investment strategy is
DECEMBER 18, 1998 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 Personal 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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE 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
TAXADVANTAGE PORTFOLIO AND SHOULD BE READ AND RETAINED
FOR FUTURE REFERENCE. A STATEMENT OF ADDITIONAL
INFORMATION, DATED DECEMBER 18, 1998, 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
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.
[AIM LOGO APPEARS HERE]
Fund Management Company
11 Greenway Plaza
Suite 100
Houston, Texas 77046-1173
(800) 877-4744
<PAGE> 321
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 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 separate prospectuses, the Trust also offers other classes of
shares of beneficial interest representing interests in the Portfolio: the Cash
Management Class, the Institutional Class, the Private Investment Class, the
Reserve Class and the Resource Class. Such classes have different distribution
arrangements and are designed for different types of investors. The Trust also
offers shares of several classes representing interests in each of two other
portfolios, the Government & Agency Portfolio and the Treasury Portfolio,
pursuant to separate prospectuses. 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 $1,000. 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."
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
3:00 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 3:00 p.m. Eastern Time. Dividends are
paid monthly by check or wire transfer unless the shareholder has previously
elected to have such dividends automatically reinvested in additional shares of
the Class. Information concerning the amount of the dividends declared on any
particular day will normally be available by 4:00 p.m. Eastern Time on that day.
See "Dividends."
CONSTANT NET ASSET VALUE
The 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
2
<PAGE> 322
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, 1998, the Trust paid AIM advisory fees with respect to the
Portfolio which represented 0.12% 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." Under a Transfer
Agency and Service Agreement, A I M Fund Services, Inc., ("Transfer Agent"),
AIM's wholly owned subsidiary and a registered transfer agent, receives a fee
for its provision of transfer agency, dividend distribution and disbursement,
and shareholder services to the Trust. See "General Information -- Transfer
Agent and Custodian."
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 0.75% 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, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design and Invest With
Discipline are registered service marks and AIM Bank Connection is a service
mark of A I M Management Group Inc.
3
<PAGE> 323
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 (after fee waivers)**..................... 0.12%
12b-1 fees (after fee waivers)**.......................... 0.50%***
Other expenses (estimated):
Custodian fees......................................... 0.01%
Other.................................................. 0.07%
------
Total other expenses.............................. 0.08%
------
Total portfolio operating expenses -- Personal Investment
Class**................................................ 0.70%
======
</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 be 0.20%, 0.75% and 1.03%, 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..................................................... $ 7
3 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 "Total portfolio
operating expenses -- Personal Investment Class" figure is based upon costs and
the estimated size of the Class and fees to be charged for the current fiscal
period. The "Other expenses" and "12b-1 fees" figures are based upon estimated
costs and the estimated size of the Class and the Portfolio and estimated fees
to be charged for the current fiscal period. Thus, actual expenses may be
greater or less than such estimates. 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.
4
<PAGE> 324
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 LESSER THAN THOSE SHOWN.
SUITABILITY FOR INVESTORS
The Class is intended for use primarily by customers of banks, certain
broker-dealers and other financial institutions who seek a convenient vehicle in
which to invest in an open-end diversified money market fund. The Portfolio's
investment strategy is intended to provide its shareholders with dividends that
are exempt from state and local income taxation in certain jurisdictions. The
minimum initial investment is $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.
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
5
<PAGE> 325
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.
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, liquid 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 liquid 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.
INVESTMENT IN OTHER INVESTMENT COMPANIES. The Trust is permitted to invest
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 investment policies described above may be changed by the Board of
Trustees without the affirmative vote of a majority of the outstanding shares of
beneficial interest of the Trust.
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.
6
<PAGE> 326
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. 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 Transfer Agent
prior to 3:00 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. Following the initial investment, subsequent purchases of shares of the
Class may also be made via AIM LINK(R) Remote, a personal computer application
software product. 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. The Portfolio, however, reserves the right to change the
time for which purchase and redemption requests must be submitted to the
Portfolio for execution on the same day or any day when the U.S. primary
broker-dealer community is closed for business or trading is restricted due to
national holiday. 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.
Prior to the initial purchase of shares of the Class, an Account
Application, which can be obtained from the Transfer Agent, must be completed
and sent to the Transfer Agent at P.O. Box 4497, Houston, TX 77210-4497. 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 the Transfer Agent.
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, 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
7
<PAGE> 327
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 the
Transfer Agent.
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 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 the 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
3:00 p.m. Eastern Time will earn the dividend declared on the date of purchase.
Any request for a correction to a transaction of Portfolio shares must be
submitted in writing to the Transfer Agent. The Transfer Agent reserves the
right to reject any such request. When a correction results in a dividend
adjustment, the Institution must agree in writing to reimburse the Portfolio for
any loss resulting from the correction. Failure to deliver purchase proceeds on
the requested settlement date may result in a claim against the Institution for
an amount equal to the overdraft charge incurred by 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 must specify that it is for the purchase of Shares of the
"Personal 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.
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) Remote. 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 Transfer Agent prior to 3:00 p.m.
Eastern Time on
8
<PAGE> 328
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 Transfer Agent after 3:00
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 3:00 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. The Portfolio reserves the right to change the time for which
redemption requests must be submitted to and received by the Transfer Agent for
execution on the same day on any day when the U.S. primary broker-dealer
community is closed for business or trading is restricted due to national
holidays.
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 the
Transfer Agent.
Shareholders may request a redemption by telephone. Neither the Transfer
Agent nor FMC will 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 may 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
3:00 p.m. Eastern Time on the day of declaration. Net income for dividend
purposes is determined daily as of 3:00 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's 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 3:00 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 the Transfer Agent at P.O. Box 4497, Houston, TX 77210-4497, and
will become effective with dividends paid after its receipt by the Transfer
Agent. If a shareholder redeems all
9
<PAGE> 329
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 portfolios 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 the
Transfer Agent.
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
10
<PAGE> 330
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
3:00 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) 877-4744. Yields will fluctuate from time to time and are not necessarily
indicative of future results. Accordingly, the yield information may not provide
a basis for comparison with investments which pay a fixed rate of interest for a
stated period of time. Yield is a function of the type and quality of the
Portfolio's investments, the Portfolio's maturity and the operating expense
ratio of the Class. A SHAREHOLDER'S INVESTMENT IN THE PORTFOLIO IS NOT INSURED
OR GUARANTEED BY THE U.S. GOVERNMENT OR BY ANY INSTITUTION. These factors should
be carefully considered by the investor before making an investment in the
Portfolio.
To assist banks and other institutions performing their own sub-accounting,
same day information as to the daily dividend per share for the Portfolio to
eight decimal places and current yield normally will be available by 4:00 p.m.
Eastern Time.
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.
11
<PAGE> 331
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. Information concerning the Board of Trustees may be found in the
Statement of Additional Information. Certain trustees and officers of the Trust
are affiliated with AIM and A I M Management Group Inc. ("AIM Management"), the
parent corporation of AIM.
For a discussion of AIM Management and its subsidiaries' Year 2000
Compliance Project, see "General Information -- Year 2000 Compliance Project."
INVESTMENT ADVISOR
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173, acts as the investment advisor for the Portfolio pursuant to a
Master Investment Advisory Agreement (the "Advisory Agreement"). AIM was
organized in 1976 and, together with its affiliates, manages or advises over 90
investment company portfolios. Certain of the directors and 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. AIM Management is an indirect, wholly owned
subsidiary of AMVESCAP PLC, a publicly-traded holding company that, through its
subsidiaries, engages in institutional investment management and retail fund
businesses in the United States, Europe and the Pacific Region.
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, 1998, AIM received fees from the Trust
under the Advisory Agreement with respect to the Portfolio which represented
0.12% of the Portfolio's average daily net assets.
ADMINISTRATIVE SERVICES
The Trust has entered into a Master Administrative Services Agreement 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 waived
advisory fees of $167,622 on the Portfolio during the year ended August 31,
1998.
12
<PAGE> 332
DISTRIBUTOR
The Trust has entered into a Master Distribution Agreement (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 100, 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 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 0.75% 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, 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 has been 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"). 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
13
<PAGE> 333
Plan may be amended by the trustees, including a majority of the Qualified
Trustees, by vote cast in person at a meeting called for the purpose of voting
upon such amendment. As long as the Plan is in effect, the selection or
nomination of the Qualified Trustees is committed to the discretion of the
Qualified Trustees.
PORTFOLIO TRANSACTIONS AND BROKERAGE
AIM is responsible for decisions to buy and sell securities for the
Portfolio, broker-dealer selection and negotiation of commission rates. Since
purchases and sales of portfolio securities by the Portfolio are usually
principal transactions, the Portfolio incurs little or no brokerage commissions.
Portfolio securities are normally purchased directly from the issuer or from a
market maker for the securities. The purchase price paid to dealers serving as
market makers may include a spread between the bid and asked prices.
AIM's primary consideration in effecting a security transaction is to
obtain the best net price and the most favorable execution of the order. To the
extent that the executions and prices offered by more than one dealer are
comparable, AIM may, in its discretion, effect transactions with dealers that
furnish statistical, research or other information or services which are deemed
by AIM to be beneficial to the Portfolio's investment programs. Certain research
services furnished by dealers may be useful to clients of AIM other than the
Portfolio. Similarly, any research services received by AIM through placement of
portfolio transactions of other clients may be of value to AIM in fulfilling its
obligations to the Portfolio.
GENERAL INFORMATION
ORGANIZATION AND DESCRIPTION OF SHARES
The 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 eighteen classes. Six classes, including the Class,
represent interests in the Portfolio, six classes represent interests in the
Government & Agency Portfolio and six 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.
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
14
<PAGE> 334
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 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 Fund Services, Inc., P.O. Box 4497, Houston, TX 77210-4497, acts as
transfer agent for the shares of the Portfolio.
LEGAL COUNSEL
The law firm of Ballard Spahr Andrews & Ingersoll, LLP, Philadelphia,
Pennsylvania, serves as counsel to the Trust and passes upon certain legal
matters for the Trust.
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 100, Houston, Texas 77046-1173, or may be made by calling (800) 877-4744.
YEAR 2000 COMPLIANCE PROJECT
In providing services to the Trust, AIM Management and its subsidiaries
rely on both internal software systems as well as external software systems
provided by third parties. Many software systems in use today are unable to
distinguish the year 2000 from the year 1900. This defect if not cured will
likely adversely affect the services that AIM Management, its subsidiaries and
other service providers to the Trust provide the Trust and its shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and phase (iii) has
commenced. The Project is scheduled to be completed during the second quarter of
1999. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm year 2000 compliance
upon installation. No assurance can be given that the Project will be successful
or that AIM Management and its subsidiaries will not otherwise be adversely
affected by the year 2000 issue.
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.
15
<PAGE> 335
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS TRUST
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 877-4744
INVESTMENT ADVISOR
A I M ADVISORS, INC.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(713) 626-1919
DISTRIBUTOR
FUND MANAGEMENT COMPANY
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 877-4744
AUDITORS
KPMG PEAT MARWICK LLP
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 FUND SERVICES, INC.
P.O. Box 4497
Houston, TX 77210-4497
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.
PROSPECTUS
December 18, 1998
SHORT-TERM
INVESTMENTS TRUST
---------------------
TREASURY
TAXADVANTAGE
PORTFOLIO
---------------------
PERSONAL
INVESTMENT CLASS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Summary........................................... 2
Table of Fees and Expenses........................ 4
Suitability for Investors......................... 5
Investment Program................................ 5
Purchase of Shares................................ 7
Redemption of Shares.............................. 8
Dividends......................................... 9
Taxes............................................. 10
Net Asset Value................................... 11
Yield Information................................. 11
Reports to Shareholders........................... 11
Management of the Trust........................... 12
General Information............................... 14
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 336
SHORT-TERM
INVESTMENTS TRUST
Prospectus
- --------------------------------------------------------------------------------
TREASURY The Treasury TaxAdvantage Portfolio is a money
TAXADVANTAGE market fund whose investment objective is the
PORTFOLIO maximization of current income to the extent consistent
with the preservation of capital and the maintenance of
PRIVATE liquidity. The Treasury TaxAdvantage Portfolio seeks to
INVESTMENT achieve its objective by investing in direct
CLASS obligations of the U.S. Treasury. The Treasury
TaxAdvantage Portfolio's investment strategy is
DECEMBER 18, 1998 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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE 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 18, 1998, 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.
[AIM LOGO APPEARS HERE]
Fund Management Company
11 Greenway Plaza
Suite 100
Houston, Texas 77046-1173
(800) 877-7748
<PAGE> 337
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 separate prospectuses, the Trust also offers other classes of
shares of beneficial interest representing interests in the Portfolio: the Cash
Management Class, the Institutional Class, the Personal Investment Class, the
Reserve Class and the Resource Class. Such classes have different distribution
arrangements and are designed for different types of investors. The Trust also
offers shares of several classes representing interests in each of two other
portfolios, the Government & Agency Portfolio and the Treasury Portfolio,
pursuant to separate prospectuses. 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."
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
3:00 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 3:00 p.m. Eastern Time. Dividends are
paid monthly by check or wire transfer unless the shareholder has previously
elected to have such dividends automatically reinvested in additional shares of
the Class. Information concerning the amount of the dividends declared on any
particular day will normally be available by 4:00 p.m. Eastern Time on that day.
See "Dividends."
CONSTANT NET ASSET VALUE
The 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
2
<PAGE> 338
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, 1998, the Trust paid AIM advisory fees with respect to the
Portfolio which represented 0.12% 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." Under a Transfer
Agency and Service Agreement, A I M Fund Services, Inc., ("Transfer Agent"),
AIM's wholly owned subsidiary and a registered transfer agent, receives a fee
for its provision of transfer agency, dividend distribution and disbursement,
and shareholder services to the Trust. See "General Information -- Transfer
Agent and Custodian."
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, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design and Invest With
Discipline are registered service marks and AIM Bank Connection is a service
mark of A I M Management Group Inc.
3
<PAGE> 339
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)**..................... 0.12%
12b-1 fees (after fee waivers)**.......................... 0.25%***
Other expenses:
Custodian fees......................................... 0.01%
Other.................................................. 0.07%
------
Total other expenses.............................. 0.08%
------
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 be 0.20%, 0.50% and 0.78%, 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 costs and fees charged to the Class for the fiscal year
ended August 31, 1998 as restated to reflect current agreements. 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.
4
<PAGE> 340
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 years in the three year period ended August 31,
1998 and the period December 21, 1994 (date sales commenced) through August 31,
1995. The data has been audited by KPMG Peat Marwick LLP, independent auditors,
whose report on the financial statements and the related notes appears in the
Statement of Additional Information.
<TABLE>
<CAPTION>
1998 1997 1996 1995
------- ------- ------- ------
<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 0.05 0.04
------- ------- ------- ------
Less distributions:
Dividends from net investment income........... (0.05) (0.05) (0.05) (0.04)
------- ------- ------- ------
Net asset value, end of period................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======
Total return..................................... 5.04% 4.87% 4.93% 5.32%(a)
======= ======= ======= ======
Ratios/supplemental data:
Net assets, end of period (000s omitted)....... $31,143 $39,312 $49,978 $5,423
======= ======= ======= ======
Ratio of expenses to average net assets(b)..... 0.45%(c) 0.45% 0.45% 0.45%(a)
======= ======= ======= ======
Ratio of net investment income to average net
assets(d)................................... 4.80%(c) 4.75% 4.72% 5.21%(a)
======= ======= ======= ======
</TABLE>
- ---------------
(a) Annualized.
(b) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
0.78%, 0.74%, 0.85% and 1.02% (annualized) for the periods 1998-1995,
respectively.
(c) Ratios are based on average net assets of $36,387,542.
(d) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 4.47%, 4.46%, 4.32% and 4.64% (annualized) for the
periods 1998-1995, respectively.
SUITABILITY FOR INVESTORS
The Class is intended for use primarily by customers of banks, certain
broker-dealers and other financial institutions who seek a convenient vehicle in
which to invest in an open-end diversified money market fund. The Portfolio's
investment strategy is intended to provide its shareholders with dividends that
are exempt from state and local income taxation in certain jurisdictions. The
minimum initial investment is $10,000.
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.
5
<PAGE> 341
Because the Portfolio invests in direct obligations of the U.S. Treasury it
may be considered to have somewhat less risk than many other money market funds
and yields on the Portfolio may be expected to be somewhat lower than many other
money market funds. However, the possible exemption from state and local income
taxation with respect to dividends paid by the Portfolio may enable shareholders
to achieve an after-tax return comparable to or higher than that obtained from
other money market funds, which may provide an advantage to some shareholders.
INVESTMENT PROGRAM
INVESTMENT OBJECTIVE
The investment objective of the Portfolio is the maximization of current
income to the extent consistent with the preservation of capital and the
maintenance of liquidity. The Portfolio intends to provide its shareholders with
dividends that are exempt from state and local income taxation in certain
jurisdictions. The Portfolio seeks to achieve its objective by investing in
direct obligations of the U.S. Treasury. The money market instruments in which
the Portfolio invests are considered to carry very little risk and accordingly
may not have as high a yield as that available on money market instruments of
lesser quality.
INVESTMENT POLICIES
The Portfolio invests exclusively in direct obligations of the U.S.
Treasury, which include Treasury bills, notes and bonds. The market values of
the money market instruments held by the Portfolio will be affected by changes
in the yields available on similar securities. If yields have increased since a
security was purchased, the market value of such security will generally have
decreased. Conversely, if yields have decreased, the market value of such
security will generally have increased.
BORROWING MONEY/REVERSE REPURCHASE AGREEMENTS. The Portfolio may borrow
money and enter into reverse repurchase agreements with respect to its portfolio
securities in amounts up to 10% of the value of its total assets at the time of
borrowing or entering into a reverse repurchase agreement. The Portfolio will
only borrow money or enter into reverse repurchase agreements for temporary or
emergency purposes, such as to facilitate the orderly sale of portfolio
securities to accommodate abnormally heavy redemption requests should they
occur. Borrowing will not be made for leverage purposes. Reverse repurchase
transactions are limited to a term not to exceed 92 days. The Portfolio will use
reverse repurchase agreements when the interest income to be earned from the
securities that would otherwise have to be liquidated to meet redemption
requests is greater than the interest expense of the reverse repurchase
transaction. Reverse repurchase agreements involve the risk that the market
value of securities retained by the Portfolio in lieu of liquidation may decline
below the repurchase price of the securities sold by the Portfolio which it is
obligated to repurchase. The risk, if encountered, could cause a reduction in
the net asset value of the Portfolio's shares. Reverse repurchase agreements are
considered to be borrowings under the 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, liquid 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 liquid 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.
6
<PAGE> 342
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.
INVESTMENT IN OTHER INVESTMENT COMPANIES. The Trust is permitted to invest
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 investment policies described above may be changed by the Board of
Trustees without the affirmative vote of a majority of the outstanding shares of
beneficial interest of the Trust.
INVESTMENT RESTRICTIONS
The Portfolio's investment program is subject to a number of investment
restrictions which reflect self-imposed standards as well as federal and state
regulatory limitations. These restrictions are designed to minimize certain
risks associated with investing in specified types of securities or engaging in
certain transactions and to limit the amount of the Portfolio's assets which may
be concentrated in any specific industry or issuer. The most significant of
these restrictions provides that the Portfolio will not:
borrow money or issue senior securities except (a) for
temporary or emergency purposes (e.g., in order to facilitate
the orderly sale of portfolio securities to accommodate
abnormally heavy redemption requests), the Portfolio may
borrow money from banks or obtain funds by entering into
reverse repurchase agreements, and (b) to the extent that
entering into commitments to purchase securities in accordance
with the Portfolio's investment program may be considered the
issuance of senior securities. The Portfolio will not purchase
securities while borrowings in excess of 5% of its total
assets are outstanding.
The foregoing investment restriction of the Portfolio (as well as certain
others set forth in the Statement of Additional Information) is a matter of
fundamental policy which may not be changed without the affirmative vote of a
majority of the outstanding shares of the Portfolio.
In addition to the restrictions described above, the Portfolio must also
comply with the requirements of Rule 2a-7 under the 1940 Act, as such Rule may
be amended from time to time, which governs the operations of money market
funds, and may be more restrictive than the policies described herein. 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
7
<PAGE> 343
order is placed, provided that the order is properly submitted and received by
the Transfer Agent prior to 3:00 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. Following the initial investment, subsequent
purchases of shares of the Class may also be made via AIM LINK(R) Remote, a
personal computer application software product. 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. The Portfolio, however, reserves the right to change the
time for which purchase and redemption requests must be submitted to the
Portfolio for execution on the same day or any day when the U.S. primary
broker-dealer community is closed for business or trading is restricted due to
national holiday. 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.
Prior to the initial purchase of shares of the Class, an Account
Application, which can be obtained from the Transfer Agent, must be completed
and sent to the Transfer Agent at P.O. Box 4497, Houston, TX 77210-4497. 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 the Transfer Agent.
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
8
<PAGE> 344
the Class is paid for other than in federal funds, the Institution, acting on
behalf of the investor, completes the conversion into federal funds (which may
take two business days), or itself advances federal funds prior to conversion,
and promptly transmits the order and payment in the form of federal funds to the
Transfer Agent.
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 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 the 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
3:00 p.m. Eastern Time will earn the dividend declared on the date of purchase.
Any request for correction to a transaction of Portfolio shares must be
submitted in writing to the Transfer Agent. The Transfer Agent reserves the
right to reject any such request. When a correction results in a dividend
adjustment, the Institution must agree in writing to reimburse the Portfolio for
any loss resulting from the correction. Failure to deliver purchase proceeds on
the requested settlement date may result in a claim against the Institution for
an amount equal to the overdraft charge incurred by 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 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.
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) Remote. 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 Transfer Agent prior to 3:00 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 Transfer Agent after
3:00 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 3:00 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. The Portfolio reserves the right to change the time for which
redemption requests must be submitted to and received by the Transfer Agent for
execution on the same day on any day when the U.S. primary broker-dealer
community is closed for business or trading is restricted due to national
holidays.
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 the
Transfer Agent.
Shareholders may request a redemption by telephone. Neither the Transfer
Agent nor FMC will 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
9
<PAGE> 345
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 may 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
3:00 p.m. Eastern Time on the day of declaration. Net income for dividend
purposes is determined daily as of 3:00 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's 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 3:00 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 the Transfer Agent at P.O. Box 4497, Houston, TX 77210-4497, and
will become effective with dividends paid after its receipt by the Transfer
Agent. 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
10
<PAGE> 346
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 portfolios 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 the
Transfer Agent.
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
3:00 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
11
<PAGE> 347
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
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, 1998, 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 4.74% and 4.85%, 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. Information concerning the Board of Trustees may be found in the
Statement of Additional Information. Certain trustees and officers of the Trust
are affiliated with AIM and A I M Management Group Inc. ("AIM Management"), the
parent corporation of AIM.
For a discussion of AIM Management and its subsidiaries' Year 2000
Compliance Project, see "General Information -- Year 2000 Compliance Project."
12
<PAGE> 348
INVESTMENT ADVISOR
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173, acts as the investment advisor for the Portfolio pursuant to a
Master Investment Advisory Agreement (the "Advisory Agreement"). AIM was
organized in 1976 and, together with its affiliates, manages or advises over 90
investment company portfolios. Certain of the directors and 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. AIM Management is an indirect, wholly owned
subsidiary of AMVESCAP PLC, a publicly-traded holding company that, through its
subsidiaries, engages in institutional investment management and retail fund
businesses in the United States, Europe and the Pacific Region.
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, 1998, AIM received fees from the Trust
under the Advisory Agreement with respect to the Portfolio which represented
0.12% 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's
daily net assets.
ADMINISTRATIVE SERVICES
The Trust has entered into a Master Administrative Services Agreement 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 waived
advisory fees of $167,622 on the Portfolio during the year ended August 31,
1998.
DISTRIBUTOR
The Trust has entered into a Master Distribution Agreement (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 100, 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 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.
13
<PAGE> 349
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 has been 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"). 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.
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
14
<PAGE> 350
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 eighteen classes. Six classes, including the Class,
represent interests in the Portfolio, six classes represent interests in the
Government & Agency Portfolio and six 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.
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 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 Fund Services, Inc., P.O. Box 4497, Houston, Texas 77210-4479, acts as
transfer agent for the shares of the Portfolio.
LEGAL COUNSEL
The law firm of Ballard Spahr Andrews & Ingersoll, LLP, Philadelphia,
Pennsylvania, serves as counsel to the Trust and passes upon certain legal
matters for the Trust.
15
<PAGE> 351
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 100, Houston, Texas 77046-1173, or may be made by calling (800) 877-7748.
YEAR 2000 COMPLIANCE PROJECT
In providing services to the Trust, AIM Management and its subsidiaries
rely on both internal software systems as well as external software systems
provided by third parties. Many software systems in use today are unable to
distinguish the year 2000 from the year 1900. This defect if not cured will
likely adversely affect the services that AIM Management, its subsidiaries and
other service providers to the Trust provide the Trust and its shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and phase (iii) has
commenced. The Project is scheduled to be completed during the second quarter of
1999. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm year 2000 compliance
upon installation. No assurance can be given that the Project will be successful
or that AIM Management and its subsidiaries will not otherwise be adversely
affected by the year 2000 issue.
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.
16
<PAGE> 352
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 353
=============================================================
SHORT-TERM INVESTMENTS TRUST
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 877-7748
INVESTMENT ADVISOR
A I M ADVISORS, INC.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(713) 626-1919
DISTRIBUTOR
FUND MANAGEMENT COMPANY
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 877-7748
AUDITORS
KPMG PEAT MARWICK LLP
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 FUND SERVICES, INC.
P.O. Box 4497,
Houston, TX 77210-4497
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.
=============================================================
=============================================================
PROSPECTUS
December 18, 1998
SHORT-TERM
INVESTMENTS TRUST
---------------------
TREASURY TAXADVANTAGE
PORTFOLIO
---------------------
PRIVATE INVESTMENT CLASS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Summary........................................... 2
Table of Fees and Expenses........................ 4
Financial Highlights.............................. 5
Suitability for Investors......................... 5
Investment Program................................ 6
Purchase of Shares................................ 7
Redemption of Shares.............................. 9
Dividends......................................... 10
Taxes............................................. 10
Net Asset Value................................... 11
Yield Information................................. 12
Reports to Shareholders........................... 12
Management of the Trust........................... 12
General Information............................... 15
</TABLE>
=============================================================
<PAGE> 354
SHORT-TERM
INVESTMENTS TRUST
Prospectus
- --------------------------------------------------------------------------------
TREASURY The Treasury TaxAdvantage Portfolio is a money
TAXADVANTAGE market fund whose investment objective is the
PORTFOLIO maximization of current income to the extent consistent
with the preservation of capital and the maintenance of
RESERVE liquidity. The Treasury TaxAdvantage Portfolio seeks to
CLASS achieve its objective by investing in direct
obligations of the U.S. Treasury. The Treasury
TaxAdvantage Portfolio's investment strategy is
DECEMBER 18, 1998 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 Reserve 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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE 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 RESERVE CLASS OF THE TREASURY
TAXADVANTAGE PORTFOLIO AND SHOULD BE READ AND RETAINED
FOR FUTURE REFERENCE. A STATEMENT OF ADDITIONAL
INFORMATION, DATED DECEMBER 18, 1998, 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) 467-8792. 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.
[AIM LOGO APPEARS HERE]
Fund Management Company
11 Greenway Plaza
Suite 100
Houston, Texas 77046-1173
(800) 467-8792
<PAGE> 355
SUMMARY
THE PORTFOLIO AND ITS INVESTMENT OBJECTIVE
The Trust is an open-end diversified series management investment company.
This Prospectus relates to the Reserve 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 separate prospectuses, the Trust also offers other classes of
shares of beneficial interest representing interests in the Portfolio: the Cash
Management Class, the Institutional Class, the Personal Investment Class, the
Private Investment Class and the Resource Class. Such classes have different
distribution arrangements and are designed for different types of investors. The
Trust also offers shares of several classes representing interests in each of
two other portfolios, the Government & Agency Portfolio and the Treasury
Portfolio, pursuant to separate prospectuses. 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 $1,000. 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."
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
3:00 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 3:00 p.m. Eastern Time. Dividends are
paid monthly by check or wire transfer unless the shareholder has previously
elected to have such dividends automatically reinvested in additional shares of
the Class. Information concerning the amount of the dividends declared on any
particular day will normally be available by 4:00 p.m. Eastern Time on that day.
See "Dividends."
CONSTANT NET ASSET VALUE
The 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
2
<PAGE> 356
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, 1998, the Trust paid AIM advisory fees with respect to the
Portfolio which represented 0.12% 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." Under a Transfer
Agency and Service Agreement, A I M Fund Services, Inc., ("Transfer Agent"),
AIM's wholly owned subsidiary and a registered transfer agent, receives a fee
for its provision of transfer agency, dividend distribution and disbursement,
and shareholder services to the Trust. See "General Information -- Transfer
Agent and Custodian."
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 1.00% 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, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design and Invest With
Discipline are registered service marks and AIM Bank Connection is a service
mark of A I M Management Group Inc.
3
<PAGE> 357
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 -- RESERVE CLASS
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management fees (after fee waivers)**..................... 0.12%
12b-1 fees (after fee waivers)**.......................... 0.80%***
Other expenses (estimated):
Custodian fees......................................... 0.01%
Other.................................................. 0.07%
------
Total other expenses.............................. 0.08%
------
Total portfolio operating expenses -- Reserve Class**..... 1.00%
======
</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 be 0.20%, 1.00% and 1.28%, 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...................................................... $10
3 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 "Total portfolio
operating expenses -- Reserve Class" figure is based upon costs and the
estimated size of the Class and fees to be charged for the current fiscal
period. The "Other expenses" and "12b-1 fees" figures are based upon estimated
costs and the estimated size of the Class and the Portfolio and estimated fees
to be charged for the current fiscal period. Thus, actual expenses may be
greater or less than such estimates. 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.
4
<PAGE> 358
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 -- Reserve 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.
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 $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.
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
5
<PAGE> 359
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.
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, liquid 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 liquid 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.
INVESTMENT IN OTHER INVESTMENT COMPANIES. The Trust is permitted to invest
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 investment policies described above may be changed by the Board of
Trustees without the affirmative vote of a majority of the outstanding shares of
beneficial interest of the Trust.
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.
6
<PAGE> 360
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. 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 Transfer Agent
prior to 3:00 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. Following the initial investment, subsequent purchases of shares of the
Class may also be made via AIM LINK(R) Remote, a personal computer application
software product. 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. The Portfolio, however, reserves the right to change the
time for which purchase and redemption requests must be submitted to the
Portfolio for execution on the same day or any day when the U.S. primary
broker-dealer community is closed for business or trading is restricted due to
national holiday. 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.
Prior to the initial purchase of shares of the Class, an Account
Application, which can be obtained from the Transfer Agent, must be completed
and sent to the Transfer Agent at P.O. Box 4497, Houston, TX 77210-4497. 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 the Transfer Agent.
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
7
<PAGE> 361
investors to effect purchases of shares of the Class. The minimum initial
investment is $1,000, 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 the
Transfer Agent.
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 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 the 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
3:00 p.m. Eastern Time will earn the dividend declared on the date of purchase.
Any request for a correction to a transaction of Portfolio shares must be
submitted in writing to the Transfer Agent. The Transfer Agent reserves the
right to reject any such request. When a correction results in a dividend
adjustment, the Institution must agree in writing to reimburse the Portfolio for
any loss resulting from the correction. Failure to deliver purchase proceeds on
the requested settlement date may result in a claim against the Institution for
an amount equal to the overdraft charge incurred by 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 must specify that it is for the purchase of Shares of the
"Reserve 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.
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) Remote. 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.
8
<PAGE> 362
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 Transfer Agent prior to 3:00 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 Transfer Agent after
3:00 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 3:00 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. The Portfolio reserves the right to change the time for which
redemption requests must be submitted to and received by the Transfer Agent for
execution on the same day on any day when the U.S. primary broker-dealer
community is closed for business or trading is restricted due to national
holidays.
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 the
Transfer Agent.
Shareholders may request a redemption by telephone. Neither the Transfer
Agent nor FMC will 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 may 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
3:00 p.m. Eastern Time on the day of declaration. Net income for dividend
purposes is determined daily as of 3:00 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's 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 3:00 p.m. Eastern Time on the last business day of the month.
Such election, or any revocation thereof, must
9
<PAGE> 363
be made in writing by the Institution to the Transfer Agent at P.O. Box 4497,
Houston, TX 77210-4497, and will become effective with dividends paid after its
receipt by the Transfer Agent. 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 portfolios 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 the
Transfer Agent.
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
10
<PAGE> 364
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
3:00 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) 467-8792. 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.
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.
11
<PAGE> 365
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. Information concerning the Board of Trustees may be found in the
Statement of Additional Information. Certain trustees and officers of the Trust
are affiliated with AIM and A I M Management Group Inc. ("AIM Management"), the
parent corporation of AIM.
For a discussion of AIM Management and its subsidiaries' Year 2000
Compliance Project, see "General Information -- Year 2000 Compliance Project."
INVESTMENT ADVISOR
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173, acts as the investment advisor for the Portfolio pursuant to a
Master Investment Advisory Agreement (the "Advisory Agreement"). AIM was
organized in 1976 and, together with its affiliates, manages or advises over 90
investment company portfolios. Certain of the directors and 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. AIM Management is an indirect, wholly owned
subsidiary of AMVESCAP PLC, a publicly-traded holding company that, through its
subsidiaries, engages in institutional investment management and retail fund
businesses in the United States, Europe and the Pacific Region.
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, 1998, AIM received fees from the Trust
under the Advisory Agreement with respect to the Portfolio which represented
0.12% of the Portfolio's average daily net assets.
ADMINISTRATIVE SERVICES
The Trust has entered into a Master Administrative Services Agreement 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 waived
advisory fees of $167,622 on the Portfolio during the year ended August 31,
1998.
12
<PAGE> 366
DISTRIBUTOR
The Trust has entered into a Master Distribution Agreement (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 100, 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 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 1.00% 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 has been 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"). 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
13
<PAGE> 367
Plan may be amended by the trustees, including a majority of the Qualified
Trustees, by vote cast in person at a meeting called for the purpose of voting
upon such amendment. As long as the Plan is in effect, the selection or
nomination of the Qualified Trustees is committed to the discretion of the
Qualified Trustees.
PORTFOLIO TRANSACTIONS AND BROKERAGE
AIM is responsible for decisions to buy and sell securities for the
Portfolio, broker-dealer selection and negotiation of commission rates. Since
purchases and sales of portfolio securities by the Portfolio are usually
principal transactions, the Portfolio incurs little or no brokerage commissions.
Portfolio securities are normally purchased directly from the issuer or from a
market maker for the securities. The purchase price paid to dealers serving as
market makers may include a spread between the bid and asked prices.
AIM's primary consideration in effecting a security transaction is to
obtain the best net price and the most favorable execution of the order. To the
extent that the executions and prices offered by more than one dealer are
comparable, AIM may, in its discretion, effect transactions with dealers that
furnish statistical, research or other information or services which are deemed
by AIM to be beneficial to the Portfolio's investment programs. Certain research
services furnished by dealers may be useful to clients of AIM other than the
Portfolio. Similarly, any research services received by AIM through placement of
portfolio transactions of other clients may be of value to AIM in fulfilling its
obligations to the Portfolio.
GENERAL INFORMATION
ORGANIZATION AND DESCRIPTION OF SHARES
The 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 eighteen classes. Six classes, including the Class,
represent interests in the Portfolio, six classes represent interests in the
Government & Agency Portfolio and six 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.
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
14
<PAGE> 368
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 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 Fund Services, Inc., P.O. Box 4497, Houston, Texas 77210-4492, acts as
transfer agent for the shares of the Portfolio.
LEGAL COUNSEL
The law firm of Ballard Spahr Andrews & Ingersoll, LLP, Philadelphia,
Pennsylvania, serves as counsel to the Trust and passes upon certain legal
matters for the Trust.
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 100, Houston, Texas 77046-1173, or may be made by calling (800) 467-8792.
YEAR 2000 COMPLIANCE PROJECT
In providing services to the Trust, AIM Management and its subsidiaries
rely on both internal software systems as well as external software systems
provided by third parties. Many software systems in use today are unable to
distinguish the year 2000 from the year 1900. This defect if not cured will
likely adversely affect the services that AIM Management, its subsidiaries and
other service providers to the Trust provide the Trust and its shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and phase (iii) has
commenced. The Project is scheduled to be completed during the second quarter of
1999. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm year 2000 compliance
upon installation. No assurance can be given that the Project will be successful
or that AIM Management and its subsidiaries will not otherwise be adversely
affected by the year 2000 issue.
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.
15
<PAGE> 369
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS TRUST
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 467-8792
INVESTMENT ADVISOR
A I M ADVISORS, INC.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(713) 626-1919
DISTRIBUTOR
FUND MANAGEMENT COMPANY
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 467-8792
AUDITORS
KPMG PEAT MARWICK LLP
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 FUND SERVICES, INC.
P.O. Box 4497,
Houston, TX 77210-4497
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROSPECTUS
December 18, 1998
SHORT-TERM
INVESTMENTS TRUST
---------------------
TREASURY TAXADVANTAGE
PORTFOLIO
---------------------
RESERVE CLASS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Summary........................................... 2
Table of Fees and Expenses........................ 4
Suitability for Investors......................... 5
Investment Program................................ 5
Purchase of Shares................................ 7
Redemption of Shares.............................. 8
Dividends......................................... 9
Taxes............................................. 10
Net Asset Value................................... 11
Yield Information................................. 11
Reports to Shareholders........................... 11
Management of the Trust........................... 12
General Information............................... 14
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 370
SHORT-TERM
INVESTMENTS TRUST
Prospectus
- --------------------------------------------------------------------------------
TREASURY The Treasury TaxAdvantage Portfolio is a money
TAXADVANTAGE market fund whose investment objective is the
PORTFOLIO maximization of current income to the extent consistent
with the preservation of capital and the maintenance of
RESOURCE liquidity. The Treasury TaxAdvantage Portfolio seeks to
CLASS achieve its objective by investing in direct
obligations of the U.S. Treasury. The Treasury
DECEMBER 18, 1998 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 Resource 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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE 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
TAXADVANTAGE PORTFOLIO AND SHOULD BE READ AND RETAINED
FOR FUTURE REFERENCE. A STATEMENT OF ADDITIONAL
INFORMATION, DATED DECEMBER 18, 1998, 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) 825-6858. 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.
[AIM LOGO APPEARS HERE]
Fund Management Company
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 825-6858
<PAGE> 371
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
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 separate prospectuses, the Trust also offers other classes of
shares of beneficial interest representing interests in the Portfolio: the Cash
Management Class, the Institutional Class, the Personal Investment Class, the
Private Investment Class and the Reserve Class. Such classes have different
distribution arrangements and are designed for different types of investors. The
Trust also offers shares of several classes representing interests in each of
two other portfolios, the Government & Agency Portfolio and the Treasury
Portfolio, pursuant to separate prospectuses. 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."
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
3:00 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 3:00 p.m. Eastern Time. Dividends are
paid monthly by check or wire transfer unless the shareholder has previously
elected to have such dividends automatically reinvested in additional shares of
the Class. Information concerning the amount of the dividends declared on any
particular day will normally be available by 4:00 p.m. Eastern Time on that day.
See "Dividends."
CONSTANT NET ASSET VALUE
The 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
2
<PAGE> 372
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, 1998, the Trust paid AIM advisory fees with respect to the
Portfolio which represented 0.12% 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." Under a Transfer
Agency and Service Agreement, A I M Fund Services, Inc., ("Transfer Agent"),
AIM's wholly owned subsidiary and a registered transfer agent, receives a fee
for its provision of transfer agency, dividend distribution and disbursement,
and shareholder services to the Trust. See "General Information -- Transfer
Agent and Custodian."
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 0.20% 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. 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, AIM Institutional Funds, aimfunds.com, La
Familia AIM de Fondos, La Familia AIM de Fondos and Design and Invest With
Discipline are registered service marks and AIM Bank Connection is a service
mark of A I M Management Group Inc.
3
<PAGE> 373
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 (after fee waivers)**..................... 0.12%
12b-1 fees (after fee waivers)**.......................... 0.16%
Other expenses (estimated):
Custodian fees......................................... 0.01%
Other.................................................. 0.07%
------
Total other expenses.............................. 0.08%
------
Total portfolio operating expenses -- Resource Class**.... 0.36%
======
</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 be 0.20%, 0.20% and 0.48%, 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..................................................... $ 4
3 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 "Total portfolio
operating expenses -- Resource Class" figure is based upon costs and the
estimated size of the Class and fees to be charged for the current fiscal
period. The "Other Expenses" and "12b-1 fees" figures are based upon estimated
costs and the estimated size of the Class and the Portfolio and estimated fees
to be charged for the current fiscal period. Thus, actual expenses may be
greater or less than such estimates. 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 -- Resource Class" remain the same in the years
shown.
4
<PAGE> 374
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.
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 the repurchase price of the securities sold by the Portfolio which it is
obligated to repurchase. The risk, if
5
<PAGE> 375
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, liquid 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 liquid 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.
INVESTMENT IN OTHER INVESTMENT COMPANIES. The Trust is permitted to invest
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 investment policies described above may be changed by the Board of
Trustees without the affirmative vote of a majority of the outstanding shares of
beneficial interest of the Trust.
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.
6
<PAGE> 376
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. 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 Transfer Agent
prior to 3:00 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. Following the initial investment, subsequent purchases of shares of the
Class may also be made via AIM LINK(R) Remote, a personal computer application
software product. 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. The Portfolio, however, reserves the right to change the
time for which purchase and redemption requests must be submitted to the
Portfolio for execution on the same day or any day when the U.S. primary
broker-dealer community is closed for business or trading is restricted due to
national holiday. 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.
Prior to the initial purchase of shares of the Class, an Account
Application, which can be obtained from the Transfer Agent, must be completed
and sent to the Transfer Agent at P.O. Box 4497, Houston, TX 77210-4497. 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 the Transfer Agent.
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.
7
<PAGE> 377
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 the
Transfer Agent.
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 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 the 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
3:00 p.m. Eastern Time will earn the dividend declared on the date of purchase.
Any request for a correction to a transaction of Portfolio shares must be
submitted in writing to the Transfer Agent. The Transfer Agent reserves the
right to reject any such request. When a correction results in a dividend
adjustment, the Institution must agree in writing to reimburse the Portfolio for
any loss resulting from the correction. Failure to deliver purchase proceeds on
the requested settlement date may result in a claim against the Institution for
an amount equal to the overdraft charge incurred by 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 must specify that it is for the purchase of Shares of the
"Resource 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.
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) Remote. 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
8
<PAGE> 378
by a shareholder. If a redemption request is received by the Transfer Agent
prior to 3:00 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 Transfer Agent after 3:00 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 3:00 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. The Portfolio reserves the
right to change the time for which redemption requests must be submitted to and
received by the Transfer Agent for execution on the same day on any day when the
U.S. primary broker-dealer community is closed for business or trading is
restricted due to national holidays.
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 the
Transfer Agent.
Shareholders may request a redemption by telephone. Neither the Transfer
Agent nor FMC will 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 may 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
3:00 p.m. Eastern Time on the day of declaration. Net income for dividend
purposes is determined daily as of 3:00 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's 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 3:00 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 the Transfer Agent at P.O. Box 4497, Houston, TX 77210-4497, and
will become effective with dividends paid after its receipt by the Transfer
Agent. If a shareholder redeems all
9
<PAGE> 379
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 portfolios 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 the
Transfer Agent.
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
10
<PAGE> 380
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
3:00 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) 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 the investor before making an investment in the
Portfolio.
To assist banks and other institutions performing their own sub-accounting,
same day information as to the daily dividend per share for the Portfolio to
eight decimal places and current yield normally will be available by 4:00 p.m.
Eastern Time.
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.
11
<PAGE> 381
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. Information concerning the Board of Trustees may be found in the
Statement of Additional Information. Certain trustees and officers of the Trust
are affiliated with AIM and A I M Management Group Inc. ("AIM Management"), the
parent corporation of AIM.
For a discussion of AIM Management and its subsidiaries' Year 2000
Compliance Project, see "General Information -- Year 2000 Compliance Project."
INVESTMENT ADVISOR
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173, acts as the investment advisor for the Portfolio pursuant to a
Master Investment Advisory Agreement (the "Advisory Agreement"). AIM was
organized in 1976 and, together with its affiliates, manages or advises over 90
investment company portfolios. Certain of the directors and 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. AIM Management is an indirect, wholly owned
subsidiary of AMVESCAP PLC, a publicly-traded holding company that, through its
subsidiaries, engages in institutional investment management and retail fund
businesses in the United States, Europe and the Pacific Region.
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, 1998, AIM received fees from the Trust
under the Advisory Agreement with respect to the Portfolio which represented
0.12% of the Portfolio's average daily net assets.
ADMINISTRATIVE SERVICES
The Trust has entered into a Master Administrative Services Agreement 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 waived
advisory fees of $167,622 on the Portfolio during the year ended August 31,
1998.
12
<PAGE> 382
DISTRIBUTOR
The Trust has entered into a Master Distribution Agreement (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 100, 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 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 0.20% 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 0.20% 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 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 has been 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"). 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
13
<PAGE> 383
Plan may be amended by the trustees, including a majority of the Qualified
Trustees, by vote cast in person at a meeting called for the purpose of voting
upon such amendment. As long as the Plan is in effect, the selection or
nomination of the Qualified Trustees is committed to the discretion of the
Qualified Trustees.
PORTFOLIO TRANSACTIONS AND BROKERAGE
AIM is responsible for decisions to buy and sell securities for the
Portfolio, broker-dealer selection and negotiation of commission rates. Since
purchases and sales of portfolio securities by the Portfolio are usually
principal transactions, the Portfolio incurs little or no brokerage commissions.
Portfolio securities are normally purchased directly from the issuer or from a
market maker for the securities. The purchase price paid to dealers serving as
market makers may include a spread between the bid and asked prices.
AIM's primary consideration in effecting a security transaction is to
obtain the best net price and the most favorable execution of the order. To the
extent that the executions and prices offered by more than one dealer are
comparable, AIM may, in its discretion, effect transactions with dealers that
furnish statistical, research or other information or services which are deemed
by AIM to be beneficial to the Portfolio's investment programs. Certain research
services furnished by dealers may be useful to clients of AIM other than the
Portfolio. Similarly, any research services received by AIM through placement of
portfolio transactions of other clients may be of value to AIM in fulfilling its
obligations to the Portfolio.
GENERAL INFORMATION
ORGANIZATION AND DESCRIPTION OF SHARES
The 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 eighteen classes. Six classes, including the Class,
represent interests in the Portfolio, six classes represent interests in the
Government & Agency Portfolio and six 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.
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
14
<PAGE> 384
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 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 Fund Services, Inc., P.O. Box 4497, Houston, TX 77210-4497, acts as
transfer agent for the shares of the Portfolio.
LEGAL COUNSEL
The law firm of Ballard Spahr Andrews & Ingersoll, LLP, Philadelphia,
Pennsylvania, serves as counsel to the Trust and passes upon certain legal
matters for the Trust.
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 100, Houston, Texas 77046-1173, or may be made by calling (800) 825-6858.
YEAR 2000 COMPLIANCE PROJECT
In providing services to the Trust, AIM Management and its subsidiaries
rely on both internal software systems as well as external software systems
provided by third parties. Many software systems in use today are unable to
distinguish the year 2000 from the year 1900. This defect if not cured will
likely adversely affect the services that AIM Management, its subsidiaries and
other service providers to the Trust provide the Trust and its shareholders.
To address this issue, AIM Management and its subsidiaries, together with
independent technology consultants, are undertaking a comprehensive Year 2000
Compliance Project (the "Project"). The Project consists of three phases, namely
(i) inventorying every software application in use at AIM Management and its
subsidiaries, as well as remote, third party software systems on which AIM
Management and its subsidiaries rely, (ii) identifying those applications that
may not function properly after December 31, 1999, and (iii) correcting and
subsequently testing those applications that may not function properly after
December 31, 1999. Phases (i) and (ii) are complete and phase (iii) has
commenced. The Project is scheduled to be completed during the second quarter of
1999. Software applications acquired by AIM Management and its subsidiaries
after completion of the Project will be reviewed to confirm year 2000 compliance
upon installation. No assurance can be given that the Project will be successful
or that AIM Management and its subsidiaries will not otherwise be adversely
affected by the year 2000 issue.
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.
15
<PAGE> 385
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS TRUST
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 825-6858
INVESTMENT ADVISOR
A I M ADVISORS, INC.
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(713) 626-1919
DISTRIBUTOR
FUND MANAGEMENT COMPANY
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
(800) 825-6858
AUDITORS
KPMG PEAT MARWICK LLP
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 FUND SERVICES, INC.
P.O. Box 4497
Houston, TX 77210-4497
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROSPECTUS
December 18, 1998
SHORT-TERM
INVESTMENTS TRUST
---------------------
TREASURY
TAXADVANTAGE
PORTFOLIO
---------------------
RESOURCE CLASS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Summary........................................... 2
Table of Fees and Expenses........................ 4
Suitability for Investors......................... 5
Investment Program................................ 5
Purchase of Shares................................ 7
Redemption of Shares.............................. 8
Dividends......................................... 9
Taxes............................................. 10
Net Asset Value................................... 11
Yield Information................................. 11
Reports to Shareholders........................... 11
Management of the Trust........................... 12
General Information............................... 14
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 386
STATEMENT OF
ADDITIONAL INFORMATION
SHORT-TERM INVESTMENTS TRUST
TREASURY TAXADVANTAGE PORTFOLIO
(CASH MANAGEMENT CLASS)
(INSTITUTIONAL CLASS)
(PERSONAL INVESTMENT CLASS)
(PRIVATE INVESTMENT CLASS)
(RESERVE CLASS)
(RESOURCE CLASS)
11 GREENWAY PLAZA
SUITE 100
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 CLASSES OF THE
TREASURY TAXADVANTAGE PORTFOLIO,
COPIES OF WHICH MAY BE OBTAINED BY WRITING
FUND MANAGEMENT COMPANY, 11 GREENWAY PLAZA,
SUITE 100, HOUSTON, TEXAS 77046-1173
OR CALLING (800) 659-1005
---------------------
STATEMENT OF ADDITIONAL INFORMATION DATED DECEMBER 18, 1998
RELATING TO THE PROSPECTUS OF EACH OF THE FOLLOWING CLASSES OF THE
TREASURY TAXADVANTAGE PORTFOLIO:
CASH MANAGEMENT CLASS PROSPECTUS DATED DECEMBER 18, 1998,
INSTITUTIONAL CLASS PROSPECTUS DATED DECEMBER 18, 1998,
PERSONAL INVESTMENT CLASS PROSPECTUS DATED DECEMBER 18, 1998,
PRIVATE INVESTMENT CLASS PROSPECTUS DATED DECEMBER 18, 1998,
RESERVE CLASS PROSPECTUS DATED DECEMBER 18, 1998 AND
RESOURCE CLASS PROSPECTUS DATED DECEMBER 18, 1998
1
<PAGE> 387
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Introduction................................................ 3
General Information about the Trust......................... 3
The Trust and Its Shares............................... 3
Management.................................................. 5
Trustees and Officers.................................. 5
Remuneration of Trustees............................... 8
Investment Advisor..................................... 9
Administrative Services................................ 10
Expenses............................................... 10
Banking Regulations.................................... 11
Transfer Agent and Custodian........................... 11
Reports................................................ 12
Fee Waivers............................................ 12
Principal Holders of Securities........................ 12
Purchases and Redemptions................................... 15
Net Asset Value Determination.......................... 16
Distribution Agreement................................. 16
Distribution Plan...................................... 16
Performance Information................................ 17
Investment Program and Restrictions......................... 17
Investment Program..................................... 17
Eligible Securities.................................... 17
Investment Restrictions................................ 18
Other Investment Policies.............................. 18
Portfolio Transactions...................................... 18
General Brokerage Policy............................... 18
Allocation of Portfolio Transactions................... 19
Section 28(e) Standards................................ 19
Tax Matters................................................. 20
Qualifications as a Regulated Investment Company....... 20
Excise Tax on Regulated Investment Companies........... 21
Portfolio Distributions................................ 21
Sale or Redemption of Shares........................... 21
Foreign Shareholders................................... 22
Effect of Future Legislation; State and Local Tax
Considerations........................................ 22
Financial Statements........................................ FS-1
</TABLE>
2
<PAGE> 388
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 Cash Management Class Prospectus
dated December 18, 1998, the Institutional Class Prospectus dated December 18,
1998, the Personal Investment Class Prospectus dated December 18, 1998, the
Private Investment Class Prospectus dated December 18, 1998, the Reserve Class
Prospectus dated December 18, 1998 and the Resource Class Prospectus dated
December 18, 1998 (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 100, 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 Amended and Restated 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 three portfolios: the Portfolio, the Government & Agency Portfolio and the
Treasury Portfolio (together, the "Portfolios"). The Portfolio consists of the
following six classes of shares: Cash Management Class, Institutional Class,
Personal Investment Class, Private Investment Class, Reserve 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 the shares of each class of the Portfolio. The
Treasury Portfolio and the Government & Agency Portfolio each consists of the
following six classes of shares: Cash Management Class, Institutional Class,
Personal Investment Class, Private Investment Class, Reserve Class and Resource
Class. Shares of the six classes of the Treasury Portfolio and the six classes
of the Government & Agency Portfolio are offered pursuant to separate
prospectuses and separate statements 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 each 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.
3
<PAGE> 389
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, any 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, any Portfolio and any class
thereof with respect to which there are fewer than 100 holders of record.
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 property of the Portfolio for all losses and
expenses of any shareholder of the Portfolio 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
Portfolio 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 and officers will
not be personally liable for any act, omission or obligation of the Trust or any
Trustee or officer. However, nothing in the Declaration of Trust protects a
trustee or officer against any liability to the Trust or to the shareholders to
which a trustee or officer 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 or her office with the Trust. The Declaration of
Trust provides for indemnification by the Trust of the trustees, the officers,
employees or agents of the Trust if it is determined that such person acted in
good faith and reasonably believed: (1) in the case of conduct in his or her
official capacity for the Trust, that his or her conduct was in the Trust's best
interests, (2) in all other cases, that his or her conduct was at least not
opposed to the Trust's best interests and (3) in a criminal proceeding, that he
or she had no reason to believe that his or her conduct was unlawful. 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 each 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.
Except as otherwise disclosed in each Prospectus and in the Statement of
Additional Information, the trustees shall continue to hold office and may
appoint their successors.
4
<PAGE> 390
MANAGEMENT
TRUSTEES AND OFFICERS
The trustees and officers of the Trust and their principal occupations during
at least the last five years are set forth below. Unless otherwise indicated,
the address of each trustee and officer is 11 Greenway Plaza, Suite 100,
Houston, Texas 77046.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
POSITIONS HELD
NAME, ADDRESS AND AGE WITH REGISTRANT PRINCIPAL OCCUPATION DURING AT LEAST THE PAST 5 YEARS
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
*CHARLES T. BAUER (79) Trustee and Chairman of the Board of Directors, A I M Management
Chairman Group Inc., A I M Advisors, Inc., A I M Capital
Management, Inc., A I M Distributors, Inc., A I M
Fund Services, Inc. and Fund Management Company; and
Vice Chairman and Director, AMVESCAP PLC.
- --------------------------------------------------------------------------------------------------------------------------
BRUCE L. CROCKETT (54) Trustee Director, ACE Limited (insurance company). Formerly,
906 Frome Lane Director, President and Chief Executive Officer,
McLean, VA 22102 COMSAT Corporation; and Chairman, Board of Governors
of INTELSAT (international communications company).
- --------------------------------------------------------------------------------------------------------------------------
OWEN DALY II (74) Trustee Director, Cortland Trust Inc. (investment company).
Six Blythewood Road Formerly, Director, CF & I Steel Corp., Monumental
Baltimore, MD 21210 Life Insurance Company and Monumental General
Insurance Company; and Chairman of the Board of
Equitable Bancorporation.
- --------------------------------------------------------------------------------------------------------------------------
EDWARD K. DUNN (63) Trustee Chairman of the Board of Directors, Mercantile
2 Hopkins Plaza, 20th Floor Mortgage Corp. Formerly, Vice Chairman of the Board
Baltimore, MD 21201 of Directors and President, Mercantile-Safe Deposit &
Trust Co.; and President, Mercantile Bankshares.
- --------------------------------------------------------------------------------------------------------------------------
JACK M. FIELDS (46) Trustee Chief Executive Officer, Texana Global, Inc. (foreign
8810 Will Clayton Parkway trading company) and Twenty First Century Group, Inc.
Jetero Plaza, Suite E (a governmental affairs company). Formerly, Member of
Humble, TX 77338 the U.S. House of Representatives.
- --------------------------------------------------------------------------------------------------------------------------
**CARL FRISCHLING (61) Trustee Partner, Kramer, Levin, Naftalis & Frankel (law
919 Third Avenue firm). Formerly, Partner, Reid & Priest (law firm).
New York, NY 10022
- --------------------------------------------------------------------------------------------------------------------------
*ROBERT H. GRAHAM (51) Trustee and Director, President and Chief Executive Officer,
President A I M Management Group Inc.; Director and President,
A I M Advisors, Inc.; Director and Senior Vice
President, A I M Capital Management, Inc., A I M
Distributors, Inc., A I M Fund Services, Inc., and
Fund Management Company; and Director, AMVESCAP PLC.
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
*A trustee who is an "interested person" of the Trust and AIM as defined in the
1940 Act.
**A trustee who is an "interested person" of the Trust as defined in the 1940
Act.
5
<PAGE> 391
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
POSITIONS HELD
NAME, ADDRESS AND AGE WITH REGISTRANT PRINCIPAL OCCUPATION DURING AT LEAST THE PAST 5 YEARS
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PREMA MATHAI-DAVIS (48) Trustee Chief Executive Officer, YWCA of the U.S.A.;
350 Fifth Avenue, Suite 301 Commissioner, New York City Department for the Aging;
New York, NY 10118 and Member of the Board of Directors, Metropolitan
Transportation Authority of New York State.
- --------------------------------------------------------------------------------------------------------------------------
LEWIS F. PENNOCK (56) Trustee Attorney in private practice in Houston, Texas.
6363 Woodway, Suite 825
Houston, TX 77057
- --------------------------------------------------------------------------------------------------------------------------
IAN W. ROBINSON (75) Trustee Formerly, Executive Vice President and Chief
183 River Drive Financial Officer, Bell Atlantic Management Services,
Tequesta, FL 33469 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.
- --------------------------------------------------------------------------------------------------------------------------
LOUIS S. SKLAR (59) Trustee Executive Vice President, Development and Operations,
Transco Tower, 50th Floor Hines Interests Limited Partnership (real estate
2800 Post Oak Blvd. development).
Houston, TX 77056
- --------------------------------------------------------------------------------------------------------------------------
***JOHN J. ARTHUR (54) Senior Vice Director, Senior Vice President and Treasurer, A I M
President and Advisors, Inc.; and Vice President and Treasurer,
Treasurer A I M Management Group Inc., A I M Capital
Management, Inc., A I M Distributors, Inc., A I M
Fund Services, Inc. and Fund Management Company.
- --------------------------------------------------------------------------------------------------------------------------
GARY T. CRUM (51) Senior Vice Director and President, A I M Capital Management,
President 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. and AMVESCAP PLC.
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
***Mr. Arthur and Ms. Relihan are married to each other.
6
<PAGE> 392
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
POSITIONS HELD
NAME, ADDRESS AND AGE WITH REGISTRANT PRINCIPAL OCCUPATION DURING AT LEAST THE PAST 5 YEARS
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
***CAROL F. RELIHAN (44) Senior Vice Director, Senior Vice President, General Counsel and
President and Secretary, A I M Advisors, Inc.; Vice President,
Secretary General Counsel and Secretary, A I M Management Group
Inc.; Director, Vice President and General Counsel,
Fund Management Company; General Counsel and Vice
President, A I M Fund Services, Inc. and Vice
President, A I M Capital Management, Inc. and A I M
Distributors, Inc.
- --------------------------------------------------------------------------------------------------------------------------
DANA R. SUTTON (39) Vice President Vice President and Fund Controller, A I M Advisors,
and Assistant Inc.; and Assistant Vice President and Assistant
Treasurer Treasurer, Fund Management Company.
- --------------------------------------------------------------------------------------------------------------------------
MELVILLE B. COX (55) Vice President 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. and
Fund Management Company.
- --------------------------------------------------------------------------------------------------------------------------
KAREN DUNN KELLEY (38) Vice President Senior Vice President, A I M Capital Management, Inc.
and Vice President, A I M Advisors, Inc.
- --------------------------------------------------------------------------------------------------------------------------
J. ABBOTT SPRAGUE (43) Vice President Director and President, Fund Management Company;
11 Greenway Plaza, Suite 100 Director, A I M Fund Services, Inc.; and Senior Vice
Houston, TX 77046 President, A I M Advisors, Inc. and A I M Management
Group Inc.
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
***Mr. Arthur and Ms. Relihan are married to each other.
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. Crockett, Daly, Dunn, Fields,
Frischling, Pennock, Robinson (Chairman) and Sklar. 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,
Dunn, Fields, Frischling, Pennock, Robinson, and Sklar (Chairman). 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.
The members of the Nominating and Compensation Committee are Messrs. Crockett
(Chairman), Daly, Dunn, Fields, Pennock, Robinson 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. Most of the Trust's executive
officers hold similar offices with some or all of such investment companies.
7
<PAGE> 393
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 or her services according to
a fee schedule which recognizes the fact that such trustee also serves as a
director or trustee of certain 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 or she
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
BENEFITS TOTAL
AGGREGATE ACCRUED COMPENSATION
COMPENSATION BY ALL FROM ALL
TRUSTEE FROM TRUST(1) AIM FUNDS(2) AIM FUNDS(3)
------- ------------- ------------- ------------
<S> <C> <C> <C>
Charles T. Bauer................................ $ -0- $ -0- $ -0-
Bruce L. Crockett............................... 4,747 67,774 84,000
Owen Daly II.................................... 4,747 103,542 84,000
Edward K. Dunn, Jr.(4).......................... 2,193 -0- -0-
Jack Fields..................................... 4,747 -0- 70,500
Carl Frischling................................. 4,747 96,520 84,000(5)
Robert H. Graham................................ -0- -0- -0-
John F. Kroeger(6).............................. 4,547 94,132 82,500
Prema Mathai-Davis(4)........................... 261 -0- -0-
Lewis F. Pennock................................ 4,747 55,777 84,000
Ian W. Robinson................................. 4,672 85,912 84,000
Louis S. Sklar.................................. 4,695 84,370 83,500
</TABLE>
- ---------------
(1) The total amount of compensation deferred by all Trustees of the Trust
during the fiscal year ended August 31, 1998, including interest earned
thereon, was $26,330.
(2) During the fiscal year ended August 31, 1998, the total amount of expenses
allocated to the Trust in respect of such retirement benefits was $32,407.
Data reflects compensation for the calendar year ended December 31, 1997.
(3) Each serves as a Director or Trustee of a total of 12 registered investment
companies advised by AIM as of December 31, 1997 (comprised of over 50
portfolios). Data reflects total compensation for the calendar year ended
December 31, 1997.
(4) Mr. Dunn and Ms. Mathai-Davis were not serving as Trustees during the
calendar year ended December 31, 1997.
(5) The Portfolio paid the law firm of Kramer, Levin, Naftalis & Frankel $4,488
in legal fees for services provided to the Portfolio during the fiscal year
ended August 31, 1998. Mr. Frischling, a trustee of the Trust, is a partner
in such firm.
(6) Mr. Kroeger resigned as a trustee on June 11, 1998 and on that date became a
consultant to the Trust.
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.
8
<PAGE> 394
Set forth below is a table that shows the estimated annual benefits payable to
an eligible trustee upon retirement assuming a specified level of compensation
and years of service classifications. The estimated credited years of service
for Messrs. Crockett, Daly, Fields, Dunn, Frischling, Kroeger, Pennock,
Robinson, Sklar and Ms. Mathai-Davis are 11, 10, 0, 1, 21, 20, 16, 11, 8 and 0
years, respectively.
ANNUAL RETAINER UPON RETIREMENT
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
NUMBER OF
YEARS OF
SERVICE WITH ANNUAL RETAINER PAID BY ALL AIM FUNDS
THE AIM FUNDS $90,000
<S> <C>
- ------------------------------------------------------------------------------------
10 $67,500
- ------------------------------------------------------------------------------------
9 $60,750
- ------------------------------------------------------------------------------------
8 $54,000
- ------------------------------------------------------------------------------------
7 $47,250
- ------------------------------------------------------------------------------------
6 $40,500
- ------------------------------------------------------------------------------------
5 $33,750
- ------------------------------------------------------------------------------------
</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 (5) or ten
(10) years (depending on the Agreement) 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.
During the fiscal year ended August 31, 1998, $10,704 in trustees' fees and
expenses were allocated to the Portfolio.
INVESTMENT ADVISOR
A I M Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173,
acts as the investment advisor of the Portfolio pursuant to a Master Investment
Advisory Agreement (the "Advisory Agreement"). AIM was organized in 1976, and
together with its subsidiaries advises or manages over 90 investment company
portfolios.
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.
9
<PAGE> 395
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>
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 and under an investment advisory agreement in effect prior to February
28, 1997 which provided for the same level of compensation to AIM, AIM received
fees (net of fee waivers, if any) from the Trust for the fiscal years ended
August 31, 1998, 1997 and 1996, with respect to the Portfolio in the amounts of
$412,610, $705,397 and $675,795, respectively. For the fiscal years ended August
31, 1998, 1997 and 1996, AIM waived fees with respect to the Portfolio in the
amounts of $167,622, $123,468 and $116,126, 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 will continue in effect from year to year, 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' written 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 100, Houston, Texas 77046-1173, a holding
company that has been engaged in the financial service business since 1976. AIM
Management is an indirect wholly owned subsidiary of AMVESCAP PLC, 11 Devonshire
Square, London EC2M 4YR, United Kingdom. AMVESCAP PLC and its subsidiaries are
an independent investment management group engaged in institutional investment
management and retail fund businesses in the United States, Europe and the
Pacific Region. Certain of the directors and 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 100, 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 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 and under a prior administrative
services agreement which provided for the same level of reimbursement to AIM,
AIM was reimbursed for the fiscal years ended August 31, 1998, 1997 and 1996, in
the amounts of $46,759, $56,844 and $30,056, respectively, for fund accounting
services for the Portfolio.
10
<PAGE> 396
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 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 Fund Services, Inc. ("AFS"), a wholly owned subsidiary of AIM, P.O. Box
4497, Houston, TX 77210-4497, acts as transfer agent for the shares of all
classes of the Portfolio. For the services it provides to the Trust, AFS is
entitled to receive a fee based on the average daily net assets of the Trust,
plus out-of-pocket expenses and advances it has incurred. Such compensation may
be changed from time to time as is agreed to by AFS and the Trust. AFS has
provided transfer agency and shareholder services to the Portfolio since
December 29, 1997 pursuant to a Transfer Agency and Service Agreement. Prior to
December 29, 1997, A I M Institutional Fund Services, Inc., ("AIFS") provided
transfer agency and shareholder services to the Fund pursuant to a Transfer
Agency and Service Agreement.
11
<PAGE> 397
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, 700 Louisiana, Houston, Texas
77002, as the independent auditors to audit the financial statements and review
the tax returns of the Portfolio.
FEE WAIVERS
AIM or its affiliates may, from time to time, agree to waive voluntarily all
or any portion of its fees or reimburse the Portfolio for certain of its
expenses. Such waivers or reimbursements may be discontinued at any time.
PRINCIPAL HOLDERS OF SECURITIES
GOVERNMENT & AGENCY 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 Government &
Agency Portfolio as of October 30, 1998, 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>
Fund Services Associates.................................. 59.52% b
1875 Century Park East -- Suite 1345
Los Angeles, CA 90067
Gardnyr Michael Capital, Inc.............................. 40.48% b
2281 Lee Rd. Ste. 104
Winter Park, FL 32789
</TABLE>
INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Only a
---------------- -------------
<S> <C>
Gardnyr Michael Capital, Inc.............................. 65.79% b
2281 Lee Rd. Ste. 104
Winter Park, FL 32789
Norwest Bank Mpls........................................... 34.11%
733 Marquette Ave.
Minneapolis, MN 55479-0052
</TABLE>
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Only a
---------------- -------------
<S> <C>
Fund Services Associates, Inc............................. 94.36% b
1875 Century Park East -- Suite 1345
Los Angeles, CA 90067
Huntington Capital Corp................................... 5.64%
41 S. High St., Ninth Floor
Columbus, OH 43287
</TABLE>
RESOURCE CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Only a
---------------- -------------
<S> <C>
Hambrecht & Quist LLC..................................... 97.81%
230 Park Avenue, Floor 19
New York, NY 10169
</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 portfolio
may be presumed to be in "control" of such portfolio, as defined in the 1940
Act.
12
<PAGE> 398
AIM provided the initial capitalization of the Personal Investment Class and
the Reserve Class of the Government & Agency Portfolio and, accordingly, as of
the date of this Statement of Additional Information, owned all the outstanding
shares of beneficial interest of each such Class. The Trust expects that the
sale of shares of such Classes to the public pursuant to the Prospectuses will
promptly reduce the percentage of such shares owned by AIM to less than 1% of
the total shares outstanding of such Classes.
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 Treasury
Portfolio as of October 30, 1998 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>
Bank of New York.......................................... 57.31%
One Wall Street
5Th Floor
Stif/Master Note
New York, NY 10286
Fund Services Associates, Inc............................. 12.08%
1875 Century Park East -- Suite 1345
Los Angeles, CA 90067
Chase Bank of Texas....................................... 8.91%
600 Travis St., 8th Floor
8-CBT-39
Houston, TX 77252-8009
Bank of Oklahoma.......................................... 5.87%
P.O. Box 2180
Tulsa, OK 74101
</TABLE>
INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY a
---------------- -------------
<S> <C>
Trust Company Bank........................................ 8.20%
Center 3139
P.O. Box 105504
Atlanta, GA 30348
City of New York Deferred Compensation Plan............... 7.25%
40 Rector Street, 3rd Floor
New York, NY 10006
Weststar Bank Trust Dept.................................. 5.96%
P.O. Box 1156
Bartlesville, OK 74005-1156
First Trust/Var & Co...................................... 5.03%
Funds Control Suite 0404
180 East Fifth Street
St. Paul, MN 55101
</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.
13
<PAGE> 399
PERSONAL INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Only a
---------------- -------------
<S> <C>
Cullen/Frost Discount Brokers............................. 67.44%
P.O. Box 2358
San Antonio, TX 78299
Bank of New York.......................................... 24.64%
4 Fisher Lane
White Plains, NY 10603
</TABLE>
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Only a
---------------- -------------
<S> <C>
The Bank of New York...................................... 26.49%
One Wall Street
5Th Floor
Stif/Master Note
New York, NY 10286
Huntington Capital Corp................................... 19.84%
41 S. High St., Ninth Floor
Columbus, OH 43287
Zions First National Bank................................. 13.19%
P.O. Box 30880
Salt Lake City, UT 84130
First Trust/Var & Co...................................... 8.45%
Funds Control Suite 0404
180 East 5th Street
St. Paul, MN 55101
New Haven Savings Bank Trust Department................... 6.74%
P.O. Box 302
Trust Department
New Haven, CT 06502
Midland First American.................................... 6.53%
One Erieview Plaza Ste. 500
Cleveland, OH 44114
Cullen/Frost Discount Brokers............................. 6.39%
P.O. Box 2358
San Antonio, TX 78299
</TABLE>
RESOURCE CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Only a
---------------- -------------
<S> <C>
First Union Capital Markets............................... 80.64%
8739 Research Drive
Capital Markets
Charlotte, NC 28262-0675
Mellon Bank NA............................................ 11.26%
P.O. Box 710
Pittsburgh, PA 15230-0710
</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.
14
<PAGE> 400
AIM provided the initial capitalization of the Reserve Class of the Treasury
Portfolio and, accordingly, as of the date of this Statement of Additional
Information, owned all the outstanding shares of beneficial interest of such
Class. The Trust expects that the sale of shares of such Class to the public
pursuant to its Prospectus will promptly reduce the percentage of such shares
owned by AIM to less than 1% of the total shares outstanding of such Class.
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 Portfolio as
of October 30, 1998 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...................................... 26.43%
Funds Control Suite 0404
180 East Fifth Street
St. Paul, MN 55101
Peoples Two Ten Company................................... 20.85%
P.O. Box 821
C/O Summit Bank
Hackensack, NJ 07602
Frost National Bank TX.................................... 12.17%
Muir & Co.
C/O Frost
P.O. Box 2479
San Antonio, TX 78298-2479
Everen Clearing Corp...................................... 6.60%
111 East Kilbourn Ave.
Milwaukee, WI 53202
Key Trust Company......................................... 6.48%
Mail Code OH-01-49-3040
4900 Tiedeman
Cleveland, OH 44101-5971
Nationsbank Texas......................................... 6.21%
1401 Elm Street 11Th Floor
P.O. Box 831000
Dallas, TX 75202-2911
Mason-Dixon Trust Company................................. 5.57%
45 W. Main Street
Westminister, MD 21158-0199
</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.
15
<PAGE> 401
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER Record Only a
---------------- -------------
<S> <C>
Huntington Capital Corp. ................................. 26.45%
41 S High St., Ninth Floor
Columbus, OH 43287
Bank of New York.......................................... 24.01%
One Wall Street
5Th Floor
Stif/Master Note
New York, NY 10286
First National Bank of Chicago............................ 18.69%
Mail Suite 0126
Attention Sweep Coordinator
Chicago, IL 60670-0126
Oppenheimer & Co., Inc.................................... 11.15%
Oppenheimer Tower
World Financial Center
New York, NY 10281
Hambrecht & Quist LLC..................................... 8.79%
1100 Newport Center Drive, Second Floor
Newport Beach, CA 92660
First Union Capital Markets............................... 8.65%
8739 Research Drive
Capital Markets
Charlotte, NC 28262-0675
</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.
AIM provided the initial capitalization of the Cash Management Class, Personal
Investment Class, Reserve Class and Resource Class of the Portfolio and,
accordingly, as of the date of this Statement of Additional Information, owned
all the outstanding shares of beneficial interest of each such Class. The Trust
expects that the sale of shares of each such Class to the public pursuant to its
Prospectuses will promptly reduce the percentage of such shares owned by AIM to
less than 1% of the total shares outstanding of each such Class.
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 October 30, 1998, the
trustees and officers of the Trust beneficially owned less than 1% of each class
of the Trust's outstanding shares.
PURCHASES AND REDEMPTIONS
A complete description of the manner by which shares of a particular class may
be purchased, redeemed or exchanged appears in each Prospectus under the heading
"Purchase of Shares."
The right of redemption may be suspended or the date of payment postponed when
(a) trading on the New York Stock Exchange ("NYSE") is restricted, as determined
by applicable rules and regulations of the SEC, (b) the NYSE is closed for other
than customary weekend and 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
Fund not reasonably practicable.
A "business day" of the Portfolio is any day on which commercial banks in the
New York Federal Reserve district are open for business. The Portfolio, however,
reserves the right to change the time for which purchase and redemption requests
must be
16
<PAGE> 402
submitted to the Portfolio for execution on the same day on any day when the
U.S. primary broker-dealer community is closed for business or trading is
restricted due to national holidays.
NET ASSET VALUE DETERMINATION
Shares of each class 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.
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 (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 100, 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 continue in effect from year to year 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. 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 Cash Management Class, Personal
Investment Class, Private Investment Class, Reserve Class and Resource Class of
the Portfolio. These services may include among other things: (i) answering
customer inquiries regarding the shares of these classes 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 in shares of these classes; (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;
17
<PAGE> 403
(viii) arranging for bank wires; and (ix) such other services as the Trust may
request on behalf of the shares of these classes, 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, 1998, FMC received compensation pursuant
to the Plan in the amount of $90,969, 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 each 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, 1998, 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 4.99% and 5.11% and for the Private
Investment Class were 4.74% and 4.85%, 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 particular 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 the yield of a class 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.
INVESTMENT PROGRAM AND RESTRICTIONS
INVESTMENT PROGRAM
The Portfolio seeks to achieve its objective by investing in high grade money
market instruments. The money market instruments in which the Portfolio invests
are considered to carry very little risk and accordingly may not have as high a
yield as that available on money market instruments of lesser quality. The
Portfolio invests exclusively in direct obligations of the U.S. Treasury, which
include Treasury bills, notes and bonds.
18
<PAGE> 404
ELIGIBLE SECURITIES
The Trust will invest in "Eligible Securities" as defined in Rule 2a-7 under
the 1940 Act, which the Trust's Board of Trustees has determined to present
minimal credit risk.
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;
(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;
or
(8) invest in any obligation not payable as to principal and interest
in United States currency.
OTHER INVESTMENT POLICIES
The Portfolio does not intend to invest in companies for the purpose of
exercising control or management, except that the Portfolio may purchase
securities of other investment companies to the extent permitted by applicable
law or exemptive order. 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.
19
<PAGE> 405
PORTFOLIO TRANSACTIONS
GENERAL BROKERAGE POLICY
AIM makes decisions to buy and sell securities for the Portfolio, selects
broker-dealers, effects the Portfolio's investment portfolio transactions,
allocates brokerage fees in such transactions, and where applicable, negotiates
commissions and spreads on transactions. Since purchases and sales of portfolio
securities by the Portfolio are usually principal transactions, the Portfolio
incurs little or no brokerage commissions. AIM's primary consideration in
effecting a security transaction is to obtain the most favorable execution of
the order, which includes the best price on the security and a low commission
rate (as applicable). While AIM seeks reasonable competitive commission rates,
the Portfolio may not pay the lowest commission or spread available. See
"Section 28(e) Standards" below.
In the event the Portfolio purchases securities traded in over-the-counter
markets, the Portfolio deals directly with dealers who make markets in the
securities involved, except when better prices are available elsewhere.
Portfolio transactions placed through dealers who are primary market makers are
effected at net prices without commissions, but which include compensation in
the form of a mark up or mark down.
AIM may determine target levels of commission business with various brokers on
behalf of its clients (including the Portfolio) over a certain time period. The
target levels will be based upon the following factors, among others: (1) the
execution services provided by the broker; (2) the research services provided by
the broker; and (3) the broker's interest in mutual funds in general and in the
Portfolio and other mutual funds advised by AIM or A I M Capital Management,
Inc. (collectively, the "AIM Funds") in particular, including sales of the
Portfolio and of the other AIM Funds. In connection with (3) above, the
Portfolio's trades may be executed directly by dealers which sell shares of the
AIM Funds or by other broker-dealers with which such dealers have clearing
arrangements. AIM will not use a specific formula in connection with any of
these considerations to determine the target levels.
AIM will seek, whenever possible, to recapture for the benefit of a Portfolio
any commissions, fees, brokerage or similar payments paid by the Portfolio on
portfolio transactions. Normally, the only fees which AIM can recapture are the
soliciting dealer fees on the tender of the Portfolio's securities in a tender
or exchange offer.
The Portfolio may engage in certain principal and agency transactions with
banks and their affiliates that own 5% or more of the outstanding voting
securities of the Portfolio provided the conditions of an exemptive order
received by the Portfolio from the SEC are met. In addition, the Portfolio may
purchase or sell a security from or to another AIM Fund provided the Portfolio
follows procedures adopted by the Board of Directors/Trustees of the various AIM
Funds, including the Trust. These inter-fund transactions do not generate
brokerage commissions but may result in custodial fees or taxes or other related
expenses.
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. 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.
ALLOCATION OF PORTFOLIO TRANSACTIONS
AIM and its affiliates manage several other investment accounts. Some of these
accounts may have investment objectives similar to the Portfolio. Occasionally,
identical securities will be appropriate for investment by the Portfolio and by
another fund or one or more of these investment accounts. However, the position
of each account in the same securities and the length of time that each account
may hold its investment in the same securities may 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, AIM will fairly allocate transactions in such securities among the
Portfolio and these accounts. AIM may combine such transactions, in accordance
with applicable laws and regulations, to obtain the most favorable execution.
Simultaneous transactions could, however, adversely affect the Portfolio's
ability to obtain or dispose of the full amount of a security which it seeks to
purchase or sell.
20
<PAGE> 406
Sometimes the procedure for allocating portfolio transactions among the
various investment accounts advised by AIM could have an adverse effect on the
price or amount of securities available to the Portfolio. In making such
allocations, AIM considers the investment objectives and policies of its
advisory clients, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment, the size of
investment commitments generally held, and the judgments of the persons
responsible for recommending the investment.
SECTION 28(e) STANDARDS
Section 28(e) of the Securities Exchange Act of 1934 provides that AIM, under
certain circumstances, lawfully may cause an account to pay a higher commission
than the lowest available. Under Section 28(e), AIM must make a good faith
determination that the commissions paid are "reasonable in relation to the value
of the brokerage and research services provided . . . viewed in terms of either
that particular transaction or [AIM's] overall responsibilities with respect to
the accounts as to which it exercises investment discretion." The services
provided by the broker also must lawfully and appropriately assist AIM in the
performance of its investment decision-making responsibilities. Accordingly, in
recognition of research services provided to it, a Fund may pay a broker higher
commissions than those available from another broker.
Research services received from broker-dealers supplement AIM's own research
(and the research of its affiliates), and may include the following types of
information: statistical and background information on the U.S. and foreign
economies, industry groups and individual companies; forecasts and
interpretations with respect to the U.S. and foreign economies, securities,
markets, specific industry groups and individual companies; information on
federal, state, local and foreign political developments; portfolio management
strategies; performance information on securities, indexes and investment
accounts; information concerning prices of securities; and information supplied
by specialized services to AIM and to the Trust's trustees with respect to the
performance, investment activities, and fees and expenses of other mutual funds.
Broker-dealers may communicate such information electronically, orally or in
written form. Research services may also include the providing of custody
services, as well as the providing of equipment used to communicate research
information, the providing of specialized consultations with AIM personnel with
respect to computerized systems and data furnished to AIM as a component of
other research services, the arranging of meetings with management of companies,
and the providing of access to consultants who supply research information.
The outside research assistance is useful to AIM since the broker-dealers used
by AIM tend to follow a broader universe of securities and other matters than
AIM's staff can follow. In addition, the research provides AIM with a diverse
perspective on financial markets. Research services provided to AIM by
broker-dealers are available for the benefit of all accounts managed or advised
by AIM or by its affiliates. Some broker-dealers may indicate that the provision
of research services is dependent upon the generation of certain specified
levels of commissions and underwriting concessions by AIM's clients, including
the Portfolio. However, the Portfolio is not under any obligation to deal with
any broker-dealer in the execution of transactions in portfolio securities.
In some cases, the research services are available only from the broker-dealer
providing them. In other cases, the research services may be obtainable from
alternative sources in return for cash payments. AIM believes that the research
services are beneficial in supplementing AIM's research and analysis and that
they improve the quality of AIM's investment advice. The advisory fee paid by
the Portfolio is not reduced because AIM receives such services. However, to the
extent that AIM would have purchased research services had they not been
provided by broker-dealers, the expenses to AIM could be considered to have been
reduced accordingly.
Under the 1940 Act, certain 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 certain persons
affiliated with the Trust are members 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.
21
<PAGE> 407
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
each 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
each Prospectus is not intended as a substitute for careful tax planning.
QUALIFICATIONS 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 (1) must 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) must satisfy an asset
diversification test in order to qualify for tax purposes as a regulated
investment company (the "Asset Diversification Test"). Under the Asset
Diversification 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 in accordance with the guidance that has been
provided by the Internal Revenue Service.
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.
22
<PAGE> 408
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 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
18, 1998. 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.
23
<PAGE> 409
FINANCIAL STATEMENTS
FS
<PAGE> 410
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, 1998, and the
related statement of operations for the year then ended, the statements 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. 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, 1998, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Treasury TaxAdvantage Portfolio as of August 31, 1998, 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, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
October 2, 1998
FS-1
<PAGE> 411
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, 1998, and the
related statement of operations for the year then ended, the statements 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 December 21, 1994 (date sales commenced for the
Private Investment Class) 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, 1998, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Treasury TaxAdvantage Portfolio as of August 31, 1998, 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 December
21, 1994 (date sales commenced for the Private Investment Class) through August
31, 1995, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
October 2, 1998
FS-2
<PAGE> 412
SCHEDULE OF INVESTMENTS
August 31, 1998
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
U.S. TREASURY SECURITIES - 98.98%
U.S. TREASURY BILLS(a) - 42.76%
5.38% 09/15/98 $17,000 $ 16,964,432
- ------------------------------------------------------------------------
4.91% 10/08/98 1,500 1,492,430
- ------------------------------------------------------------------------
4.92% 10/08/98 1,500 1,492,415
- ------------------------------------------------------------------------
4.94% 10/22/98 6,200 6,156,610
- ------------------------------------------------------------------------
4.95% 10/22/98 6,000 5,957,925
- ------------------------------------------------------------------------
4.90% 10/29/98 1,700 1,686,580
- ------------------------------------------------------------------------
4.94% 10/29/98 4,500 4,464,185
- ------------------------------------------------------------------------
4.96% 10/29/98 3,000 2,976,027
- ------------------------------------------------------------------------
4.88% 11/12/98 3,000 2,970,720
- ------------------------------------------------------------------------
4.89% 11/12/98 3,500 3,465,770
- ------------------------------------------------------------------------
4.92% 11/12/98 3,900 3,861,624
- ------------------------------------------------------------------------
4.925% 11/12/98 4,000 3,960,600
- ------------------------------------------------------------------------
4.83% 11/27/98 6,300 6,226,463
- ------------------------------------------------------------------------
61,675,781
- ------------------------------------------------------------------------
U.S. TREASURY NOTES - 56.22%
6.00% 09/30/98 20,000 20,011,434
- ------------------------------------------------------------------------
5.875% 10/31/98 30,000 30,015,678
- ------------------------------------------------------------------------
5.50% 11/15/98 10,000 10,002,191
- ------------------------------------------------------------------------
8.875% 11/15/98 6,000 6,041,836
- ------------------------------------------------------------------------
5.625% 11/30/98 15,000 15,014,104
- ------------------------------------------------------------------------
81,085,243
- ------------------------------------------------------------------------
Total U.S. Treasury Securities
(Cost $142,761,024) 142,761,024
- ------------------------------------------------------------------------
TOTAL INVESTMENTS -- 98.98% 142,761,024(b)
- ------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES -- 1.02% 1,466,178
- ------------------------------------------------------------------------
NET ASSETS -- 100.00% $144,227,202
========================================================================
</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> 413
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1998
<TABLE>
<S> <C>
ASSETS:
Investments, at value (amortized cost) $142,761,024
- ----------------------------------------------------------------------
Cash 535,982
- ----------------------------------------------------------------------
Interest receivable 1,633,831
- ----------------------------------------------------------------------
Investment for deferred compensation plan 25,086
- ----------------------------------------------------------------------
Other assets 1,534
- ----------------------------------------------------------------------
Total assets 144,957,457
- ----------------------------------------------------------------------
LIABILITIES:
Payables for:
Dividends 636,264
- ----------------------------------------------------------------------
Deferred compensation 25,086
- ----------------------------------------------------------------------
Accrued administrative services fees 3,987
- ----------------------------------------------------------------------
Accrued advisory fees 12,942
- ----------------------------------------------------------------------
Accrued distribution fees 7,410
- ----------------------------------------------------------------------
Accrued transfer agent fees 6,199
- ----------------------------------------------------------------------
Accrued trustees' fees 2,195
- ----------------------------------------------------------------------
Accrued operating expenses 36,172
- ----------------------------------------------------------------------
Total liabilities 730,255
- ----------------------------------------------------------------------
NET ASSETS $144,227,202
======================================================================
NET ASSETS:
Institutional Class $113,084,306
======================================================================
Private Investment Class $ 31,142,896
======================================================================
SHARES OF BENEFICIAL INTEREST, $.01 PAR VALUE PER SHARE:
Institutional Class 113,050,692
======================================================================
Private Investment Class 31,133,639
======================================================================
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> 414
STATEMENT OF OPERATIONS
For the year ended August 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $10,833,975
- ------------------------------------------------------------------
EXPENSES:
Advisory fees 412,610
- ------------------------------------------------------------------
Custodian fees 10,804
- ------------------------------------------------------------------
Administrative services fees 46,759
- ------------------------------------------------------------------
Trustees' fees and expenses 10,704
- ------------------------------------------------------------------
Transfer agent fees 34,933
- ------------------------------------------------------------------
Distribution fees (Note 2) 181,938
- ------------------------------------------------------------------
Other 66,389
- ------------------------------------------------------------------
Total expenses 764,137
- ------------------------------------------------------------------
Less: Fee waivers (258,591)
- ------------------------------------------------------------------
Net expenses 505,546
- ------------------------------------------------------------------
Net investment income 10,328,429
- ------------------------------------------------------------------
Net realized gain on sales of investments 42,871
- ------------------------------------------------------------------
Net increase in net assets resulting from operations $10,371,300
==================================================================
</TABLE>
See Notes to Financial Statements.
FS-5
<PAGE> 415
STATEMENT OF CHANGES IN NET ASSETS
For the years ended August 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
------------ -------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 10,328,429 $ 19,242,512
- --------------------------------------------------------------------------
Net realized gain on sales of investments 42,871 77,371
- --------------------------------------------------------------------------
Net increase in net assets resulting from
operations 10,371,300 19,319,883
- --------------------------------------------------------------------------
Distributions to shareholders from net
investment income:
Institutional Class (8,586,021) (16,879,485)
- --------------------------------------------------------------------------
Private Class (1,742,408) (2,363,027)
- --------------------------------------------------------------------------
Distributions to shareholders from capital
gains:
Institutional Class (154,304) --
- --------------------------------------------------------------------------
Private Class (47,000) --
- --------------------------------------------------------------------------
Share transactions-net (See Note 4) (153,177,145) (159,710,741)
- --------------------------------------------------------------------------
Net increase (decrease) in net assets (153,335,578) (159,633,370)
- --------------------------------------------------------------------------
NET ASSETS:
Beginning of period 297,562,780 457,196,150
- --------------------------------------------------------------------------
End of period $144,227,202 $ 297,562,780
==========================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $144,184,331 $ 297,361,476
- --------------------------------------------------------------------------
Undistributed net realized gain on sales of
investments 42,871 201,304
- --------------------------------------------------------------------------
$144,227,202 $ 297,562,780
==========================================================================
</TABLE>
See Notes to Financial Statements.
FS-6
<PAGE> 416
NOTES TO FINANCIAL STATEMENTS
August 31, 1998
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 three different portfolios, each of which offers separate series
of shares: the Treasury TaxAdvantage Portfolio, the Government & Agency
Portfolio and the Treasury Portfolio. The Government & Agency Portfolio
commenced operations on September 1, 1998. Information presented in these
financial statements pertains only to the Treasury TaxAdvantage Portfolio (the
"Portfolio") with the assets, liabilities and operations of each portfolio
accounted for separately. 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 the shareholders of each
class. 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 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. The
following is a summary of the significant accounting policies followed by the
Portfolio in the preparation of its financial statements.
A. Security Valuations - The Portfolio's 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 - Distribution expenses directly attributable to a class of shares
are charged to that class' operations. All other expenses which are
attributable to more than one class are allocated between the classes.
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 investment 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>
During the year ended August 31, 1998, AIM voluntarily waived advisory fees of
$167,622.
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, 1998,
the Portfolio reimbursed AIM $46,759 for such services.
The Portfolio, pursuant to a transfer agency and service agreement, has agreed
to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer agent and
shareholder services to the Portfolio. On September 20, 1997, the Board of
Trustees
FS-7
<PAGE> 417
approved the appointment of AFS as transfer agent of the Fund effective
December 29, 1997. During the year ended August 31, 1998, the Portfolio paid
AFS $19,384 for such services. Prior to the effective date of this agreement
with AFS, the Portfolio paid A I M Institutional Fund Services, Inc. $8,009
pursuant to a transfer agency and shareholder services agreement for the period
September 1, 1997 through December 28, 1997.
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 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 Fund 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 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, 1998, the Private Investment Class paid $90,969 as compensation
under the Plan. FMC waived fees of $90,969 for the same period. Certain
officers and trustees of the Trust are officers of AIM, FMC and AFS.
During the year ended August 31, 1998, the Portfolio paid legal fees of $4,488
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 during the years ended August 31, 1998 and 1997
were as follows:
<TABLE>
<CAPTION>
1998 1997
--------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ------------- -------------- --------------
<S> <C> <C> <C> <C>
Sold:
Institutional Class 758,084,286 $ 758,084,286 1,249,698,433 $1,249,698,433
- -----------------------------------------------------------------------------------
Private Investment
Class 314,695,955 314,695,955 274,981,089 274,981,089
- -----------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Institutional Class 368,100 368,100 425,111 425,111
- -----------------------------------------------------------------------------------
Private Investment
Class 774,188 774,188 479,712 479,712
- -----------------------------------------------------------------------------------
Reacquired:
Institutional Class (903,477,854) (903,477,854) (1,399,155,040) (1,399,155,040)
- -----------------------------------------------------------------------------------
Private Investment
Class (323,621,820) (323,621,820) (286,140,046) (286,140,046)
- -----------------------------------------------------------------------------------
Net increase
(decrease) (153,177,145) $(153,177,145) (159,710,741) $ (159,710,741)
- -----------------------------------------------------------------------------------
</TABLE>
FS-8
<PAGE> 418
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Institutional Class
outstanding during each of the years in the five-year period ended August 31,
1998.
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<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 0.05 0.05 0.03
- ------------------------- -------- -------- -------- -------- --------
Total from investment
operations 0.05 0.05 0.05 0.05 0.03
- ------------------------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income (0.05) (0.05) (0.05) (0.05) (0.03)
- ------------------------- -------- -------- -------- -------- --------
Total distributions (0.05) (0.05) (0.05) (0.05) (0.03)
- ------------------------- -------- -------- -------- -------- --------
Net asset value, end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========================= ======== ======== ======== ======== ========
Total return 5.30% 5.13% 5.19% 5.35% 3.29%
========================= ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $113,084 $258,251 $407,218 $394,376 $403,882
========================= ======== ======== ======== ======== ========
Ratio of expenses to
average net assets(a) 0.20%(b) 0.20% 0.20% 0.20% 0.20%
========================= ======== ======== ======== ======== ========
Ratio of net investment
income to average net
assets(c) 5.05%(b) 5.00% 5.06% 5.21% 3.23%
========================= ======== ======== ======== ======== ========
</TABLE>
(a) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
0.28%, 0.23%, 0.23%, 0.23% and 0.23% for the periods 1998-1994,
respectively.
(b) Ratios are based on average net assets of $169,918,161.
(c) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 4.97%, 4.97%, 5.04%, 5.18% and 3.20% for the periods
1998-1994, respectively.
FS-9
<PAGE> 419
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Private Investment
Class outstanding during each of the years in the three-year period ended
August 31, 1998 and the period December 21, 1994 (date sales commenced) through
August 31, 1995.
<TABLE>
<CAPTION>
1998 1997 1996 1995
------- ------- ------- ------
<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 0.05 0.04
- ------------------------------------- ------- ------- ------- ------
Total from investment operations 0.05 0.05 0.05 0.04
- ------------------------------------- ------- ------- ------- ------
Less distributions:
Dividends from net investment income (0.05) (0.05) (0.05) (0.04)
- -------------------------------------- ------ ------- ------- ------
Total distributions (0.05) (0.05) (0.05) (0.04)
- -------------------------------------- ------ ------- ------- ------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
====================================== ======= ======= ======= ======
Total return 5.04% 4.87% 4.93% 5.32%(a)
====================================== ======= ======= ======= ======
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $31,143 $39,312 $49,978 $5,423
====================================== ======= ======= ======= ======
Ratio of expenses to average net
assets(b) 0.45%(c) 0.45% 0.45% 0.45%(a)
====================================== ======= ======= ======= ======
Ratio of net investment income to
average net assets(d) 4.80%(c) 4.75% 4.72% 5.21%(a)
====================================== ======= ======= ======= ======
</TABLE>
(a) Annualized.
(b) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
0.78%, 0.74%, 0.85% and 1.02% (annualized) for the periods 1998-1995,
respectively.
(c) Ratios are based on average net assets of $36,387,542.
(d) After fee waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 4.47%, 4.46%, 4.32% and 4.64% (annualized) for the
periods 1998-1995, respectively.
FS-10
<PAGE> 420
PART C
OTHER INFORMATION
Item 24.
(a) Financial Statements
1. Government & Agency Portfolio - Cash Management Class
In Part A: None
In Part B: None
In Part C: None
2. Government & Agency Portfolio - Institutional Class
In Part A: None
In Part B: None
In Part C: None
3. Government & Agency Portfolio - Personal Investment
Class
In Part A: None
In Part B: None
In Part C: None
4. Government & Agency Portfolio - Private Investment
Class
In Part A: None
In Part B: None
In Part C: None
5. Government & Agency Portfolio - Reserve Class
In Part A: None
In Part B: None
In Part C: None
6. Government & Agency Portfolio - Resource Class
In Part A: None
In Part B: None
In Part C: None
7. Treasury Portfolio - Cash Management Class
In Part A: Financial Highlights
In Part B: (i) Independent Auditors'
Report
(ii) Financial Statements as of
August 31, 1998 (audited)
In Part C: None
C-1
<PAGE> 421
8. Treasury Portfolio - Institutional Class
In Part A: Financial Highlights
In Part B: (i) Independent Auditors'
Report
(ii) Financial Statements as of
August 31, 1998 (audited)
In Part C: None
9. Treasury Portfolio - Personal Investment Class
In Part A: Financial Highlights
In Part B: (i) Independent Auditors'
Report
(ii) Financial Statements as of
August 31, 1998 (audited)
In Part C: None
10. Treasury Portfolio - Private Investment Class
In Part A: Financial Highlights
In Part B: (i) Independent Auditors'
Report
(ii) Financial Statements as of
August 31, 1998 (audited)
In Part C: None
11. Treasury Portfolio - Reserve Class
In Part A: None
In Part B: None
In Part C: None
12. Treasury Portfolio - Resource Class
In Part A: Financial Highlights
In Part B: (i) Independent Auditors'
Report
(ii) Financial Statements as of
August 31, 1998 (audited)
In Part C: None
13. Treasury TaxAdvantage Portfolio - Cash Management
Class
In Part A: None
In Part B: None
In Part C: None
14. Treasury TaxAdvantage Portfolio - Institutional Class
In Part A: Financial Highlights
In Part B: (i) Independent Auditors'
Report
(ii) Financial Statements as of
August 31, 1998 (audited)
In Part C: None
15. Treasury TaxAdvantage Portfolio - Personal Investment
Class
In Part A: None
In Part B: None
In Part C: None
C-2
<PAGE> 422
16. Treasury TaxAdvantage Portfolio - Private Investment
Class
In Part A: Financial Highlights
In Part B: (i) Independent Auditors'
Report
(ii) Financial Statements as of
August 31, 1998 (audited)
In Part C: None
17. Treasury TaxAdvantage Portfolio - Reserve Class
In Part A: None
In Part B: None
In Part C: None
18. Treasury TaxAdvantage Portfolio - Resource Class
In Part A: None
In Part B: None
In Part C: None
(b) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -------------------------------------------------------------
<S> <C> <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 was filed electronically
as an Exhibit to Registrant's Post-Effective
Amendment No. 30 on December 17, 1997.
(b) Restated Certificate of Trust of Registrant dated
November 5, 1998 is filed herewith electronically.
(c) 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.
(d) 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.
(e) 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.
(f) Third Amendment, dated September 19, 1995, to the
Registrant's Agreement and Declaration of Trust was
filed electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 29 on December 18,
1996.
</TABLE>
C-3
<PAGE> 423
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -------------------------------------------------------------
<S> <C> <C>
(g) Fourth Amendment, dated June 12, 1997, to the
Registrant's Agreement and Declaration of Trust, was
filed electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 30 on December 17,
1997.
(h) Fifth Amendment to the Registrant's Agreement and
Declaration of Trust was filed electronically as an
Exhibit to Registrant's Post-Effective Amendment No.
31 on June 22, 1998.
(i) Amended and Restated Agreement and Declaration of
Trust of Registrant dated November 5, 1998 is filed
herewith electronically.
(2) - (a) By-Laws of Registrant were filed as an Exhibit to
Registrant's Post-Effective Amendment No. 26 on
October 15, 1993, and were filed electronically as an
Exhibit to Registrant's Post-Effective Amendment No.
28 on November 13, 1995.
(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.
(c) Second Amendment to the By-Laws of Registrant, dated
March 14, 1995, was filed as an Exhibit to
Registrants Post-Effective Amendment No. 29 on
December 18, 1996.
(d) Amended and Restated By-Laws of Registrant, dated
December 11, 1996, were filed electronically as an
Exhibit to Registrant's Post-Effective Amendment No.
30 on December 17, 1997.
(e) Amended and Restated By-Laws of Registrant dated
November 5, 1998 are filed herewith electronically.
(3) - Certain Voting Trust Agreements - None.
(4) - (a) 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.
(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 Resource Class of the Treasury Portfolio was
filed electronically as an Exhibit to Registrant's
Post-Effective
</TABLE>
C-4
<PAGE> 424
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -------------------------------------------------------------
<S> <C> <C>
Amendment No. 28 on November 13, 1995, and is hereby
incorporated by reference.
(f) 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.
(g) 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.
(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.
(b) Master Investment Advisory Agreement, dated February
28, 1997, between A I M Advisors, Inc. and Registrant
with respect to the Treasury Portfolio and the
Treasury TaxAdvantage Portfolio was filed
electronically as an Exhibit to Registrant's Post-
Effective Amendment No. 30 on December 17, 1997, and
is hereby incorporated by reference.
(c) Amendment No. 1, dated September 1, 1998, to the
Master Investment Advisory Agreement, dated February
28, 1997 between A I M Advisors, Inc. and Registrant
with respect to the Government & Agency Portfolio, is
filed herewith electronically.
(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.
(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.
(c) Amendment No. 2, dated September 19, 1995, to the
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. 29 on
December 18, 1996.
(d) Master Distribution Agreement, dated February 28,
1997 between Registrant and Fund Management Company
with respect to the Treasury and Treasury
TaxAdvantage Portfolio was filed electronically as an
Exhibit to Registrant's Post-Effective Amendment No.
30 on December 17, 1997, and is hereby incorporated
by reference.
</TABLE>
C-5
<PAGE> 425
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -------------------------------------------------------------
<S> <C> <C>
(e) Amendment No. 1, dated September 1, 1998, to the
Master Distribution Agreement, dated February 28,
1997 between Registrant and Fund Management Company
with respect to the Government & Agency Portfolio, is
filed herewith electronically.
(f) Form of Amendment No. 2 to the Master Distribution
Agreement, dated February 28, 1997, between
Registrant and Fund Management Company 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 hereby
incorporated by reference.
(b) Form of Deferred Compensation Agreement was filed
electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 30 on December 17, 1997,
and is hereby incorporated by reference.
(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 hereby incorporated by
reference.
(b) Amendment, dated July 30, 1996, to the Custodian
Agreement, dated October 15, 1993, between The Bank
of New York and Registrant was filed as an Exhibit to
Post-Effective Amendment No. 29 on December 18, 1996
and is hereby incorporated by reference.
(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.
(b) Amendment No. 1, dated July 1, 1995, 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.
(c) Amendment No. 2, 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.
30 on December 17, 1997.
(d) Amendment No. 3, dated July 1, 1997, 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.
30 on December 17, 1997.
(e) Transfer Agency and Service Agreement, dated December
29, 1997, between A I M Fund Services, Inc. and
Registrant was filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 30 on
December 17, 1997, and is
hereby incorporated by reference.
</TABLE>
C-6
<PAGE> 426
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -------------------------------------------------------------
<S> <C> <C>
(f) 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.
(g) 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 was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 29 on December 18, 1996.
(h) Master Administrative Services Agreement, dated
February 28, 1997, between A I M Advisors, Inc. and
Registrant was filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 30 on
December 17, 1997, and is
hereby incorporated by reference.
(i) Amendment No. 1, dated September 1, 1998, to the
Master Administrative Services Agreement, dated
February 28, 1997, between Registrant and A I M
Advisors, Inc. with respect to Government & Agency
Portfolio, is filed herewith electronically.
(10) - Opinion and Consent of Ballard Spahr Andrews & Ingersoll,
LLP is filed herewith electronically.
(11) - Consent of KPMG Peat Marwick LLP is filed herewith
electronically.
(12) - Other Financial Statements - None.
(13) - Agreement Concerning Initial Capitalization - None.
(14) - Retirement Plans - None.
(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 was
filed as an Exhibit to Post-Effective Amendment No.
29 on December 18, 1996.
(b) Amended and Restated Master Distribution Plan
pursuant to Rule 12b-1, effective as of June 30, 1997
with respect to the Treasury and Treasury
TaxAdvantage Portfolios was filed electronically as
an Exhibit to Registrant's Post-Effective Amendment
No. 30 on December 17, 1997, and is hereby
incorporated by reference.
(c) Amendment No. 1, dated September 1, 1998, to the
Amended and Restated Master Distribution Plan
pursuant to Rule 12b-1 is filed herewith
electronically.
(d) Form of Amendment No. 2 to the Amended and Restated
Master Distribution Plan pursuant to Rule 12b-1 is
filed herewith electronically.
</TABLE>
C-7
<PAGE> 427
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -------------------------------------------------------------
<S> <C> <C>
(e) Form of Shareholder Service Agreement to be used in
connection with Registrant's Amended and Restated
Master Distribution Plan, as amended, is filed
herewith electronically.
(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) - (a) Multiple Class (Rule 18f-3) Plan was filed as an
Exhibit to Post-Effective Amendment No. 29 on
December 18, 1996.
(b) Amended and Restated Multiple Class (Rule 18f-3)
Plan was filed electronically as an Exhibit to
Post-Effective Amendment No. 30 on December 17, 1997.
(c) Second Amended and Restated Multiple Class (Rule
18f-3) Plan was filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 30 on
December 17, 1997, and is hereby incorporated by
reference.
(27) - Financial Data Schedule is filed herewith electronically.
</TABLE>
Item 25. Persons Controlled by or under Common Control with Registrant
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 October 30, 1998*
----------- -----------------
<S> <C>
Treasury Portfolio
Cash Management Class 220
Institutional Class 213
Personal Investment Class 1,103
Private Investment Class 554
Resource Class 295
Treasury TaxAdvantage Portfolio
Institutional Class 30
Private Investment Class 20
</TABLE>
C-8
<PAGE> 428
<TABLE>
<S> <C>
Government & Agency Portfolio
Cash Management Class 11
Institutional Class 5
Private Investment Class 9
Resource Class 5
</TABLE>
* No shares of the Reserve Class of the Treasury Portfolio, the
Cash Management, Personal Investment, Reserve and Resource
Classes of the Treasury TaxAdvantage Portfolio and the
Personal Investment and Reserve Classes of the Government &
Agency Portfolio were outstanding as of October 30, 1998.
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.
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 $25,000,000 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.
C-9
<PAGE> 429
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 (AIM Limited
Maturity Treasury Fund -Institutional Class)
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:
<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 & Trustee
Directors and Director
J. Abbott Sprague President & Director Vice President
Robert H. Graham Senior Vice President & Director President & Trustee
Mark D. Santero Senior Vice President None
William J. Wendel Senior Vice President None
John J. Arthur Vice President & Treasurer Senior Vice President
& Treasurer
Melville B. Cox Vice President & Chief Vice President
Compliance Officer
Carol F. Relihan Vice President, Director Senior Vice President &
& General Counsel Secretary
Stephen I. Winer Vice President, Assistant Secretary
Assistant General Counsel &
Assistant Secretary
James R. Anderson Vice President None
Nancy A. Beck Vice President None
- ------------------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
</TABLE>
C-10
<PAGE> 430
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ----------------- -------------------------- ---------------
<S> <C> <C>
David E. Hessel Assistant Vice President, None
Assistant Treasurer &
Controller
Jeffrey L. Horne Assistant Vice President None
Robert W. Morris, Jr. Assistant Vice President None
Ann M. Srubar Assistant Vice President None
Dana R. Sutton Assistant Vice President & Vice President & Assistant
Assistant Treasurer Treasurer
Nicholas D. White Assistant Vice President None
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 100, 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 Fund Services,
Inc., 11 Greenway Plaza, Suite 100, Houston, TX 77046-1173.
- --------------------------
<TABLE>
<S> <C>
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
</TABLE>
C-11
<PAGE> 431
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
(c) None.
C-12
<PAGE> 432
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant 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 25th day of
November, 1998.
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 November 25, 1998
- -----------------------------------
(Charles T. Bauer)
/s/ Robert H. Graham Trustee & President November 25, 1998
- ----------------------------------- (Principal Executive Officer)
(Robert H. Graham)
/s/ Bruce L. Crockett Trustee November 25, 1998
- -----------------------------------
(Bruce L. Crockett)
/s/ Owen Daly II Trustee November 25, 1998
- -----------------------------------
(Owen Daly II)
/s/ Edward K. Dunn, Jr. Trustee November 25, 1998
- -----------------------------------
(Edward K. Dunn, Jr.)
/s/ Jack M. Fields Trustee November 25, 1998
- -----------------------------------
(Jack M. Fields)
/s/ Carl Frischling Trustee November 25, 1998
- -----------------------------------
(Carl Frischling)
/s/ Prema Mathai-Davis Trustee November 25, 1998
- -----------------------------------
(Prema Mathai-Davis)
/s/ Lewis F. Pennock Trustee November 25, 1998
- -----------------------------------
(Lewis F. Pennock)
/s/ Ian W. Robinson Trustee November 25, 1998
- -----------------------------------
(Ian W. Robinson)
/s/ Louis S. Sklar Trustee November 25, 1998
- -----------------------------------
(Louis S. Sklar)
/s/ John J. Arthur Senior Vice President & November 25, 1998
- ----------------------------------- Treasurer (Principal Financial
(John J. Arthur) and Accounting Officer)
</TABLE>
<PAGE> 433
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number
- ------
<S> <C>
1(b) Restated Certificate of Trust of Registrant dated November 5,
1998
1(i) Amended and Restated Agreement and Declaration of Trust of
Registrant dated November 5, 1998.
2(e) Amended and Restated By-Laws of Registrant dated November 5,
1998
5(c) Amendment No. 1, dated September 1, 1998, to the Master
Investment Advisory Agreement, dated February 28, 1997, between
A I M Advisors, Inc. and Registrant with respect to the
Government & Agency Portfolio
6(e) Amendment No. 1, dated September 1, 1998, to the Master
Distribution Agreement, dated February 28, 1997, between
Registrant and Fund Management Company with respect to the
Government & Agency Portfolio
6(f) Form of Amendment No. 2 to the Master Distribution Agreement,
dated February 28, 1997, between Registrant and Fund Management
Company
9(i) Amendment No. 1, dated September 1, 1998, to the Master
Administrative Services Agreement, dated February 28, 1997,
between Registrant and A I M Advisors, Inc. with respect to the
Government & Agency Portfolio
10 Opinion and Consent of Ballard Spahr Andrews & Ingersoll, LLP
11 Consent of KPMG Peat Marwick LLP
15(c) Amendment No. 1, dated September 1, 1998, to the Amended and
Restated Master Distribution Plan pursuant to Rule 12b-1
15(d) Form of Amendment No. 2 to the Amended and Restated Master
Distribution Plan pursuant to Rule 12b-1
15(e) Form of Shareholder Service Agreement to be used in connection
with Registrant's Amended and Restated Master Distribution
Plan, as amended
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 1(b)
RESTATED CERTIFICATE OF TRUST
OF
SHORT-TERM INVESTMENTS TRUST
THIS RESTATED CERTIFICATE OF TRUST of Short-Term Investments Trust (the
"Trust"), a business trust under the Delaware Business Trust Act (12 Del. C.
Sec. 3801 et. seq.), dated as of November 5, 1998, is being duly executed and
filed by the undersigned, being a trustee of the Trust, to amend and restate the
original Certificate of Trust filed with the Office of the Secretary of State of
the State of Delaware (the "Secretary of State") on May 5, 1993.
ARTICLE I
The name of the Trust is "Short-Term Investments Trust."
ARTICLE II
The original Certificate of Trust of the Trust was filed on May 5,
1993.
ARTICLE III
The Trust is a registered investment company under the Investment
Company Act of 1940, as amended (15 U.S.C. Sec. 80a-1 et. seq.).
ARTICLE IV
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 V
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 VI
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
<PAGE> 2
provided in the Trust Instrument, (i) 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 or assets belonging to any
other series, and (ii) none of the debts, liabilities, obligations and expenses
incurred, contracted for or otherwise existing with respect to the Trust
generally that have not been allocated to a specified series, or with respect to
any other series, shall be enforceable against the assets of such specified
series.
ARTICLE VII
This Restated Certificate of Trust shall be effective immediately upon
filing with the Secretary of State.
IN WITNESS WHEREOF, the undersigned, being a trustee of the
Trust, has set forth his or her hand and seal to this Restated Certificate of
Trust as of the date first above written.
SHORT-TERM INVESTMENTS TRUST
By: /s/ ROBERT H. GRAHAM
---------------------------------
Name: Robert H. Graham
Title: Trustee
<PAGE> 1
EXHIBIT 1(i)
AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST
OF
SHORT-TERM INVESTMENTS TRUST
WHEREAS, THIS AGREEMENT AND DECLARATION OF TRUST of Short-Term
Investments Trust, dated May 5, 1993, as previously amended, is hereby amended
and restated as of November 5, 1998, among Charles T. Bauer, Bruce L. Crockett,
Owen Daly II, Edward K. Dunn, Jr., Jack Fields, Carl Frischling, Robert H.
Graham, Prema Mathai-Davis, Lewis F. Pennock, Ian W. Robinson and Louis S.
Sklar, as Trustees, and each person who becomes a Shareholder in accordance with
the terms hereinafter set forth.
NOW, THEREFORE, the Trustees do hereby declare that all money and
property contributed to the trust hereunder shall continue to be held and
managed in trust under this Agreement for the benefit of the Shareholders as
herein set forth below.
ARTICLE I
NAME, DEFINITIONS, PURPOSE AND RESTATED CERTIFICATE OF TRUST
Section 1.1. Name. The name of the business trust continued hereby
is Short-Term Investments Trust, and the Trustees may transact the Trust's
affairs in that name. The Trust shall constitute a Delaware business trust in
accordance with the Delaware Act.
Section 1.2. Definitions. Whenever used herein, unless otherwise
required by the context or specifically provided:
(a) "Affiliated Person," "Company," "Person," and "Principal
Underwriter" shall have the meanings given them in the 1940
Act, as modified by or interpreted by any applicable order or
orders of the Commission or any rules or regulations adopted
or interpretive releases of the Commission thereunder. The
term "Commission" shall have the meaning given it in the 1940
Act;
(b) "Agreement" means this Amended and Restated Agreement and
Declaration of Trust, as it may be amended from time to time;
(c) "allocable" has the meaning specified in Section 2.5(d);
(d) "allocated" has the meaning specified in Section 2.5(d);
(e) "Bylaws" means the Bylaws referred to in Section 4.1(e), as
from time to time amended;
(f) "Class" means a portion of Shares of a Portfolio of the Trust
established in accordance with the provisions of Section
2.3(b);
<PAGE> 2
(g) "Class Expenses" means expenses incurred by a particular Class
in connection with a shareholder services arrangement or a
distribution plan that is specific to such Class or any other
differing share of expenses or differing fees, in each case
pursuant to or to the extent permitted by Rule 18f-3 under the
1940 Act.
(h) "Covered Persons" means a person who is or was a Trustee,
officer, employee or agent of the Trust, or is or was serving
at the request of the Trustees as a director, trustee,
partner, officer, employee or agent of a corporation, trust,
partnership, joint venture or other enterprise.
(i) The "Delaware Act" refers to the Delaware Business Trust Act,
12 Del. C. ss. 3801 et seq., as such Act may be amended from
time to time;
(j) "Governing Instrument" means collectively this Agreement, the
Bylaws, all amendments to this Agreement and the Bylaws and
every resolution of the Trustees or any committee of the
Trustees that by its terms is incorporated by reference into
this Agreement or stated to constitute part of the Trust's
Governing Instrument;
(k) "Majority Shareholder Vote" means "the vote of a majority of
the outstanding voting securities" (as defined in the 1940
Act) of the Trust, Portfolio, or Class, as applicable;
(l) "Majority Trustee Vote" means the vote of a majority of the
Trustees.
(m) "New Class A Shares" has the meaning specified in Section
2.6(c);
(n) "New Class B Shares" has the meaning specified in Section
2.6(c);
(o) The "1940 Act" means the Investment Company Act of 1940, as
amended from time to time;
(p) "Outstanding Shares" means Shares shown on the books of the
Trust or its transfer agent as then issued and outstanding,
and includes Shares of one Portfolio that the Trust has
purchased on behalf of another Portfolio, but excludes Shares
of a Portfolio that the Trust has redeemed or repurchased;
(q) "Portfolio" means a series of Shares of the Trust established
in accordance with the provisions of Section 2.3(a);
(r) "Proportionate Interest" has the meaning specified in Section
2.5(d);
(s) "Purchasing Portfolio" has the meaning specified in Section
2.10;
2
<PAGE> 3
(t) "Schedule A" has the meaning specified in Section 2.3(a);
(u) "Selling Portfolio" has the meaning specified in Section 2.10;
(v) "Shareholder" means a record owner of Outstanding Shares of
the Trust;
(w) "Shares" means, as to a Portfolio or any Class thereof, the
equal proportionate transferable units of beneficial interest
into which the beneficial interest of such Portfolio of the
Trust or such Class thereof shall be divided and may include
fractions of Shares as well as whole Shares;
(x) The "Trust" means Short-Term Investments Trust, the Delaware
business trust established hereby, and reference to the Trust,
when applicable to one or more Portfolios, shall refer to each
such Portfolio;
(y) The "Trustees" means the Persons who have signed this
Agreement as trustees so long as they shall continue to serve
as trustees of the Trust in accordance with the terms hereof,
and all other Persons who may from time to time be duly
appointed as Trustee in accordance with the provisions of
Section 3.4, or elected as Trustee by the Shareholders, and
reference herein to a Trustee or to the Trustees shall refer
to such Persons in their capacity as Trustees hereunder; and
(z) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the
account of the Trust or any Portfolio, or by the Trustees on
behalf of the Trust.
Section 1.3. Purpose. The purpose of the Trust is to conduct,
operate and carry on the business of an open-end management investment company
registered under the 1940 Act through one or more Portfolios investing primarily
in securities and to carry on such other business as the Trustees may from time
to time determine pursuant to their authority under this Agreement.
Section 1.4. Restated Certificate of Trust. Immediately upon the
execution of this Agreement, the Trustees shall file a Restated Certificate of
Trust with respect to the Trust in the Office of the Secretary of State of the
State of Delaware pursuant to the Delaware Act.
ARTICLE II
BENEFICIAL INTEREST
Section 2.1. Shares of Beneficial Interest. The beneficial interest
in the Trust shall be divided into an unlimited number of Shares, with par value
of $0.01 per Share. The Trustees may, from time to time, (a) authorize the
division of the Shares into one or more series, each of which constitutes a
Portfolio, and (b) may further authorize the division of the Shares of any
Portfolio into one or more separate and distinct Classes. All Shares issued
hereunder, including
3
<PAGE> 4
without limitation, Shares issued in connection with a dividend or other
distribution in Shares or a split or reverse split of Shares, shall be fully
paid and nonassessable.
Section 2.2. Issuance of Shares. The Trustees in their discretion
may, from time to time, without vote of the Shareholders, issue Shares, in
addition to the then issued and outstanding Shares and Shares held in the
treasury, to such party or parties and for such amount and type of
consideration, subject to applicable law, including cash or securities, at such
time or times and on such terms as the Trustees may deem appropriate, and may in
such manner acquire other assets (including the acquisition of assets subject
to, and in connection with, the assumption of liabilities) and businesses. In
connection with any issuance of Shares, the Trustees may issue fractional
Shares. The Trustees may from time to time divide or combine the Shares into a
greater or lesser number without thereby changing the proportionate beneficial
interests in the Trust. Contributions to the Trust may be accepted for, and
Shares shall be redeemed as, whole Shares and/or 1/1,000th of a Share or
integral multiples thereof.
Section 2.3. Establishment of Portfolios and Classes.
(a) The Trust shall consist of one or more separate and distinct
Portfolios, each with an unlimited number of Shares unless
otherwise specified. The Trustees hereby establish and
designate the Portfolios listed on Schedule A attached hereto
and made a part hereof ("Schedule A"). Each additional
Portfolio shall be established by the adoption of a resolution
by the Trustees. Each such resolution is hereby incorporated
herein by this reference and made a part of the Trust's
Governing Instrument whether or not expressly stated in such
resolution, and shall be effective upon the occurrence of both
(i) the date stated therein (or, if no such date is stated,
upon the date of such adoption) and (ii) the execution of an
amendment either to this Agreement or to Schedule A hereto
establishing and designating such additional Portfolio or
Portfolios. The Shares of each Portfolio shall have the
relative rights and preferences provided for herein and such
rights and preferences as may be designated by the Trustees in
any amendment or modification to the Trust's Governing
Instrument. The Trust shall maintain separate and distinct
records of each Portfolio and shall hold and account for the
assets belonging thereto separately from the other Trust
Property and the assets belonging to any other Portfolio. Each
Share of a Portfolio shall represent an equal beneficial
interest in the net assets belonging to that Portfolio, except
to the extent of Class Expenses and other expenses separately
allocated to Classes thereof (if any Classes have been
established) as permitted herein.
(b) The Trustees may establish one or more Classes of Shares of
any Portfolio, each with an unlimited number of Shares unless
otherwise specified. Each Class so established and designated
shall represent a Proportionate Interest (as defined in
Section 2.5(d)) in the net assets belonging to that Portfolio
and shall have identical voting, dividend, liquidation, and
other rights and be subject to the same terms and conditions,
except that (1) Class Expenses allocated to a Class for
4
<PAGE> 5
which such expenses were incurred shall be borne solely by
that Class, (2) other expenses, costs, charges, and reserves
allocated to a Class in accordance with Section 2.5(e) may be
borne solely by that Class, (3) dividends declared and payable
to a Class pursuant to Section 7.1 shall reflect the items
separately allocated thereto pursuant to the preceding
clauses, (4) each Class may have separate rights to convert to
another Class, exchange rights, and similar rights, each as
determined by the Trustees, and (5) subject to Section 2.6(c),
each Class may have exclusive voting rights with respect to
matters affecting only that Class. The Trustees hereby
establish for each Portfolio listed on Schedule A the Classes
listed thereon. Each additional Class for any or all
Portfolios shall be established by the adoption of a
resolution by the Trustees, each of which is hereby
incorporated herein by this reference and made a Governing
Instrument whether or not expressly stated in such resolution,
and shall be effective upon the occurrence of both (i) the
date stated therein (or, if no such date is stated, upon the
date of such adoption) and (ii) the execution of an amendment
to this Agreement establishing and designating such additional
Class or Classes.
Section 2.4. Actions Affecting Portfolios and Classes. Subject to
the right of Shareholders, if any, to vote pursuant to Section 6.1, the Trustees
shall have full power and authority, in their sole discretion without obtaining
any prior authorization or vote of the Shareholders of any Portfolio, or Class
thereof, to establish and designate and to change in any manner any Portfolio of
Shares, or any Class or Classes thereof; to fix or change such preferences,
voting powers, rights, and privileges of any Portfolio, or Classes thereof, as
the Trustees may from time to time determine, including any change that may
adversely affect a Shareholder; to divide or combine the Shares of any
Portfolio, or Classes thereof, into a greater or lesser number; to classify or
reclassify or convert any issued Shares of any Portfolio, or Classes thereof,
into one or more Portfolios or Classes of Shares of a Portfolio; and to take
such other action with respect to the Shares as the Trustees may deem desirable.
A Portfolio and any Class thereof may issue any number of Shares but need not
issue any Shares. At any time that there are no Outstanding Shares of any
particular Portfolio or Class previously established and designated, the
Trustees may abolish that Portfolio or Class and the establishment and
designation thereof.
Section 2.5. Relative Rights and Preferences. Unless the
establishing resolution or any other resolution adopted pursuant to Section 2.3
otherwise provides, Shares of each Portfolio or Class thereof established
hereunder shall have the following relative rights and preferences:
(a) Except as set forth in paragraph (e) of this Section 2.5, each
Share of a Portfolio, regardless of Class, shall represent an
equal pro rata interest in the assets belonging to such
Portfolio and shall have identical voting, dividend,
liquidation and other rights, preferences, powers,
restrictions, limitations, qualifications and designations and
terms and conditions with each other Share of such Portfolio.
5
<PAGE> 6
(b) Shareholders shall have no preemptive or other right to
subscribe to any additional Shares or other securities issued
by the Trust or the Trustees, whether of the same or other
Portfolio (or Class).
(c) All consideration received by the Trust for the issue or sale
of Shares of a particular Portfolio, together with all assets
in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof, including any
proceeds derived from the sale, exchange, or liquidation of
such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may
be, shall be held and accounted for separately from the other
assets of the Trust and of every other Portfolio and may be
referred to herein as "assets belonging to" that Portfolio.
The assets belonging to a particular Portfolio shall belong to
that Portfolio for all purposes, and to no other Portfolio,
subject only to the rights of creditors of that Portfolio. In
addition, any assets, income, earnings, profits or funds, or
payments and proceeds with respect thereto, which are not
readily identifiable as belonging to any particular Portfolio
shall be allocated by the Trustees between and among one or
more of the Portfolios in such manner as the Trustees, in
their sole discretion, deem fair and equitable. Each such
allocation shall be conclusive and binding upon the
Shareholders of all Portfolios thereof for all purposes, and
such assets, income, earnings, profits, or funds, or payments
and proceeds with respect thereto shall be assets belonging to
that Portfolio.
(d) Each Class of a Portfolio shall have a proportionate undivided
interest (as determined by or at the direction of, or pursuant
to authority granted by, the Trustees, consistent with
industry practice) ("Proportionate Interest") in the net
assets belonging to that Portfolio. References herein to
assets, expenses, charges, costs, and reserves "allocable" or
"allocated" to a particular Class of a Portfolio shall mean
the aggregate amount of such item(s) of the Portfolio
multiplied by the Class's Proportionate Interest.
(e) A particular Portfolio shall be charged with the liabilities
of that Portfolio, and all expenses, costs, charges and
reserves attributable to any particular Portfolio shall be
borne by such Portfolio; provided that the Trustees may, in
their sole discretion, allocate or authorize the allocation of
particular expenses, costs, charges, and/or reserves of a
Portfolio to fewer than all the Classes thereof. Class
Expenses shall, in all cases, be allocated to the Class for
which such Class Expenses were incurred. Any general
liabilities, expenses, costs, charges or reserves of the Trust
(or any Portfolio) that are not readily identifiable as
chargeable to or bearable by any particular Portfolio (or any
particular Class) shall be allocated and charged by the
Trustees between or among any one or more of the Portfolios
(or Classes) in such manner as the Trustees in their sole
discretion deem fair and equitable. Each such allocation shall
be conclusive and binding upon the Shareholders of all
Portfolios (or Classes) for all purposes. Without
6
<PAGE> 7
limitation of the foregoing provisions of this Section 2.5(e),
(i) the debts, liabilities, obligations and expenses incurred,
contracted for or otherwise existing with respect to a
particular Portfolio shall be enforceable against the assets
of such Portfolio only, and not against the assets of the
Trust generally or assets belonging to any other Portfolio,
and (ii) none of the debts, liabilities, obligations and
expenses incurred, contracted for or otherwise existing with
respect to the Trust generally that have not been allocated to
a specified Portfolio, or with respect to any other Portfolio,
shall be enforceable against the assets of such specified
Portfolio. Notice of this contractual limitation on
inter-Portfolio liabilities shall be set forth in the Trust's
Restated Certificate of Trust described in Section 1.4, and
upon the giving of such notice in the Restated Certificate of
Trust, the statutory provisions of Section 3804 of the
Delaware Act relating to limitations on inter-Portfolio
liabilities (and the statutory effect under Section 3804 of
setting forth such notice in the Restated Certificate of
Trust) shall become applicable to the Trust and each
Portfolio.
All references to Shares in this Agreement shall be deemed to
be shares of any or all Portfolios, or Classes thereof, as the context may
require. All provisions herein relating to the Trust shall apply equally to each
Portfolio of the Trust, and each Class thereof, except as the context otherwise
requires.
Section 2.6. Additional Rights and Preferences of Class B Shares. In
addition to the relative rights and preferences set forth in Section 2.5 and all
other provisions of this Agreement relating to Shares of the Trust generally,
any Class of any Portfolio designated as Class B Shares shall have the following
rights and preferences:
(a) Subject to the provisions of paragraph (c) below, all Class B
Shares other than those purchased through the reinvestment of
dividends and distributions shall automatically convert to
Class A Shares eight (8) years after the end of the calendar
month in which a Shareholder's order to purchase such shares
was accepted.
(b) Subject to the provisions of paragraph (c) below, Class B
Shares purchased through the reinvestment of dividends and
distributions paid in respect of Class B Shares will be
considered held in a separate sub-account, and will
automatically convert to Class A Shares in the same proportion
as any Class B Shares (other than those in the sub-account)
convert to Class A Shares. Other than this conversion feature,
the Class B Shares purchased through the reinvestment of
dividends and distributions paid in respect of Class B Shares
shall have all the rights and preferences, restrictions,
limitations as to dividends, qualifications and terms and
conditions of redemption of Class B Shares generally.
(c) If a Portfolio of the Trust implements any amendment to a Plan
of Distribution adopted under Rule 12b-1 promulgated under the
1940 Act (or, if presented to
7
<PAGE> 8
Shareholders, adopts or implements a non-Rule 12b-1
shareholder services plan) that the Trustees determine would
materially increase the charges that may be borne by the Class
A Shareholders under such plan, the Class B Shares will stop
converting to the Class A Shares unless the Class B Shares,
voting separately, approve the amendment or adoption. The
Trustees shall have sole discretion in determining whether
such amendment or adoption is submitted to a vote of the Class
B Shareholders. Should such amendment or adoption not be
submitted to a vote of the Class B Shareholders or, if
submitted, should the Class B Shareholders fail to approve
such amendment or adoption, the Trustees shall take such
action as is necessary to: (1) create a new class (the "New
Class A Shares") which shall be identical in all material
respects to the Class A Shares as they existed prior to the
implementation of the amendment or adoption; and (2) ensure
that the existing Class B Shares will be exchanged or
converted into New Class A Shares no later than the date such
Class B Shares were scheduled to convert to Class A Shares. If
deemed advisable by the Trustees to implement the foregoing,
and at the sole discretion of the Trustees, such action may
include the exchange of all Class B Shares for a new class
(the "New Class B Shares"), identical in all material respects
to the Class B Shares except that the New Class B Shares will
automatically convert into the New Class A Shares. Such
exchanges or conversions shall be effected in a manner that
the Trustees reasonably believe will not be subject to federal
taxation.
Section 2.7. Investment in the Trust. Investments may be accepted by
the Trust from such Persons, at such times, on such terms, and for such
consideration, which may consist of cash or tangible or intangible property or a
combination thereof, as the Trustees from time to time may authorize. At the
Trustees' sole discretion, such investments, subject to applicable law, may be
in the form of cash or securities in which the affected Portfolio is authorized
to invest, valued as provided in applicable law. Each such investment shall be
credited to the individual Shareholder's account in the form of full and
fractional Shares of the Trust, in such Portfolio (or Class) as the Shareholder
shall select.
Section 2.8. Personal Liability of Shareholders. As provided by
applicable law, no Shareholder of the Trust shall be personally liable for the
debts, liabilities, obligations and expenses incurred by, contracted for, or
otherwise existing with respect to, the Trust or any Portfolio (or Class)
thereof. Neither the Trust nor the Trustees, nor any officer, employee, or agent
of the Trust shall have any power to bind personally any Shareholder or, except
as provided herein or by applicable law, to call upon any Shareholder for the
payment of any sum of money or assessment whatsoever other than such as the
Shareholder may at any time personally agree to pay by way of subscription for
any Shares or otherwise. The Shareholders shall be entitled, to the fullest
extent permitted by applicable law, to the same limitation of personal liability
as is extended under the Delaware General Corporation Law to stockholders of
private corporations for profit. Every note, bond, contract or other undertaking
issued by or on behalf of the Trust or the Trustees relating to the Trust or to
any Portfolio shall include a recitation limiting the obligation represented
thereby to the Trust and its assets or to one or more Portfolios and the
8
<PAGE> 9
assets belonging thereto (but the omission of such a recitation shall not
operate to bind any Shareholder or Trustee of the Trust).
Section 2.9. Assent to Agreement. Every Shareholder, by virtue of
having purchased a Share, shall be held to have expressly assented to, and
agreed to be bound by, the terms hereof. The death of a Shareholder during the
continuance of the Trust shall not operate to terminate the same nor entitle the
representative of any deceased Shareholder to an accounting or to take any
action in court or elsewhere against the Trust or the Trustees, but only to
rights of said decedent under this Trust.
Section 2.10. Purchases of Shares Among Portfolios. The Trust may
purchase, on behalf of any Portfolio (the "Purchasing Portfolio"), Shares of
another Portfolio (the "Selling Portfolio") or any Class thereof. Shares of the
Selling Portfolio so purchased on behalf of the Purchasing Portfolio shall be
Outstanding Shares, and shall have all preferences, voting powers, rights and
privileges established for such Shares.
ARTICLE III
THE TRUSTEES
Section 3.1. Management of the Trust. The Trustees shall have
exclusive and absolute control over the Trust Property and over the business of
the Trust to the same extent as if the Trustees were the sole owners of the
Trust Property and business in their own right, but with such powers of
delegation as may be permitted by this Agreement. The Trustees shall have power
to conduct the business of the Trust and carry on its operations in any and all
of its branches and maintain offices both within and without the State of
Delaware, in any and all states of the United States of America, in the District
of Columbia, in any and all commonwealths, territories, dependencies, colonies,
or possessions of the United States of America, and in any and all foreign
jurisdictions and to do all such other things and execute all such instruments
as they deem necessary, proper or desirable in order to promote the interests of
the Trust although such things are not herein specifically mentioned. Any
determination as to what is in the interests of the Trust made by the Trustees
in good faith shall be conclusive. In construing the provisions of this
Agreement, the presumption shall be in favor of a grant of power to the
Trustees.
The enumeration of any specific power in this Agreement shall
not be construed as limiting the aforesaid power. The powers of the Trustees may
be exercised without order of or resort to any court or other authority.
Section 3.2. Trustees. The number of Trustees shall be such number
as shall be fixed from time to time by a majority of the Trustees; provided,
however, that the number of Trustees shall in no event be less than three (3)
nor more than fifteen (15). The current Trustees are those first identified
above.
9
<PAGE> 10
Section 3.3. Terms of Office of Trustees. The Trustees shall hold
office during the lifetime of this Trust, and until its termination as herein
provided; except that (a) any Trustee may resign his trusteeship or may retire
by written instrument signed by him and delivered to the other Trustees, which
shall take effect upon such delivery or upon such later date as is specified
therein; (b) any Trustee may be removed at any time by written instrument,
signed by at least two-thirds of the number of Trustees prior to such removal,
specifying the date when such removal shall become effective; (c) any Trustee
who has died, become physically or mentally incapacitated by reason of disease
or otherwise, or is otherwise unable to serve, may be retired by written
instrument signed by a majority of the other Trustees, specifying the date of
his retirement; and (d) a Trustee may be removed at any meeting of the
Shareholders by a vote of the Shareholders owning at least two-thirds of the
Outstanding Shares.
Section 3.4. Vacancies and Appointment of Trustees. In case of the
declination to serve, death, resignation, retirement or removal of a Trustee, or
a Trustee is otherwise unable to serve, or an increase in the number of
Trustees, a vacancy shall occur. Whenever a vacancy in the Board of Trustees
shall occur, until such vacancy is filled, the other Trustees shall have all the
powers hereunder and the certification of the other Trustees of such vacancy
shall be conclusive. In the case of an existing vacancy, the remaining Trustees
may fill such vacancy by appointing such other person as they in their
discretion shall see fit, or may leave such vacancy unfilled or may reduce the
number of Trustees to not less than two (2) Trustees. Such appointment shall be
evidenced by a written instrument signed by a majority of the Trustees in office
or by resolution of the Trustees, duly adopted, which shall be recorded in the
minutes of a meeting of the Trustees, whereupon the appointment shall take
effect.
An appointment of a Trustee may be made by the Trustees then
in office in anticipation of a vacancy to occur by reason of retirement,
resignation, or removal of a Trustee, or an increase in number of Trustees
effective at a later date, provided that said appointment shall become effective
only at the time or after the expected vacancy occurs. As soon as any Trustee
appointed pursuant to this Section 3.4 or elected by the Shareholders shall have
accepted the Trust and agreed in writing to be bound by the terms of the
Agreement, the Trust estate shall vest in the new Trustee or Trustees, together
with the continuing Trustees, without any further act or conveyance, and he
shall be deemed a Trustee hereunder.
Section 3.5. Temporary Absence of Trustee. Any Trustee may, by power
of attorney, delegate his power for a period not exceeding six months at any one
time to any other Trustee or Trustees, provided that in no case shall less than
two Trustees personally exercise the other powers hereunder except as herein
otherwise expressly provided.
Section 3.6. Effect of Death, Resignation, etc. of a Trustee. The
declination to serve, death, resignation, retirement, removal, incapacity, or
inability of the Trustees, or any one of them, shall not operate to terminate
the Trust or to revoke any existing agency created pursuant to the terms of this
Trust Agreement.
10
<PAGE> 11
Section 3.7. Ownership of Assets of the Trust. The assets of the
Trust and of each Portfolio thereof shall be held separate and apart from any
assets now or hereafter held in any capacity other than as Trustee hereunder by
the Trustees or any successor Trustees. Legal title in all of the assets of the
Trust and the right to conduct any business shall at all times be considered as
vested in the Trustees on behalf of the Trust, except that the Trustees may
cause legal title to any Trust Property to be held by, or in the name of the
Trust, or in the name of any Person as nominee. No Shareholder shall be deemed
to have a severable ownership in any individual asset of the Trust, or belonging
to any Portfolio, or allocable to any Class thereof, or any right of partition
or possession thereof, but each Shareholder shall have, except as otherwise
provided for herein, a proportionate undivided beneficial interest in the Trust
or in assets belonging to the Portfolio (or allocable to the Class) in which the
Shareholder holds Shares. The Shares shall be personal property giving only the
rights specifically set forth in this Agreement or the Delaware Act.
ARTICLE IV
POWERS OF THE TRUSTEES
Section 4.1. Powers. The Trustees in all instances shall act as
principals, and are and shall be free from the control of the Shareholders. The
Trustees shall have full power and authority to do any and all acts and to make
and execute any and all contracts and instruments that they may consider
necessary or appropriate in connection with the management of the Trust. Without
limiting the foregoing and subject to any applicable limitation in this
Agreement or the Bylaws of the Trust, the Trustees shall have power and
authority:
(a) To invest and reinvest cash and other property, and to hold
cash or other property uninvested, without in any event being
bound or limited by any present or future law or custom in
regard to investments by Trustees, and to sell, exchange,
lend, pledge, mortgage, hypothecate, write options on and
lease any or all of the assets of the Trust;
(b) To operate as, and to carry on the business of, an investment
company, and exercise all the powers necessary and appropriate
to the conduct of such operations;
(c) To borrow money and in this connection issue notes or other
evidence of indebtedness; to secure borrowings by mortgaging,
pledging or otherwise subjecting as security the Trust
Property; to endorse, guarantee, or undertake the performance
of an obligation or engagement of any other Person and to lend
Trust Property;
(d) To provide for the distribution of interests of the Trust
either through a principal underwriter in the manner hereafter
provided for or by the Trust itself, or both, or otherwise
pursuant to a plan of distribution of any kind;
11
<PAGE> 12
(e) To adopt Bylaws not inconsistent with this Trust Agreement
providing for the conduct of the business of the Trust and to
amend and repeal them to the extent that they do not reserve
such right to the Shareholders; such Bylaws shall be deemed
incorporated and included in this Trust Agreement;
(f) To elect and remove such officers and appoint and terminate
such agents as they consider appropriate;
(g) To employ one or more banks, trust companies or companies that
are members of a national securities exchange or such other
domestic or foreign entities as custodians of any assets of
the Trust subject to any conditions set forth in this
Agreement or in the Bylaws;
(h) To retain one or more transfer agents and shareholder
servicing agents;
(i) To set record dates in the manner provided herein or in the
Bylaws;
(j) To delegate such authority as they consider desirable to any
officers of the Trust and to any investment adviser, manager,
administrator, custodian, underwriter or other agent or
independent contractor;
(k) To sell or exchange any or all of the assets of the Trust,
subject to the right of Shareholders, if any, to vote on such
transaction pursuant to Section 6.1;
(l) To vote or give assent, or exercise any rights of ownership,
with respect to stock or other securities or property; and to
execute and deliver proxies and powers of attorney to such
person or persons as the Trustees shall deem proper, granting
to such person or persons such power and discretion with
relation to securities or property as the Trustee shall deem
proper;
(m) To exercise powers and rights of subscription or otherwise
which in any manner arise out of ownership of securities;
(n) To hold any security or property in a form not indicating any
trust, whether in bearer, book entry, unregistered or other
negotiable form; or either in the name of the Trust or of a
Portfolio or a custodian or a nominee or nominees, subject in
either case to proper safeguards according to the usual
practice of Delaware business trusts or investment companies;
(o) To establish separate and distinct Portfolios with separately
defined investment objectives and policies and distinct
investment purposes in accordance with the provisions of
Article II hereof and to establish Classes of such Portfolios
having relative rights, powers and duties as they may provide
consistent with applicable law;
12
<PAGE> 13
(p) Subject to the provisions of Section 3804 of the Delaware Act,
to allocate assets, liabilities and expenses of the Trust to a
particular Portfolio or to apportion the same between or among
two or more Portfolios, provided that any liabilities or
expenses incurred by a particular Portfolio shall be payable
solely out of the assets belonging to that Portfolio as
provided for in Article II hereof;
(q) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or
concern, any security of which is held in the Trust; to
consent to any contract, lease, mortgage, purchase, or sale of
property by such corporation or concern, and to pay calls or
subscriptions with respect to any security held in the Trust;
(r) To compromise, arbitrate, or otherwise adjust claims in favor
of or against the Trust or any matter in controversy
including, but not limited to, claims for taxes;
(s) To declare and pay dividends and make distributions of income
and of capital gains and capital to Shareholders in the manner
hereinafter provided;
(t) To establish, from time to time, a minimum investment for
Shareholders in the Trust or in one or more Portfolios or
Classes, and to require the redemption of the Shares of any
Shareholder whose investment is less than such minimum upon
giving notice to such Shareholder;
(u) To establish one or more committees, to delegate any of the
powers of the Trustees to said committees and to adopt a
committee charter providing for such responsibilities,
membership (including Trustees, officers or other agents of
the Trust therein) and any other characteristics of said
committees as the Trustees may deem proper, each of which
committees may consist of less than the whole number of
Trustees then in office, and may be empowered to act for and
bind the Trustees and the Trust, as if the acts of such
committee were the acts of all the Trustees then in office;
(v) To interpret the investment policies, practices or limitations
of any Portfolios;
(w) To establish a registered office and have a registered agent
in the State of Delaware; and
(x) In general to carry on any other business in connection with
or incidental to any of the foregoing powers, to do everything
necessary, suitable or proper for the accomplishment of any
purpose or the attainment of any object or the furtherance of
any power hereinbefore set forth, either alone or in
association with others, and to do every other act or thing
incidental or appurtenant to or growing out of or connected
with the aforesaid business or purposes, objects or powers.
13
<PAGE> 14
The foregoing clauses shall be construed both as objects and
powers, and the foregoing enumeration of specific powers shall not be held to
limit or restrict in any manner the general powers of the Trustees. Any action
by one or more of the Trustees in their capacity as such hereunder shall be
deemed an action on behalf of the Trust or the applicable Portfolio, and not an
action in an individual capacity.
The Trustees shall not be limited to investing in obligations
maturing before the possible termination of the Trust.
No one dealing with the Trustees shall be under any obligation
to make any inquiry concerning the authority of the Trustees, or to see to the
application of any payments made or property transferred to the Trustees or upon
their order.
Section 4.2. Issuance and Repurchase of Shares. The Trustees shall
have the power to issue, sell, repurchase, redeem, retire, cancel, acquire,
hold, resell, reissue, dispose of, and otherwise deal in Shares and, subject to
the provisions set forth in Articles II and VII hereof, to apply to any such
repurchase, redemption, retirement, cancellation or acquisition of Shares any
funds or property of the Trust, or any assets belonging to the particular
Portfolio or any assets allocable to the particular Class, with respect to which
such Shares are issued.
Section 4.3. Action by the Trustees. The Board of Trustees or any
committee thereof shall act by majority vote of those present at a meeting duly
called (including a meeting by telephonic or other electronic means, unless the
1940 Act requires that a particular action be taken only at a meeting of the
Trustees in person) at which a quorum required by the Bylaws is present or by
unanimous written consent of the Trustees or committee, as the case may be,
without a meeting, provided that the writing or writings are filed with the
minutes of proceedings of the Board or committee. Written consents or waivers of
the Trustees may be executed in one or more counterparts. Any written consent or
waiver may be provided and delivered to the Trust by any means by which notice
may be given to a Trustee. Subject to the requirements of the 1940 Act, the
Trustees by Majority Trustee Vote may delegate to any Trustee or Trustees
authority to approve particular matters or take particular actions on behalf of
the Trust.
Section 4.4. Principal Transactions. The Trustees may, on behalf of
the Trust, buy any securities from or sell any securities to, or lend any assets
of the Trust to, any Trustee or officer of the Trust or any firm of which any
such Trustee or officer is a member acting as principal, or have any such
dealings with any investment adviser, distributor, or transfer agent for the
Trust or with any Affiliated Person of such Person; and the Trust may employ any
such Person, or firm or Company in which such Person is an Affiliated Person, as
broker, legal counsel, registrar, investment adviser, distributor,
administrator, transfer agent, dividend disbursing agent, custodian, or in any
capacity upon customary terms, subject in all cases to applicable laws, rules,
and regulations and orders of regulatory authorities.
Section 4.5. Payment of Expenses by the Trust. The Trustees are
authorized to pay or cause to be paid out of the principal or income of the
Trust or any Portfolio, or partly out of the
14
<PAGE> 15
principal and partly out of income, and to charge or allocate to, between or
among such one or more of the Portfolios (or Classes), as they deem fair, all
expenses, fees, charges, taxes and liabilities incurred or arising in connection
with the Trust or Portfolio (or Class), or in connection with the management
thereof, including, but not limited to, the Trustees' compensation and such
expenses and charges for the services of the Trust's officers, employees,
investment adviser and manager, administrator, principal underwriter, auditors,
counsel, custodian, transfer agent, Shareholder servicing agent, and such other
agents or independent contractors and such other expenses and charges as the
Trustees may deem necessary or proper to incur.
Section 4.6. Trustee Compensation. The Trustees as such shall be
entitled to reasonable compensation from the Trust. They may fix the amount of
their compensation. Nothing herein shall in any way prevent the employment of
any Trustee for advisory, management, administrative, legal, accounting,
investment banking, underwriting, brokerage, or investment dealer or other
services and the payment for the same by the Trust.
ARTICLE V
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER AND
TRANSFER AGENT
Section 5.1. Investment Adviser. The Trustees may in their
discretion, from time to time, enter into an investment advisory or management
contract or contracts with respect to the Trust or any Portfolio whereby the
other party or parties to such contract or contracts shall undertake to furnish
the Trustees with such management, investment advisory, statistical and research
facilities and services and such other facilities and services, if any, and all
upon such terms and conditions, as the Trustees may in their discretion
determine.
The Trustees may authorize the investment adviser to employ,
from time to time, one or more sub-advisers to perform such of the acts and
services of the investment adviser, and upon such terms and conditions, as may
be agreed upon among the Trustees, the investment adviser and sub-adviser. Any
references in this Agreement to the investment adviser shall be deemed to
include such sub-advisers, unless the context otherwise requires.
Section 5.2. Other Service Contracts. The Trustees may authorize the
engagement of a principal underwriter, transfer agent, administrator, custodian,
and similar service providers.
Section 5.3. Parties to Contract. Any contract of the character
described in Sections 5.1 and 5.2 may be entered into with any corporation,
firm, partnership, trust or association, although one or more of the Trustees or
officers of the Trust may be an officer, director, trustee, shareholder, or
member of such other party to the contract.
Section 5.4. Miscellaneous. The fact that (i) any of the
Shareholders, Trustees or officers of the Trust is a shareholder, director,
officer, partner, trustee, employee, manager, adviser, principal underwriter or
distributor or agent of or for any Company or of or for any parent or affiliate
of any Company, with which an advisory or administration contract, or
15
<PAGE> 16
principal underwriter's or distributor's contract, or transfer, shareholder
servicing, custodian or other agency contract may have been or may hereafter be
made, or that any such Company, or any parent or affiliate thereof, is a
Shareholder or has an interest in the Trust, or that (ii) any Company with which
an advisory or administration contract or principal underwriter's or
distributor's contract, or transfer, shareholder servicing, custodian, or other
agency contract may have been or may hereafter be made also has an advisory or
administration contract, or principal underwriter's or distributor's contract,
or transfer, shareholder servicing, custodian or other agency contract with one
or more other companies, or has other business or interests shall not affect the
validity of any such contract or disqualify any Shareholder, Trustee or officer
of the Trust from voting upon or executing the same or create any liability or
accountability to the Trust or its Shareholders.
ARTICLE VI
SHAREHOLDERS' VOTING POWERS AND MEETING
Section 6.1. Voting Powers. The Shareholders shall have power to
vote only to: (i) elect Trustees, provided that a meeting of Shareholders has
been called for that purpose; (ii) remove Trustees, provided that a meeting of
Shareholders has been called for that purpose; (iii) approve the termination of
the Trust or any Portfolio or Class, unless, as of the date on which the
Trustees have determined to so terminate the Trust or such Portfolio or Class,
there are fewer than 100 holders of record of the Trust or of such terminating
Portfolio or Class and provided, further, that the Trustees have called a
meeting of the Shareholders for the purpose of approving any such termination;
(iv) approve the sale of all or substantially all the assets of the Trust or any
Portfolio or Class, unless the primary purpose of such sale is to change the
Trust's domicile or form of organization or form of business trust; (v) approve
the merger or consolidation of the Trust or any Portfolio or Class with and into
another Company, unless (A) the primary purpose of such merger or consolidation
is to change the Trust's domicile or form of organization or form of business
trust, or (B) after giving effect to such merger or consolidation, based on the
number of Shares outstanding as of a date selected by the Trustees, the
Shareholders of the Trust or such Portfolio or Class will have a majority of the
outstanding shares of the surviving Company or Portfolio or Class thereof, as
the case may be; (vi) approve any amendment to this Article VI, Section 6.1; and
(vii) approve such additional matters as may be required by law or as the
Trustees, in their sole discretion, shall determine.
Until Shares are issued, the Trustees may exercise all rights
of Shareholders and may take any action required or permitted by law, this Trust
Agreement or any of the Bylaws of the Trust to be taken by Shareholders.
On any matter submitted to a vote of the Shareholders, all
Shares shall be voted together, except when required by applicable law or when
the Trustees have determined that the matter affects the interests of one or
more Portfolios (or Classes), then only the Shareholders of all such Portfolios
(or Classes) shall be entitled to vote thereon. Each whole Share shall be
entitled to one vote as to any matter on which it is entitled to vote, and each
fractional Share shall
16
<PAGE> 17
be entitled to a proportionate fractional vote. The vote necessary to approve
any such matter shall be set forth in the Bylaws.
ARTICLE VII
DISTRIBUTIONS AND REDEMPTIONS
Section 7.1. Distributions. The Trustees may from time to time
declare and pay dividends and make other distributions with respect to any
Portfolio, or Class thereof, which may be from income, capital gains or capital.
The amount of such dividends or distributions and the payment of them and
whether they are in cash or any other Trust Property shall be wholly in the
discretion of the Trustees. Dividends and other distributions may be paid
pursuant to a standing resolution adopted once or more often as the Trustees
determine. All dividends and other distributions on Shares of a particular
Portfolio or Class shall be distributed pro rata to the Shareholders of that
Portfolio or Class, as the case may be, in proportion to the number of Shares of
that Portfolio or Class they held on the record date established for such
payment, provided that such dividends and other distributions on Shares of a
Class shall appropriately reflect Class Expenses and other expenses allocated to
that Class. The Trustees may adopt and offer to Shareholders such dividend
reinvestment plans, cash distribution payment plans, or similar plans as the
Trustees deem appropriate.
Section 7.2. Redemptions. Any holder of record of Shares of a
particular Portfolio, or Class thereof, shall have the right to require the
Trust to redeem his Shares, or any portion thereof, subject to such terms and
conditions as are set forth in the registration statement of the Trust in effect
from time to time. The redemption price may in any case or cases be paid wholly
or partly in kind if the Trustees determine that such payment is advisable in
the interest of the remaining Shareholders of the Portfolio or Class thereof for
which the Shares are being redeemed. Subject to the foregoing, the fair value,
selection and quantity of securities or other property so paid or delivered as
all or part of the redemption price may be determined by or under authority of
the Trustees. In no case shall the Trust be liable for any delay of any Person
in transferring securities selected for delivery as all or part of any payment
in kind.
Section 7.3. Redemption of Shares by Trustees. The Trustees may, at
their option, call for the redemption of the Shares of any Person or may refuse
to transfer or issue Shares to any Person to the extent that the same is
necessary to comply with applicable law or advisable to further the purposes for
which the Trust is formed. To the extent permitted by law, the Trustees may
retain the proceeds of any redemption of Shares required by them for payments of
amounts due and owing by a Shareholder to the Trust or any Portfolio.
Section 7.4. Redemption of De Minimis Accounts. If, at any time when
a request for transfer or redemption of Shares of any Portfolio is received by
the Trust or its agent, the value of the Shares of such Portfolio in a
Shareholder's account is less than Five Hundred Dollars ($500.00), or such
greater amount as the Trustees in their discretion shall have determined in
accordance with Section 4.1(t), after giving effect to such transfer or
redemption and upon giving thirty (30) days' notice to the Shareholder, the
Trust may cause the remaining Shares of such
17
<PAGE> 18
Portfolio in such Shareholder's account to be redeemed, subject to such terms
and conditions as are set forth in the registration statement of the Trust in
effect from time to time.
ARTICLE VIII
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 8.1. Limitation of Liability. A Trustee or officer, when
acting in such capacity, shall not be personally liable to any person for any
act, omission or obligation of the Trust or any Trustee or officer; provided,
however, that nothing contained herein or in the Delaware Act shall protect any
Trustee or officer against any liability to the Trust or to 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 with the Trust.
Section 8.2. Indemnification of Covered Persons. Every Covered
Person shall be indemnified by the Trust to the fullest extent permitted by the
Delaware Act, the Bylaws and other applicable law.
Section 8.3. Indemnification of Shareholders. In case any
Shareholder or former Shareholder of the Trust shall be held to be personally
liable solely by reason of his being or having been a Shareholder of the Trust
or any Portfolio or Class and not because of his acts or omissions or for some
other reason, the Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives, or, in the case of a corporation
or other entity, its corporate or general successor) shall be entitled, out of
the assets belonging to the applicable Portfolio, to be held harmless from and
indemnified against all loss and expense arising from such liability in
accordance with the Bylaws and applicable law. The Trust, on behalf of the
affected Portfolio, shall upon request by the Shareholder, assume the defense of
any such claim made against the Shareholder for any act or obligation of that
Portfolio.
ARTICLE IX
MISCELLANEOUS
Section 9.1. Trust Not a Partnership; Taxation. It is hereby
expressly declared that a trust and not a partnership is created hereby. No
Trustee hereunder shall have any power to bind personally either the Trust's
officers or any Shareholder. All persons extending credit to, contracting with
or having any claim against the Trust or the Trustees shall look only to the
assets of the appropriate Portfolio or, until the Trustees shall have
established any separate Portfolio, of the Trust for payment under such credit,
contract or claim; and neither the Shareholders, the Trustees, nor the Trust's
officers nor any of the agents of the Trustees whether past, present or future,
shall be personally liable therefor.
It is intended that the Trust, or each Portfolio if there is
more than one Portfolio, be classified for income tax purposes as an association
taxable as a corporation, and the Trustees shall do all things that they, in
their sole discretion, determine are necessary to achieve that objective,
including (if they so determine), electing such classifications on Internal
Revenue
18
<PAGE> 19
Form 8832. The Trustees, in their sole discretion and without the vote or
consent of the Shareholders, may amend this Agreement to ensure that this
objective is achieved.
Section 9.2. Trustee's Good Faith Action, Expert Advice, No Bond or
Surety. The exercise by the Trustees of their powers and discretion hereunder in
good faith and with reasonable care under the circumstances then prevailing
shall be binding upon everyone interested. Subject to the provisions of Article
VIII and to Section 9.1, the Trustees shall not be liable for errors of judgment
or mistakes of fact or law. The Trustees may take advice of counsel or other
experts with respect to the meaning and operation of this Agreement, and subject
to the provisions of Article VIII and Section 9.1, shall be under no liability
for any act or omission in accordance with such advice or for failing to follow
such advice. The Trustees shall not be required to give any bond as such, nor
any surety if a bond is obtained.
Section 9.3. Termination of Trust or Portfolio or Class.
(a) Unless terminated as provided herein, the Trust shall continue
without limitation of time. The Trust may be terminated at any
time by the Trustees by written notice to the Shareholders,
subject to the right of Shareholders, if any, to vote pursuant
to Section 6.1. Any Portfolio or Class may be terminated at
any time by the Trustees by written notice to the Shareholders
of that Portfolio or Class, subject to the right of
Shareholders, if any, to vote pursuant to Section 6.1.
(b) On termination of the Trust or any Portfolio pursuant to
paragraph (a) above,
(1) the Trust or that Portfolio thereafter shall carry on
no business except for the purpose of winding up its
affairs,
(2) the Trustees shall (i) proceed to wind up the affairs
of the Trust or that Portfolio, and all powers of the
Trustees under this Agreement with respect thereto
shall continue until such affairs have been wound up,
including the powers to fulfill or discharge the
contracts of the Trust or that Portfolio, (ii)
collect its assets or the assets belonging thereto,
(iii) sell, convey, assign, exchange, or otherwise
dispose of all or any part of those assets to one or
more persons at public or private sale for
consideration that may consist in whole or in part of
cash, securities, or other property of any kind, (iv)
discharge or pay its liabilities, and (v) do all
other acts appropriate to liquidate its business, and
(3) after paying or adequately providing for the payment
of all liabilities, and upon receipt of such
releases, indemnities, and refunding agreements as
they deem necessary for their protection, the
Trustees shall distribute the remaining assets
ratably among the Shareholders of the Trust or that
Portfolio.
19
<PAGE> 20
(c) On termination of any Class pursuant to paragraph (a) above,
(1) the Trust thereafter shall no longer issue Shares of
that Class,
(2) the Trustees shall do all other acts appropriate to
terminate the Class, and
(3) the Trustees shall distribute ratably among the
Shareholders of that Class, in cash or in kind, an
amount equal to the Proportionate Interest of that
Class in the net assets of the Portfolio (after
taking into account any Class Expenses or other fees,
expenses, or charges allocable thereto), and in
connection with any such distribution in cash the
Trustees are authorized to sell, convey, assign,
exchange or otherwise dispose of such assets of the
Portfolio of which that Class is a part as they deem
necessary.
(d) On completion of distribution of the remaining assets pursuant
to paragraph (b)(3) above, the Trust or the affected Portfolio
shall terminate and the Trustees and the Trust shall be
discharged from all further liabilities and duties hereunder
with respect thereto and the rights and interests of all
parties therein shall be cancelled and discharged. On
termination of the Trust, following completion of winding up
of its business, the Trustees shall cause a Certificate of
Cancellation of the Trust's Certificate of Trust to be filed
in accordance with the Delaware Act, which Certificate may be
signed by any one Trustee.
Section 9.4. Sale of Assets; Merger and Consolidation. Subject to
right of Shareholders, if any, to vote pursuant to Section 6.1, the Trustees may
cause (i) the Trust or one or more of its Portfolios to the extent consistent
with applicable law to sell all or substantially all of its assets to, or be
merged into or consolidated with, another Portfolio, business trust (or series
thereof) or Company (or series thereof), (ii) the Shares of the Trust or any
Portfolio (or Class) to be converted into beneficial interests in another
business trust (or series thereof) created pursuant to this Section 9.4, or
(iii) the Shares to be exchanged under or pursuant to any state or federal
statute to the extent permitted by law. In all respects not governed by statute
or applicable law, the Trustees shall have power to prescribe the procedure
necessary or appropriate to accomplish a sale of assets, merger or consolidation
including the power to create one or more separate business trusts to which all
or any part of the assets, liabilities, profits or losses of the Trust may be
transferred and to provide for the conversion of Shares of the Trust or any
Portfolio (or Class) into beneficial interests in such separate business trust
or trusts (or series or class thereof).
Section 9.5. Filing of Copies, References, Headings. The original or
a copy of this Agreement or any amendment hereto or any supplemental agreement
shall be kept at the office of the Trust where it may be inspected by any
Shareholder. In this Agreement or in any such amendment or supplemental
agreement, references to this Agreement, and all expressions like "herein,"
"hereof," and "hereunder," shall be deemed to refer to this Agreement as amended
or affected by any such supplemental agreement. All expressions like "his,"
"he," and "him," shall be deemed to include the feminine and neuter, as well as
masculine, genders. Headings are
20
<PAGE> 21
placed herein for convenience of reference only and in case of any conflict, the
text of this Agreement, rather than the headings, shall control. This Agreement
may be executed in any number of counterparts each of which shall be deemed an
original.
Section 9.6. Governing Law. The Trust and this Agreement, and the
rights, obligations and remedies of the Trustees and Shareholders hereunder, are
to be governed by and construed and administered according to the Delaware Act
and the other laws of the State of Delaware; provided, however, that there shall
not be applicable to the Trust, the Trustees, the Shareholders or this Trust
Agreement (a) the provisions of Section 3540 of Title 12 of the Delaware Code or
(b) any provisions of the laws (statutory or common) of the State of Delaware
(other than the Delaware Act) pertaining to trusts which relate to or regulate
(i) the filing with any court or governmental body or agency of trustee accounts
or schedules of trustee fees and charges, (ii) affirmative requirements to post
bonds for trustees, officers, agents or employees of a trust, (iii) the
necessity for obtaining court or other governmental approval concerning the
acquisition, holding or disposition of real or personal property, (iv) fees or
other sums payable to trustees, officers, agents or employees of a trust, (v)
the allocation of receipts and expenditures to income or principal, (vi)
restrictions or limitations on the permissible nature, amount or concentration
of trust investments or requirements relating to the titling, storage or other
manner of holding of trust assets, or (vii) the establishment of fiduciary or
other standards or responsibilities or limitations on the indemnification, acts
or powers of trustees or other Persons, which are inconsistent with the
limitations or liabilities or authorities and powers of the Trustees or officers
of the Trust set forth or referenced in this Agreement.
The Trust shall be of the type commonly called a "business
trust," and without limiting the provisions hereof, the Trust may exercise all
powers which are ordinarily exercised by such a trust under Delaware law. The
Trust specifically reserves the right to exercise any of the powers or
privileges afforded to trusts or actions that may be engaged in by trusts under
the Delaware Act, and the absence of a specific reference herein to any such
power, privilege or action shall not imply that the Trust may not exercise such
power or privilege or take such actions; provided, however, that the exercise of
any such power, privilege or action shall not otherwise violate applicable law.
Section 9.7. Amendments. Except as specifically provided in Section
6.1, the Trustees may, without any Shareholder vote, amend this Agreement by
making an amendment to this Agreement or to Schedule A, an agreement
supplemental hereto, or an amended and restated trust instrument. Any such
amendment, having been approved by a Majority Trustee Vote, shall become
effective, unless otherwise provided by such Trustees, upon being executed by a
duly authorized officer of the Trust. Any amendment submitted to Shareholders
that the Trustees determine would affect the Shareholders of fewer than all
Portfolios (or fewer than all Classes thereof) shall be authorized by a vote of
only the Shareholders of the affected Portfolio(s) (or Class(es)), and no vote
shall be required of Shareholders of any Portfolio (or Class) that is not
affected. Notwithstanding anything else herein to the contrary, any amendment to
Article VIII that would have the effect of reducing the indemnification provided
thereby to Covered Persons or to Shareholders or former Shareholders, and any
repeal or amendment of this sentence shall
21
<PAGE> 22
each require the affirmative vote of Shareholders owning at least two-thirds of
the Outstanding Shares entitled to vote thereon. A certification signed by a
duly authorized officer of the Trust setting forth an amendment to this
Agreement and reciting that it was duly adopted by the Shareholders or by the
Trustees as aforesaid, or a copy of this Agreement, as amended, executed by a
majority of the Trustees, or a duly authorized officer of the Trust, shall be
conclusive evidence of such amendment when lodged among the records of the
Trust.
Section 9.8. Provisions in Conflict with Law. The provisions of this
Agreement are severable, and if the Trustees shall determine, with the advice of
counsel, that any of such provisions is in conflict with applicable law the
conflicting provision shall be deemed never to have constituted a part of this
Agreement; provided, however, that such determination shall not affect any of
the remaining provisions of this Agreement or render invalid or improper any
action taken or omitted prior to such determination. If any provision of this
Agreement shall be held invalid or enforceable in any jurisdiction, such
invalidity or unenforceability shall attach only to such provision in such
jurisdiction and shall not in any manner affect such provisions in any other
jurisdiction or any other provision of this Agreement in any jurisdiction.
Section 9.9. Shareholders' Right to Inspect Shareholder List. One or
more Persons who together and for at least six months have been Shareholders of
at least five percent (5%) of the Outstanding Shares of any Class may present to
any officer or resident agent of the Trust a written request for a list of its
Shareholders. Within twenty (20) days after such request is made, the Trust
shall prepare and have available on file at its principal office a list verified
under oath by one of its officers or its transfer agent or registrar which sets
forth the name and address of each Shareholder and the number of Shares of each
Portfolio and Class which the Shareholder holds. The rights provided for herein
shall not extend to any Person who is a beneficial owner but not also a record
owner of Shares of the Trust.
22
<PAGE> 23
IN WITNESS WHEREOF, the undersigned, being all of the Trustees of the
Trust, have executed this instrument this 5th day of November, 1998.
/s/ CHARLES T. BAUER
------------------------------------
Charles T. Bauer
/s/ BRUCE L. CROCKETT
------------------------------------
Bruce L. Crockett
/s/ OWEN DALY II
------------------------------------
Owen Daly II
/s/ EDWARD K. DUNN, JR.
------------------------------------
Edward K. Dunn, Jr.
/s/ JACK FIELDS
------------------------------------
Jack Fields
/s/ CARL FRISCHLING
------------------------------------
Carl Frischling
/s/ ROBERT H. GRAHAM
------------------------------------
Robert H. Graham
/s/ PREMA MATHAI-DAVIS
------------------------------------
Prema Mathai-Davis
/s/ LEWIS F. PENNOCK
------------------------------------
Lewis F. Pennock
/s/ IAN W. ROBINSON
------------------------------------
Ian W. Robinson
/s/ LOUIS S. SKLAR
------------------------------------
Louis S. Sklar
23
<PAGE> 24
SCHEDULE A
SHORT-TERM INVESTMENTS TRUST PORTFOLIOS AND CLASSES THEREOF
Government & Agency Portfolio
Cash Management Class
Institutional Class
Personal Investment Class
Private Investment Class
Reserve Class
Resource Class
Treasury TaxAdvantage Portfolio
Cash Management Class
Institutional Class
Personal Investment Class
Private Investment Class
Reserve Class
Resource Class
Treasury Portfolio
Cash Management Class
Institutional Class
Personal Investment Class
Private Investment Class
Reserve Class
Resource Class
24
<PAGE> 1
EXHIBIT 2(e)
AMENDED AND RESTATED BYLAWS
OF
SHORT-TERM INVESTMENTS TRUST,
a Delaware Business Trust
Adopted effective November 5, 1998.
Capitalized terms not specifically defined herein
shall have the meanings ascribed to them in the Trust's
Amended and Restated Agreement and Declaration of Trust (the "Agreement").
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of Short-Term
Investments Trust (the "Trust") shall be at the offices of The Corporation Trust
Company in the County of New Castle, State of Delaware.
Section 2. Other Offices. The Trust may also have offices at such other
places both within and without the State of Delaware as the Trustees may from
time to time determine or the business of the Trust may require.
ARTICLE II
TRUSTEES
Section 1. Meetings of the Trustees. The Trustees of the Trust may hold
meetings, both regular and special, either within or without the State of
Delaware. Meetings of the Trustees may be called orally or in writing by the
President of the Trust or by any two Trustees.
Section 2. Regular Meetings. Regular meetings of the Board of Trustees
shall be held each year, at such time and place as the Board of Trustees may
determine.
Section 3. Notice of Meetings. Notice of the time, date, and place of
all meetings of the Trustees shall be given to each Trustee (i) by telephone,
telex, telegram, facsimile, electronic-mail, or other electronic mechanism sent
to his or her home or business address at least twenty-four hours in advance of
the meeting or (ii) in person at another meeting of the Trustees or (iii) by
written notice mailed or sent via overnight courier to his or her home or
business address at least seventy-two hours in advance of the meeting. Notice
need not be given
<PAGE> 2
to any Trustee who attends the meeting without objecting to the lack of notice
or who signs a waiver of notice either before or after the meeting.
Section 4. Quorum. At all meetings of the Trustees, one-third of the
Trustees then in office (but in no event less than two Trustees) shall
constitute a quorum for the transaction of business and the act of a majority of
the Trustees present at any meeting at which there is a quorum shall be the act
of the Board of Trustees, except as may be otherwise specifically provided by
applicable law or by the Agreement or these Bylaws. If a quorum shall not be
present at any meeting of the Board of Trustees, the Trustees present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 5. Designation, Powers, and Name of Committees. The Board of
Trustees may, by resolution passed by a majority of the whole Board, designate
one or more committees, each committee to consist of two or more of the Trustees
of the Trust. The Board may designate one or more Trustees as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of such committee. Each committee, to the extent provided in the
resolution, shall have and may exercise the powers of the Board of Trustees in
the management of the business and affairs of the Trust; provided, however, that
in the absence or disqualification of any member of such committee or
committees, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such members constitute a quorum, may
unanimously appoint another member of the Board of Trustees to act at the
meeting in the place of any such absent or disqualified member. Such committee
or committees shall have such name or names as may be determined from time to
time by resolution adopted by the Board of Trustees.
Section 6. Minutes of Committee. Each committee shall keep regular
minutes of its meetings and report the same to the Board of Trustees when
required.
ARTICLE III
OFFICERS
Section 1. Executive Officers. The initial executive officers of the
Trust shall be elected by the Board of Trustees as soon as practicable after the
organization of the Trust. The executive officers may include a Chairman of the
Board, and shall include a President, one or more Vice Presidents (the number
thereof to be determined by the Board of Trustees), a Secretary and a Treasurer.
The Chairman of the Board, if any, shall be selected from among the Trustees.
The Board of Trustees may also in its discretion appoint Assistant Vice
Presidents, Assistant Secretaries, Assistant Treasurers, and other officers,
agents and employees, who shall have such authority and perform such duties as
the Board may determine. The Board of Trustees may fill any vacancy which may
occur in any office. Any two offices, except for those of President and Vice
President, may be held by the same person, but no officer shall execute,
2
<PAGE> 3
acknowledge or verify any instrument on behalf of the Trust in more than one
capacity, if such instrument is required by law or by these Bylaws to be
executed, acknowledged or verified by two or more officers.
Section 2. Term of Office. Unless otherwise specifically determined by
the Board of Trustees, the officers shall serve at the pleasure of the Board of
Trustees. If the Board of Trustees in its judgment finds that the best interests
of the Trust will be served, the Board of Trustees may remove any officer of the
Trust at any time with or without cause. The Trustees may delegate this power to
the President (without supervision by the Trustees) with respect to any other
officer. Such removal shall be without prejudice to the contract rights, if any,
of the person so removed. Any officer may resign from office at any time by
delivering a written resignation to the Trustees or the President. Unless
otherwise specified therein, such resignation shall take effect upon delivery.
Section 3. President. The President shall be the chief executive
officer of the Trust and, subject to the Board of Trustees, shall generally
manage the business and affairs of the Trust. If there is no Chairman of the
Board, or if the Chairman of the Board has been appointed but is absent, the
President shall, if present, preside at all meetings of the Shareholders and the
Board of Trustees.
Section 4. Chairman of the Board. The Chairman of the Board, if any,
shall preside at all meetings of the Shareholders and the Board of Trustees, if
the Chairman of the Board is present. The Chairman of the Board shall have such
other powers and duties as shall be determined by the Board of Trustees, and
shall undertake such other assignments as may be requested by the President.
Section 5. Chairman; Vice Presidents. The Chairman of the Board or one
or more Vice Presidents shall have and exercise such powers and duties of the
President in the absence or inability to act of the President, as may be
assigned to them, respectively, by the Board of Trustees or, to the extent not
so assigned, by the President. In the absence or inability to act of the
President, the powers and duties of the President not otherwise assigned by the
Board of Trustees or the President shall devolve upon the Chairman of the Board,
or in the Chairman's absence, the Vice Presidents in the order of their
election.
Section 6. Secretary. The Secretary shall (a) have custody of the seal
of the Trust; (b) attend meetings of the Shareholders, the Board of Trustees,
and any committees of Trustees and keep the minutes of such meetings of
Shareholders, the Board of Trustees and any committees thereof; and (c) issue
all notices of the Trust. The Secretary shall have charge of the Shareholder
records and such other books and papers as the Board may direct, and shall
perform such other duties as may be incidental to the office or which are
assigned by the Board of Trustees. The Secretary shall also keep or cause to be
kept a Shareholder book, which may be maintained by means of computer systems,
containing the names, alphabetically arranged, of all persons who are
Shareholders of the Trust, showing their places of residence, the number and
series and class
3
<PAGE> 4
of any Shares held by them, respectively, and the dates when they became the
record owners thereof.
Section 7. Treasurer. The Treasurer shall have the care and custody of
the funds and securities of the Trust and shall deposit the same in the name of
the Trust in such bank or banks or other depositories, subject to withdrawal in
such manner as these Bylaws or the Board of Trustees may determine. The
Treasurer shall, if required by the Board of Trustees, give such bond for the
faithful discharge of duties in such form as the Board of Trustees may require.
Section 8. Assistant Officers. Assistant officers, which may include
one or more Assistant Vice Presidents, Assistant Secretaries and Assistant
Treasurers, shall perform such functions and have such responsibilities as the
Board of Trustees may determine.
Section 9. Surety Bond. The Trustees may require any officer or agent
of the Trust to execute a bond (including, without limitation, any bond required
by the Investment Company Act of 1940, as amended ( the "1940 Act") and the
rules and regulations of the Securities and Exchange Commission (the
"Commission") to the Trust in such sum and with such surety or sureties as the
Trustees may determine, conditioned upon the faithful performance of his or her
duties to the Trust, including responsibility for negligence and for the
accounting of any of the Trust's property, funds, or securities that may come
into his or her hands.
Section 10. Authorized Signatories. Unless a specific officer is
otherwise designated in a resolution adopted by the Board of Trustees, the
proper officers of the Trust for executing agreements, documents and instruments
other than Internal Revenue Service forms shall be the President, any Vice
President, the Secretary or any Assistant Secretary. Unless a specific officer
is otherwise designated in a resolution adopted by the Board of Trustees, the
proper officers of the Trust for executing any and all Internal Revenue Service
forms shall be the President, any Vice President, the Secretary, any Assistant
Secretary, or the Treasurer.
ARTICLE IV
MEETINGS OF SHAREHOLDERS
Section 1. Purpose. All meetings of the Shareholders for the election
of Trustees shall be held at such place as may be fixed from time to time by the
Trustees, or at such other place either within or without the State of Delaware
as shall be designated from time to time by the Trustees and stated in the
notice indicating that a meeting has been called for such purpose. Meetings of
Shareholders may be held for any purpose determined by the Trustees and may be
held at such time and place, within or without the State of Delaware as shall be
stated in the notice of the meeting or in a duly executed waiver of notice
thereof. At all meetings of the Shareholders, every shareholder of record
entitled to vote thereat shall be entitled to vote at such meeting either in
person or by written proxy signed by the Shareholder or by his duly authorized
attorney in fact. A Shareholder may duly authorize such attorney in fact through
written, electronic, telephonic, computerized, facsimile, telecommunication,
telex or oral communication
4
<PAGE> 5
or by any other form of communication. Unless a proxy provides otherwise, such
proxy is not valid more than eleven months after its date. A proxy with respect
to shares held in the name of two or more persons shall be valid if executed by
any one of them unless at or prior to exercise of the proxy the Trust receives a
specific written notice to the contrary from any one of them. A proxy purporting
to be executed by or on behalf of a Shareholder shall be deemed valid unless
challenged at or prior to its exercise and the burden of proving invalidity
shall rest on the challenger.
Section 2. Nominations of Trustees. Nominations of individuals for
election to the board of trustees shall be made by the Board of Trustees or a
nominating committee of the Board of Trustees, if one has been established (the
"Nominating Committee"). Any Shareholder may submit names of individuals to be
considered by the Nominating Committee or the Board of Trustees, as applicable,
provided, however, (i) that such person was a shareholder of record at the time
of submission of such names and is entitled to vote at the meeting, and (ii)
that the Nominating Committee or the Board of Trustees, as applicable, shall
make the final determination of persons to be nominated.
Section 3. Election of Trustees. All meetings of Shareholders for the
purpose of electing Trustees shall be held on such date and at such time as
shall be designated from time to time by the Trustees and stated in the notice
of the meeting, at which the Shareholders shall elect by a plurality vote any
number of Trustees as the notice for such meeting shall state are to be elected,
and transact such other business as may properly be brought before the meeting
in accordance with Section 1 of this Article IV.
Section 4. Notice of Meetings. Written notice of any meeting stating
the place, date, and hour of the meeting shall be given to each Shareholder
entitled to vote at such meeting not less than ten days before the date of the
meeting in accordance with Article V hereof.
Section 5. Special Meetings. Special meetings of the Shareholders, for
any purpose or purposes, unless otherwise prescribed by applicable law or by the
Agreement, may be called by any Trustee; provided, however, that the Trustees
shall promptly call a meeting of the Shareholders solely for the purpose of
removing one or more Trustees, when requested in writing so to do by the record
holders of not less than ten percent of the Outstanding Shares of the Trust.
Section 6. Notice of Special Meeting. Written notice of a special
meeting stating the place, date, and hour of the meeting and the purpose or
purposes for which the meeting is called, shall be given not less than ten days
before the date of the meeting, to each Shareholder entitled to vote at such
meeting.
Section 7. Conduct of Special Meeting. Business transacted at any
special meeting of Shareholders shall be limited to the purpose stated in the
notice.
Section 8. Quorum. The holders of one-third of the Outstanding Shares
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings
5
<PAGE> 6
of the Shareholders for the transaction of business except as otherwise provided
by applicable law or by the Agreement. If, however, such quorum shall not be
present or represented at any meeting of the Shareholders, the vote of the
holders of a majority of Shares cast shall have power to adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum shall be present or represented. At such adjourned meeting, at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally notified.
Section 9. Organization of Meetings.
(a) The Chairman of the Board of Trustees shall preside at
each meeting of Shareholders. In the absence of the Chairman of the Board, the
meeting shall be chaired by the President, or if the President shall not be
present, by a Vice President. In the absence of all such officers, the meeting
shall be chaired by a person elected for such purpose at the meeting. The
Secretary of the Trust, if present, shall act as Secretary of such meetings, or
if the Secretary is not present, an Assistant Secretary of the Trust shall so
act, and if no Assistant Secretary is present, then a person designated by the
Secretary of the Trust shall so act, and if the Secretary has not designated a
person, then the meeting shall elect a secretary for the meeting.
(b) The Board of Trustees of the Trust shall be entitled to
make such rules and regulations for the conduct of meetings of Shareholders as
it shall deem necessary, appropriate or convenient. Subject to such rules and
regulations of the Board of Trustees, if any, the chairman of the meeting shall
have the right and authority to prescribe such rules, regulations and procedures
and to do all such acts as, in the judgment of such chairman, are necessary,
appropriate or convenient for the proper conduct of the meeting, including,
without limitation, establishing: an agenda or order of business for the
meeting; rules and procedures for maintaining order at the meeting and the
safety of those present; limitations on participation in such meeting to
shareholders of record of the Trust and their duly authorized and constituted
proxies, and such other persons as the chairman shall permit; restrictions on
entry to the meeting after the time fixed for the commencement thereof;
limitations on the time allotted to questions or comments by participants; and
regulation of the opening and closing of the polls for balloting on matters
which are to be voted on by ballot, unless and to the extent the Board of
Trustees or the chairman of the meeting determines that meetings of Shareholders
shall not be required to be held in accordance with the rules of parliamentary
procedure.
Section 10. Voting Standard. When a quorum is present at any meeting,
the vote of the holders of a majority of the Shares cast shall decide any
question brought before such meeting, unless the question is one on which, by
express provision of applicable law, the Agreement, these Bylaws, or applicable
contract, a different vote is required, in which case such express provision
shall govern and control the decision of such question.
Section 11. Voting Procedure. Each whole Share shall be entitled to one
vote, and each fractional Share shall be entitled to a proportionate fractional
vote. On any matter submitted to a vote of the Shareholders, all Shares shall be
voted together, except when required
6
<PAGE> 7
by applicable law or when the Trustees have determined that the matter affects
the interests of one or more Portfolios (or Classes), then only the Shareholders
of such Portfolios (or Classes) shall be entitled to vote thereon.
Section 12. Action Without Meeting. Unless otherwise provided in the
Agreement or applicable law, any action required to be taken at any meeting of
the Shareholders, or any action which may be taken at any meeting of the
Shareholders, may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of Outstanding Shares having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all Shares entitled to vote thereon were present and voted.
Prompt notice of the taking of any such action without a meeting by less than
unanimous written consent shall be given to those Shareholders who have not
consented in writing.
Section 13. Broker Non-Votes. At any meeting of Shareholders the Trust
will consider broker non-votes as present for purposes of determining whether a
quorum is present at the meeting. Broker non-votes will not count as votes cast.
ARTICLE V
NOTICES
Section 1. Methods of Giving Notice. Whenever, under the provisions of
applicable law or of the Agreement or of these Bylaws, notice is required to be
given to any Trustee or Shareholder, it shall not, unless otherwise provided
herein, be construed to mean personal notice, but such notice may be given
orally in person, or by telephone (promptly confirmed in writing) or in writing,
by mail addressed to such Trustee at his or her last given address or to such
Shareholder at his address as it appears on the records of the Trust, with
postage thereon prepaid, and such notice shall be deemed to be given at the time
when the same shall be deposited in the United States mail. Notice to Trustees
or members of a committee may also be given by telex, telegram, facsimile,
electronic-mail or via overnight courier. If sent by telex or facsimile, notice
to a Trustee or member of a committee shall be deemed to be given upon
transmittal; if sent by telegram, notice to a Trustee or member of a committee
shall be deemed to be given when the telegram, so addressed, is delivered to the
telegraph company; if sent by electronic-mail, notice to a Trustee or member of
a committee shall be deemed to be given and shall be presumed valid when the
Trust's electronic-mail server reflects the electronic-mail message as having
been sent; and if sent via overnight courier, notice to a Trustee or member of a
committee shall be deemed to be given when delivered against a receipt therefor.
Section 2. Written Waiver. Whenever any notice is required to be given
under the provisions of applicable law or of the Agreement or of these Bylaws, a
waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
7
<PAGE> 8
ARTICLE VI
CERTIFICATES OF SHARES
Section 1. Issuance. Upon request, every holder of Shares in the Trust
shall be entitled to have a certificate, signed by, or in the name of the Trust
by, the President, certifying the number of Shares owned by him in the Trust.
Section 2. Countersignature. Where a certificate is countersigned (1)
by a transfer agent other than the Trust or its employee, or (2) by a registrar
other than the Trust or its employee, the signature of the President may be a
facsimile.
Section 3. Lost Certificates. The Board of Trustees may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Trust alleged to have been lost, stolen
or destroyed, upon the making of an affidavit of the fact by the person claiming
the certificate to be lost, stolen or destroyed. When authorizing such issue of
a new certificate or certificates, the Board of Trustees may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall require and/or
to give the Trust a bond in such sum as it may direct as indemnity against any
claim that may be made against the Trust with respect to the certificate alleged
to have been lost, stolen or destroyed.
Section 4. Transfer of Shares. The Trustees shall make such rules as
they consider appropriate for the transfer of Shares and similar matters. To the
extent certificates are issued in accordance with Section 1 of this Article VI,
upon surrender to the Trust or the transfer agent of the Trust of such
certificate for Shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
Trust to issue a new certificate to the person entitled thereto, cancel the old
certificate and record the transaction upon its books.
Section 5. Fixing Record Date. In order that the Trustees may determine
the Shareholders entitled to notice of or to vote at any meeting of Shareholders
or any adjournment thereof, or to express consent to action in writing without a
meeting, or entitled to receive payment of any dividend or other distribution of
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of beneficial interests or for the purpose of any
other lawful action, the Board of Trustees may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the Board of Trustees, and which record date shall not be more
than ninety nor less than ten days before the date of such meeting, nor more
than ten days after the date upon which the resolution fixing the record date is
adopted by the Board of Trustees for action by Shareholder consent in writing
without a meeting, nor more than ninety days prior to any other action. A
determination of shareholders of record entitled to notice of or to vote at a
meeting of Shareholders shall apply
8
<PAGE> 9
to any adjournment of the meeting; provided, however, that the Board of Trustees
may fix a new record date for the adjourned meeting.
Section 6. Registered Shareholders. The Trust shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of Shares to receive dividends, and to vote as such owner, and shall not be
bound to recognize any equitable or other claim of interest in such Share or
Shares on the part of any other person, whether or not it shall have express or
other notice hereof.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Seal. The business seal shall have inscribed thereon the
name of the business trust, the year of its organization and the word "Business
Seal, Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or otherwise reproduced. Any officer or Trustee of the
Trust shall have authority to affix the seal of the Trust to any document
requiring the same.
Section 2. Severability. The provisions of these Bylaws are severable.
If any provision hereof shall be held invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall attach only to such
provision only in such jurisdiction and shall not affect any other provision of
these Bylaws.
Section 3. Headings. Headings are placed in these Bylaws for
convenience of reference only and in case of any conflict, the text of these
Bylaws rather than the headings shall control.
ARTICLE VIII
INDEMNIFICATION
Section 1. Indemnification. For the purpose of this Section 1, "Trust"
includes any domestic or foreign predecessor entity of this Trust in a merger,
consolidation, or other transaction in which the predecessor's existence ceased
upon consummation of the transaction; "proceeding" means any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative, or investigative; and "expenses" includes without limitation
attorney's fees and any expenses of establishing a right to indemnification
under this Section 1.
(a) The Trust shall indemnify any person who was or is a party
or is threatened to be made a party to any proceeding (other than an action by
or in the right of the Trust) by reason of the fact that such person is or was a
Covered Person, against expenses,
9
<PAGE> 10
judgments, fines and amounts paid in settlements actually and reasonably
incurred by such person in connection with such proceeding, if it is determined
that person acted in good faith and reasonably believed: (a) in the case of
conduct in his official capacity as a Covered Person, that his conduct was in
the Trust's best interests and (b) in all other cases, that his conduct was at
least not opposed to the Trust's best interests and (c) in the case of a
criminal proceeding, that he had no reasonable cause to believe that his conduct
was unlawful. The termination of any proceeding by judgment, order or settlement
shall not, of itself, create a presumption that the person did not meet the
requisite standard of conduct set forth in this Section 1. The termination of
any proceeding by conviction, or a plea of nolo contendere or its equivalent, or
an entry of an order of probation prior to judgment, creates a rebuttable
presumption that the person did not meet the requisite standard of conduct set
forth in this Section 1.
(b) The Trust shall indemnify any person who was or is a party
or is threatened to be made a party to any proceeding by or in the right of the
Trust to procure a judgment in its favor by reason of the fact that person is or
was a Covered Person, against expenses actually and reasonably incurred by that
person in connection with the defense or settlement of such action or suit if
that person acted in good faith, in a manner that person believed to be in the
best interests of the Trust and with such care, including reasonable inquiry, as
an ordinarily prudent person in a like position would use under similar
circumstances.
(c) Notwithstanding any provision to the contrary contained
herein, there shall be no right to indemnification for any liability arising by
reason of willful misfeasance, bad faith, gross negligence, or the reckless
disregard of the duties involved in the conduct of the Covered Person's office
with the Trust.
Section 2. Advance Payments of Indemnifiable Expenses. To the maximum
extent permitted by law, the Trust or applicable Portfolio may advance to a
Covered Person, in connection with the preparation and presentation of a defense
to any claim, action, suit, or proceeding, expenses for which the Covered Person
would ultimately be entitled to indemnification; provided that the Trust or
applicable Portfolio has received an undertaking by or on behalf of such Covered
Person that such amount will be paid over by him to the Trust or applicable
Portfolio if it is ultimately determined that he is not entitled to
indemnification for such expenses, and further provided that (i) such Covered
Person shall have provided appropriate security for such undertaking, (ii) the
Trust is insured against losses arising out of any such advance payments, or
(iii) either a majority of the Trustees who are not interested persons (as
defined in the 1940 Act) of the Trust nor parties to the matter, or independent
legal counsel in a written opinion shall have determined, based upon a review of
readily available facts (as opposed to a full trial-type inquiry) that there is
reason to believe that such Covered Person will not be disqualified from
indemnification for such expenses.
10
<PAGE> 11
ARTICLE IX
AMENDMENTS
Section 1. Amendments. These Bylaws may be altered or repealed at any
regular or special meeting of the Board of Trustees without prior notice. These
Bylaws may also be altered or repealed at any special meeting of the
Shareholders, but only if the Board of Trustees resolves to put a proposed
alteration or repealer to the vote of the Shareholders and notice of such
alteration or repealer is contained in a notice of the special meeting being
held for such purpose.
11
<PAGE> 1
EXHIBIT 5(c)
AMENDMENT NO. 1
TO
MASTER INVESTMENT ADVISORY AGREEMENT
This Amendment dated as of September 1, 1998, amends the Master
Investment Advisory Agreement (the "Agreement"), dated February 28, 1997,
between Short-Term Investments Trust, a Delaware business trust, and A I M
Advisors, Inc., a Delaware corporation. Terms not otherwise defined herein shall
have the meanings ascribed them in the Agreement.
W I T N E S S E T H:
WHEREAS, the parties desire to amend the Agreement to add a new
portfolio, namely the Government & Agency Portfolio;
NOW, THEREFORE, the parties agree as follows:
1) Appendix A to the Agreement is hereby deleted in its entirety and
replaced with the following:
"APPENDIX A
TO
MASTER INVESTMENT ADVISORY AGREEMENT
OF
SHORT-TERM INVESTMENTS TRUST
The Company shall pay the Advisor, out of the assets of a Fund, as full
compensation for all services rendered and all facilities furnished hereunder, a
management fee for such Fund set forth below. Such fee shall be calculated by
applying the following annual rates to the average daily net assets of such Fund
for the calendar year computed in the manner used for the determination of the
net asset value of shares of such Fund.
TREASURY PORTFOLIO
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- ---------- -----------
<S> <C>
First $300 million.................................................................................... 0.15%
Over $300 million up to and including $1.5 billion.................................................... 0.06%
Over $1.5 billion..................................................................................... 0.05%
</TABLE>
TREASURY TAXADVANTAGE PORTFOLIO
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- ---------- -----------
<S> <C>
First $250 million.................................................................................... 0.20%
Over $250 million up to and including $500 million.................................................... 0.15%
Over $500 million..................................................................................... 0.10%
</TABLE>
<PAGE> 2
GOVERNMENT & AGENCY PORTFOLIO
<TABLE>
<CAPTION>
NET ASSETS ANNUAL RATE
- ---------- -----------
<S> <C>
All net assets...................................................................................... 0.10%"
</TABLE>
2) Notwithstanding anything in the Agreement to the contrary, the terms and
conditions described in Paragraph 10 of the Agreement shall not apply to the
Government & Agency Portfolio of the Company.
All other terms and provisions of the Agreement not amended herein
shall remain in full force and effect.
Dated: September 1, 1998
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)
2
<PAGE> 1
EXHIBIT 6(e)
AMENDMENT NO. 1
MASTER DISTRIBUTION AGREEMENT
The Master Distribution Agreement (the "Agreement"), dated February 28,
1997, 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
TO
MASTER DISTRIBUTION AGREEMENT
OF
SHORT-TERM INVESTMENTS TRUST
Treasury Portfolio
Institutional Class
Personal Investment Class
Private Investment Class
Cash Management Class
Resource Class
Treasury TaxAdvantage Portfolio
Institutional Class
Private Investment Class
Government & Agency Portfolio
Institutional Class
Private Investment Class
Cash Management Class
Resource Class"
<PAGE> 2
All other terms and provisions of the Agreement not amended herein
shall remain in full force and effect.
Dated: September 1, 1998
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/ Robert H. Graham
------------------------------- -------------------------------
Assistant Secretary Vice President
(SEAL)
<PAGE> 1
EXHIBIT 6(f)
AMENDMENT NO. 2 TO
MASTER DISTRIBUTION AGREEMENT
BETWEEN
SHORT-TERM INVESTMENTS TRUST
AND
FUND MANAGEMENT COMPANY
The Master Distribution Agreement (the "Agreement"), dated February 28,
1997, 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
TO
MASTER DISTRIBUTION AGREEMENT
OF
SHORT-TERM INVESTMENTS TRUST
Treasury Portfolio
o Cash Management Class
o Institutional Class
o Personal Investment Class
o Private Investment Class
o Reserve Class
o Resource Class
Treasury TaxAdvantage Portfolio
o Cash Management Class
o Institutional Class
o Personal Investment Class
o Private Investment Class
o Reserve Class
o Resource Class
Government & Agency Portfolio
o Cash Management Class
o Institutional Class
o Personal Investment Class
o Private Investment Class
o Reserve Class
o Resource Class
<PAGE> 2
All other terms and provisions of the Agreement not amended herein
shall remain in full force and effect.
Dated:_____________________, 1998
SHORT-TERM INVESTMENTS TRUST
Attest: By:
---------------------------- ---------------------------------
Name: Name: Robert H. Graham
Title: Title: President
(SEAL)
FUND MANAGEMENT COMPANY
Attest: By:
---------------------------- ---------------------------------
Name: Name: J. Abbott Sprague
Title: Title: President
(SEAL)
<PAGE> 1
EXHIBIT 9(i)
AMENDMENT NO. 1
MASTER ADMINISTRATIVE SERVICES AGREEMENT
The Master Administrative Services Agreement (the "Agreement"), dated
February 28, 1997, 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
Treasury TaxAdvantage Portfolio
Government & Agency Portfolio"
All other terms and provisions of the Agreement not amended herein
shall remain in full force and effect.
Dated: September 1, 1998
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 10
[Letterhead of Ballard Spahr Andrews & Ingersoll, LLP]
November 25, 1998
Short-Term Investments Trust
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Re: Short-Term Investments Trust
Registration Statement on Form N-1A
Ladies and Gentlemen:
We have acted as counsel to Short-Term Investments Trust, a
business trust organized under the laws of the State of Delaware (the "Trust")
and registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end, series management investment company.
This opinion is given in connection with the filing by the
Trust of Post-Effective Amendment No. 32 to the Registration Statement on Form
N-1A under the Securities Act of 1933, as amended, and Amendment No. 33 to such
Registration Statement under the 1940 Act (collectively, the "Registration
Statement") relating to the registration of an indefinite number of shares of
beneficial interest, par value $.01 per share (the "Shares"), of: (i) the
Personal Investment and Reserve Classes of the Government & Agency Portfolio;
(ii) the Cash Management, Personal Investment, Reserve and Resource Classes of
the Treasury TaxAdvantage Portfolio; and (iii) the Reserve Class of the Treasury
Portfolio. Each of the above portfolios is referred to herein as a "Portfolio"
and the above classes are referred to herein as the "Classes".
In connection with our giving this opinion, we have examined a
copy of the Trust's Amended and Restated Agreement and Declaration of Trust,
resolutions of the Board of Trustees adopted November 5, 1998, and originals or
copies, certified or otherwise identified to our satisfaction, of such other
documents, records and other instruments as we have deemed necessary or
advisable for purposes of this opinion. We have also examined the prospectuses
for the Classes, which are included in the Registration Statement, substantially
in the form in which they are to become effective (the "Prospectuses"). As to
various questions of fact material to our opinion, we have relied upon
information provided by officers of the Trust.
Based on the foregoing, we are of the opinion that the Shares
to be offered for sale pursuant to the Prospectuses are duly authorized and,
when sold, issued and paid for as described in the Prospectuses, will be legally
issued, fully paid and non-assessable.
<PAGE> 2
Short-Term Investments Trust
November 25, 1998
Page 2
We express no opinion concerning the laws of any jurisdiction
other than the federal law of the United States of America and the Delaware
Business Trust Act of the State of Delaware.
Both the Delaware Business Trust Act and the Trust's Agreement
and Declaration of Trust, as amended (the "Trust Agreement"), provide that
shareholders of the Trust shall be entitled to the same limitation on personal
liability as is extended under the Delaware General Corporation Law to
stockholders of private corporations for profit. There is a remote possibility,
however, that, under certain circumstances, shareholders of a Delaware business
trust may be held personally liable for that trust's obligations to the extent
that 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. The Trust Agreement also provides for indemnification out of
property of a Portfolio for all loss and expense of any shareholder held
personally liable for the obligations of that Portfolio. Therefore, the risk of
any shareholder incurring financial loss beyond his investment due to
shareholder liability is limited to circumstances in which a Portfolio is unable
to meet its obligations and the express limitation of shareholder liabilities is
determined not to be effective.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name and to the references to our
firm under the caption "General Information - Legal Counsel" in the
Prospectuses.
Very truly yours,
/s/ Ballard Spahr Andrews & Ingersoll, LLP
<PAGE> 1
EXHIBIT 11
INDEPENDENT AUDITORS' CONSENT
The Board of Trustees and Shareholders
Short-Term Investments Trust.:
We consent to the use of our reports on the Treasury Portfolio and the Treasury
TaxAdvantage Portfolio (series portfolios of Short-Term Investments Trust) dated
October 2, 1998 included herein and 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
November 23, 1998
<PAGE> 1
EXHIBIT 15(c)
AMENDMENT NO. 1
AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN PURSUANT TO RULE 12b-1
The Amended and Restated Master Distribution Plan (the "Plan"),
pursuant to Rule 12b-1 of Short-Term Investments Trust, a Delaware business
Trust, is hereby amended as follows:
Appendix A of the Plan is hereby deleted in its entirety and replaced
with the following:
"APPENDIX A TO
AMENDED AND RESTATED 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 designed 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%
TREASURY TAXADVANTAGE PORTFOLIO ANNUAL RATE
- ------------------------------- -----------
Private Investment Class 0.50%
GOVERNMENT & AGENCY PORTFOLIO ANNUAL RATE
- ----------------------------- -----------
Private Investment Class 0.50%
Resource Class 0.20%
Cash Management Class 0.10%
</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."
<PAGE> 2
All other terms and provisions of the Plan not amended herein shall
remain in full force and effect.
Dated September 1, 1998
SHORT-TERM INVESTMENTS TRUST
Attest: /s/ Stephen I. Winer By: /s/ Robert H. Graham
------------------------------- ---------------------------
Assistant Secretary President
(SEAL)
-2-
<PAGE> 1
EXHIBIT 15(d)
AMENDMENT NO. 2 TO
AMENDED AND RESTATED
MASTER DISTRIBUTION PLAN PURSUANT TO RULE 12B-1
OF
SHORT-TERM INVESTMENTS TRUST
The Amended and Restated Master Distribution Plan Pursuant to Rule
12b-1 (the "Plan") of Short-Term Investments Trust (the "Trust"), a Delaware
business Trust, with respect to its Treasury Portfolio, its Treasury
TaxAdvantage Portfolio and its Government & Agency Portfolio is hereby amended
as follows:
Appendix A of the Plan is hereby deleted in its entirety and replaced
with the following:
APPENDIX A TO
AMENDED AND RESTATED 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 designed 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>
Reserve Class 1.00%
Personal Investment Class 0.75%
Private Investment Class 0.50%
Resource Class 0.20%
Cash Management Class 0.10%
</TABLE>
<TABLE>
<CAPTION>
TREASURY TAXADVANTAGE PORTFOLIO ANNUAL RATE
- ------------------------------- -----------
<S> <C>
Reserve Class 1.00%
Personal Investment Class 0.75%
Private Investment Class 0.50%
Resource Class 0.20%
Cash Management Class 0.10%
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
GOVERNMENT & AGENCY PORTFOLIO ANNUAL RATE
- ----------------------------- -----------
<S> <C>
Reserve Class 1.00%
Personal Investment Class 0.75%
Private Investment Class 0.50%
Resource Class 0.20%
Cash Management Class 0.10%
</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.
All other terms and provisions of the Plan not amended herein shall
remain in full force and effect.
Dated _____________________ , 1998
SHORT-TERM INVESTMENTS TRUST
Attest: By:
--------------------------- ------------------------------
Name: Name: Robert H. Graham
Title: Title: President
(SEAL)
-2-
<PAGE> 1
EXHIBIT 15(e)
[AIM LOGO]
FUND MANAGEMENT COMPANY
SHAREHOLDER SERVICE AGREEMENT
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
<PAGE> 2
Shareholder Service Agreement Page 2
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.
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--REGISTERED TRADEMARK-- we are
solely responsible for the registration of account information for FMC's
and A I M Fund Services, Inc.'s ("AFS") subaccounting customers through
AIM LINK--REGISTERED TRADEMARK--, and that neither FMC, AFS nor any Fund
is responsible for the accuracy of such information; and we will
indemnify and hold harmless FMC, AFS 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,
AFS or the Funds from us. A schedule of fees relating to subaccounting
and administration is attached hereto as Schedule B.
<PAGE> 3
Shareholder Service Agreement Page 3
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 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> 4
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> 5
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 - Resource Class .20%
Liquid Assets Portfolio - Cash Management Class .08%
Short-Term Investments Trust
----------------------------
Treasury Portfolio - Reserve Class .80%*
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 - Reserve Class .80%*
Treasury TaxAdvantage Portfolio - Personal Investment Class .40%*
Treasury TaxAdvantage Portfolio - Private Investment Class .25%
Treasury TaxAdvantage Portfolio - Resource Class .16%
Treasury TaxAdvantage Portfolio - Cash Management Class .08%
Government & Agency Portfolio - Reserve Class .80%*
Government & Agency Portfolio - Personal Investment Class .40%*
Government & Agency Portfolio - Private Investment Class .25%
Government & Agency Portfolio - Resource Class .16%
Government & Agency Portfolio - Cash Management Class .08%
Tax-Free Investments Co.
------------------------
Cash Reserve Portfolio - Private Investment Class .25%
*Fees in excess of .25% are for services of an administrative nature,
as described in Paragraph 1 of this Agreement.
</TABLE>
<PAGE> 6
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, AFS or the Funds, including the ______ basis points of monthly
average net assets related to subaccounting and administration services
provided to us by AFS.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information from the Cash Management
Class of the Short-Term Investments Trust Treasury Portfolio August 31, 1998
annual report.
</LEGEND>
<CIK> 0000205007
<NAME> SHORT-TERM INVESTMENTS TRUST
<SERIES>
<NUMBER> 001
<NAME> TREASURY PORTFOLIO CASH MANAGEMENT CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> AUG-31-1998
<INVESTMENTS-AT-COST> 5117024361
<INVESTMENTS-AT-VALUE> 5117024361
<RECEIVABLES> 54017966
<ASSETS-OTHER> 151203
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5171193530
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 26959366
<TOTAL-LIABILITIES> 26959366
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5143411553
<SHARES-COMMON-STOCK> 5143411553
<SHARES-COMMON-PRIOR> 5259983781
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 822611
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 5144234164
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 291070704
<OTHER-INCOME> 0
<EXPENSES-NET> (8705300)
<NET-INVESTMENT-INCOME> 282365404
<REALIZED-GAINS-CURRENT> 17887
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 282383291
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (282365404)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 33780737508
<NUMBER-OF-SHARES-REDEEMED> (33989935426)
<SHARES-REINVESTED> 92625690
<NET-CHANGE-IN-ASSETS> (116554341)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 804724
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3026608
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 10715022
<AVERAGE-NET-ASSETS> 1032845745
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (0.05)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<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 from the Institutional
Class of the Short-Term Investments Trust Treasury Portfolio August 31, 1998
annual report.
</LEGEND>
<CIK> 0000205007
<NAME> SHORT-TERM INVESTMENTS TRUST
<SERIES>
<NUMBER> 002
<NAME> TREASURY PORTFOLIO INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> AUG-31-1998
<INVESTMENTS-AT-COST> 5117024361
<INVESTMENTS-AT-VALUE> 5117024361
<RECEIVABLES> 54017966
<ASSETS-OTHER> 151203
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5171193530
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 26959366
<TOTAL-LIABILITIES> 26959366
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5143411553
<SHARES-COMMON-STOCK> 5143411553
<SHARES-COMMON-PRIOR> 5259983781
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 822611
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 5144234164
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 291070704
<OTHER-INCOME> 0
<EXPENSES-NET> (8705300)
<NET-INVESTMENT-INCOME> 282365404
<REALIZED-GAINS-CURRENT> 17887
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 282383291
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (282365404)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 33780737508
<NUMBER-OF-SHARES-REDEEMED> (33989935426)
<SHARES-REINVESTED> 92625690
<NET-CHANGE-IN-ASSETS> (116554341)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 804724
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3026608
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 10715022
<AVERAGE-NET-ASSETS> 3112551185
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (0.05)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.08
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information from the Personal
Investment Class of the Short-Term Investments Trust Treasury Portfolio
August 31, 1998 annual report.
</LEGEND>
<CIK> 0000205007
<NAME> SHORT-TERM INVESTMENTS TRUST
<SERIES>
<NUMBER> 003
<NAME> TREASURY PORTFOLIO PERSONAL INVESTMENT CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> AUG-31-1998
<INVESTMENTS-AT-COST> 5117024361
<INVESTMENTS-AT-VALUE> 5117024361
<RECEIVABLES> 54017966
<ASSETS-OTHER> 151203
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5171193530
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 26959366
<TOTAL-LIABILITIES> 26959366
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5143411553
<SHARES-COMMON-STOCK> 5143411553
<SHARES-COMMON-PRIOR> 5259983781
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 822611
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 5144234164
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 291070704
<OTHER-INCOME> 0
<EXPENSES-NET> (8705300)
<NET-INVESTMENT-INCOME> 282365404
<REALIZED-GAINS-CURRENT> 17887
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 282383291
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (282365404)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 33780737508
<NUMBER-OF-SHARES-REDEEMED> (33989935426)
<SHARES-REINVESTED> 92625690
<NET-CHANGE-IN-ASSETS> (116554341)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 804724
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3026608
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 10715022
<AVERAGE-NET-ASSETS> 360746624
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (0.05)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.58
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information from the Private
Investment Class of the Short-Tern Investments Trust Treasury Portfolio
August 31, 1998 annual report.
</LEGEND>
<CIK> 0000205007
<NAME> SHORT-TERM INVESTMENTS TRUST
<SERIES>
<NUMBER> 004
<NAME> TREASURY PORTFOLIO PRIVATE INVESTMENT CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> AUG-31-1998
<INVESTMENTS-AT-COST> 5117024361
<INVESTMENTS-AT-VALUE> 5117024361
<RECEIVABLES> 54017966
<ASSETS-OTHER> 151203
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5171193530
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 26959366
<TOTAL-LIABILITIES> 26959366
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5143411553
<SHARES-COMMON-STOCK> 5143411553
<SHARES-COMMON-PRIOR> 5259983781
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 822611
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 5144234164
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 291070704
<OTHER-INCOME> 0
<EXPENSES-NET> (8705300)
<NET-INVESTMENT-INCOME> 282365404
<REALIZED-GAINS-CURRENT> 17887
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 282383291
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (282365404)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 33780737508
<NUMBER-OF-SHARES-REDEEMED> (33989935426)
<SHARES-REINVESTED> 92625690
<NET-CHANGE-IN-ASSETS> (116554341)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 804724
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3026608
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 10715022
<AVERAGE-NET-ASSETS> 386535328
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (0.05)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.38
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information from the Resource Class
of the Short-Term Investments Trust Treasury Portfolio August 31, 1998
annual report.
</LEGEND>
<CIK> 0000205007
<NAME> SHORT-TERM INVESTMENTS TRUST
<SERIES>
<NUMBER> 005
<NAME> TREASURY PORTFOLIO RESOURCE CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> AUG-31-1998
<INVESTMENTS-AT-COST> 5117024361
<INVESTMENTS-AT-VALUE> 5117024361
<RECEIVABLES> 54017966
<ASSETS-OTHER> 151203
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5171193530
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 26959366
<TOTAL-LIABILITIES> 26959366
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5143411553
<SHARES-COMMON-STOCK> 5143411553
<SHARES-COMMON-PRIOR> 5259983781
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 822611
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 5144234164
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 291070704
<OTHER-INCOME> 0
<EXPENSES-NET> (8705300)
<NET-INVESTMENT-INCOME> 282365404
<REALIZED-GAINS-CURRENT> 17887
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 282383291
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (282365404)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 33780737508
<NUMBER-OF-SHARES-REDEEMED> (33989935426)
<SHARES-REINVESTED> 92625690
<NET-CHANGE-IN-ASSETS> (116554341)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 804724
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3026608
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 10715022
<AVERAGE-NET-ASSETS> 320537856
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (0.05)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.24
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information from the Institutional
Class of the Short-Term Investments Trust Treasury TaxAdvantage Portfolio
August 31, 1998 annual report.
</LEGEND>
<CIK> 0000205007
<NAME> SHORT-TERM INVESTMENTS TRUST
<SERIES>
<NUMBER> 006
<NAME> TREASURY TAXADVANTAGE PORTFOLIO INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> AUG-31-1998
<INVESTMENTS-AT-COST> 142761024
<INVESTMENTS-AT-VALUE> 142761024
<RECEIVABLES> 1633831
<ASSETS-OTHER> 26620
<OTHER-ITEMS-ASSETS> 535982
<TOTAL-ASSETS> 144957457
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 730255
<TOTAL-LIABILITIES> 730255
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 144184331
<SHARES-COMMON-STOCK> 144184331
<SHARES-COMMON-PRIOR> 297361476
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 42871
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 144227202
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 10833975
<OTHER-INCOME> 0
<EXPENSES-NET> (505546)
<NET-INVESTMENT-INCOME> 10328429
<REALIZED-GAINS-CURRENT> 42871
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 10371300
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (10328429)
<DISTRIBUTIONS-OF-GAINS> (201304)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1072780241
<NUMBER-OF-SHARES-REDEEMED> (1227099674)
<SHARES-REINVESTED> 1142288
<NET-CHANGE-IN-ASSETS> (153335578)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 201304
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 412610
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 764137
<AVERAGE-NET-ASSETS> 169918161
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (0.05)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<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 from the Private
Investment Class of the Short-Term Investments Trust Treasury TaxAdvantage
Portfolio August 31, 1998 annual report.
</LEGEND>
<CIK> 0000205007
<NAME> SHORT-TERM INVESTMENTS TRUST
<SERIES>
<NUMBER> 007
<NAME> TREASURY TAXADVANTAGE PORTFOLIO PRIVATE INVESTMENT CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> AUG-31-1998
<INVESTMENTS-AT-COST> 142761024
<INVESTMENTS-AT-VALUE> 142761024
<RECEIVABLES> 1633831
<ASSETS-OTHER> 26620
<OTHER-ITEMS-ASSETS> 535982
<TOTAL-ASSETS> 144957457
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 730255
<TOTAL-LIABILITIES> 730255
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 144184331
<SHARES-COMMON-STOCK> 144184331
<SHARES-COMMON-PRIOR> 297361476
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 42871
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 144227202
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 10833975
<OTHER-INCOME> 0
<EXPENSES-NET> (505546)
<NET-INVESTMENT-INCOME> 10328429
<REALIZED-GAINS-CURRENT> 42871
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 10371300
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (10328429)
<DISTRIBUTIONS-OF-GAINS> (201304)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1072780241
<NUMBER-OF-SHARES-REDEEMED> (1227099674)
<SHARES-REINVESTED> 1142288
<NET-CHANGE-IN-ASSETS> (153335578)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 201304
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 412610
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 764137
<AVERAGE-NET-ASSETS> 36387542
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (0.05)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.45
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>