<PAGE> 1
As filed with the Securities and Exchange Commission on November 8, 1999
Registration No. 2-58287
Investment Co. Act No. 811-2729
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------
Pre-Effective Amendment No.
------ ------
Post-Effective Amendment No. 33 X
------ ------
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
------
Amendment No. 34 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 As soon as practicable after the
Public Offering: 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 17, 1999, 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
[AIM LOGO]
CASH MANAGEMENT CLASS
GOVERNMENT & AGENCY PORTFOLIO
PROSPECTUS
DECEMBER 17, 1999
Government & Agency Portfolio seeks to maximize current income consistent with
the preservation of capital and the maintenance of liquidity.
This prospectus contains important information about the Cash Management Class
of the fund. Please read it before investing and keep it for future reference.
As with all other mutual fund securities, the Securities and Exchange Commission
has not approved or disapproved these securities or determined whether the
information in this prospectus is adequate or accurate. Anyone who tells you
otherwise is committing a crime.
There can be no assurance that the fund will be able to maintain a stable net
asset value of $1.00 per share.
1
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES...........................................3
PRINCIPAL RISKS OF INVESTING IN THE FUND .....................................3
FEE TABLE AND EXPENSE EXAMPLE.................................................4
FEE TABLE............................................................4
EXPENSE EXAMPLE......................................................4
FUND MANAGEMENT...............................................................5
THE ADVISOR..........................................................5
ADVISOR COMPENSATION.................................................5
OTHER INFORMATION.............................................................6
SUITABILITY FOR INVESTORS............................................6
DIVIDENDS AND DISTRIBUTIONS..........................................6
FINANCIAL HIGHLIGHTS..........................................................7
SHAREHOLDER INFORMATION.......................................................8
DISTRIBUTION AND SERVICE (12b-1) FEES................................8
PURCHASING SHARES....................................................8
REDEEMING SHARES.....................................................8
PRICING OF SHARES....................................................9
TAXES...............................................................10
OBTAINING ADDITIONAL INFORMATION................................BACK COVER PAGE
</TABLE>
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, AIM Funds, AIM
Funds and Design, AIM Internet Connect and AIM Investor are service marks of
A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
2
<PAGE> 4
INVESTMENT OBJECTIVE AND STRATEGIES
The fund's investment objective is to maximize current income consistent with
the preservation of capital and the maintenance of liquidity.
The fund attempts to meet this objective by investing, normally, at least 65% of
its total assets in direct obligations of the U.S. Treasury, including bills,
notes and bonds and other securities issued or guaranteed as to principal and
interest by the U.S. Government or its agencies and instrumentalities, as well
as repurchase agreements secured by those obligations. Securities issued or
guaranteed as to principal and interest by the U.S. Government or its agencies
and instrumentalities may be supported by (a) the full faith and credit of the
U.S. Treasury; (b) the right of the issuer to borrow from the U.S. Treasury; (c)
discretionary authority of the U.S. Government to purchase certain obligations
of the agency or instrumentality; or (d) the credit of the agency or
instrumentality. The fund will maintain a weighted average maturity of 90 days
or less. The fund invests in compliance with Rule 2a-7 under the Investment
Company Act of 1940.
The portfolio managers focus on securities they believe have favorable prospects
for current income consistent with the preservation of capital and the
maintenance of liquidity. The portfolio managers usually hold portfolio
securities to maturity, but may sell a particular security when they deem it
advisable, such as when any of the factors above materially changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash or shares of affiliated money market
funds. As a result, the fund may not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the fund.
Additionally, the fund's yield will vary as the short-term securities in its
portfolio mature and the proceeds are reinvested in securities with different
interest rates.
The following factors could reduce the fund's income and/or share price:
o sharply rising interest rates;
o downgrades of credit ratings or defaults of any of the fund's holdings; and
o the risks generally associated with concentrating investments in the
banking industry, such as interest rate risk, credit risk and regulatory
developments relating to the banking and financial services industries.
If the seller of a repurchase agreement in which the fund invests defaults on
its obligation or declares bankruptcy, the fund may experience delays in selling
the securities underlying the repurchase agreement. As a result, the fund may
incur losses arising from decline in the value of those securities, reduced
levels of income and expenses of enforcing its rights.
The value of your shares could be adversely affected if the computer systems
used by the fund's investment advisor and the fund's other service providers are
unable to distinguish the year 2000 from the year 1900.
The fund's investment advisor and independent technology consultants are working
to avoid year 2000-related problems in its systems and to obtain assurances that
other service providers are taking similar steps. Year 2000 problems may also
affect issuers in whose securities the fund invests.
3
<PAGE> 5
FEE TABLE AND EXPENSE EXAMPLE
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
Cash Management Class
---------------------
<S> <C>
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price
or redemption proceeds, whichever is less) None
Annual Fund Operating Expenses (expenses that are deducted
from fund assets)
Management Fees 0.10%
Distribution and/or Service (12b-1) Fees 0.10
Other Expenses 0.10
Total Annual Fund Operating Expenses 0.30
Fee Waiver and Expense Reimbursement(1) 0.13
Net Expenses(2) 0.17
</TABLE>
- ------------------
(1) The distributor has contractually agreed to waive 0.02% of the Rule 12b-1
distribution plan fee. The investment advisor has contractually agreed to limit
Total Annual Fund Operating Expenses, excluding the Rule 12b-1 distribution plan
fee, interest expense, taxes and extraordinary expenses, to 0.09%.
(2) The investment advisor has voluntarily agreed to limit Net Expenses,
excluding the Rule 12b-1 distribution plan fee, interest expense, taxes and
extraordinary expenses, to 0.06%. This limitation can be terminated at any time.
Net Expenses, net of this voluntary limitation, are 0.14%.
You should also consider the effect of any account fees charged by the financial
institution managing the account.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the Cash
Management Class of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's gross operating expenses remain the same. To the extent fees are waived
or expenses are reimbursed, the expenses will be lower. Although your actual
returns and costs may be higher or lower, based on these assumptions your costs
would be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Cash Management Class $ 31 $ 97 $169 $381
</TABLE>
4
<PAGE> 6
FUND MANAGEMENT
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provides investment advisory services to
the fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 125
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended August 31, 1999, the advisor received no
compensation and reimbursed fund expenses of 0.04% of average daily net assets.
5
<PAGE> 7
OTHER INFORMATION
SUITABILITY FOR INVESTORS
The Cash Management Class of the fund is intended for use primarily by customers
of banks, certain broker-dealers and other financial institutions
(institutions). [It is expected that the shares of the Cash Management Class may
be particularly suitable investments for corporate cash managers, municipalities
or other public entities.] Individuals, corporations, partnerships and other
businesses that maintain qualified accounts at an institution may invest in
shares of the Cash Management Class. Each institution will render administrative
support services to its customers who are the beneficial owners of the shares of
the Cash Management Class. Such services include, among other things,
establishment and maintenance of shareholder accounts and records; assistance in
processing purchase and redemption transactions in shares of the Cash Management
Class; providing periodic statements showing a client's account balance in
shares of the Cash Management Class; distribution of fund proxy statements,
annual reports and other communications to shareholders whose accounts are
serviced by the institution; and such other services as the fund may reasonably
request. Institutions will be required to certify to the fund that they comply
with applicable state law regarding registration as broker-dealers, or that they
are exempt from such registration. Fund Management Company (the distributor)
will review each application for the purchase of shares of the Cash Management
Class and reserves the right to reject any order to purchase based upon a review
of the suitability of the investor.
The Cash Management Class is designed to be a convenient and economical way to
invest in an open-end diversified money market fund. It is anticipated that most
investors will perform their own subaccounting.
Investors in the Cash Management 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 Cash Management Class.
DIVIDENDS AND DISTRIBUTIONS
Dividends
The fund generally declares dividends on each business day and pays dividends
monthly. A business day is any day on which both the Federal Reserve Bank of New
York and The Bank of New York, the fund's custodian, are open for business.
Dividends are paid on settled shares of the fund as of 5:00 p.m. Eastern time.
Generally, shareholders whose purchase orders have been received by the fund
prior to 5:00 p.m. Eastern time and shareholders whose redemption proceeds have
not been wired to them on any business day are eligible to receive dividends on
that business day. The dividend declared on any day preceding a non-business day
of the fund will include the income accrued on such non-business day. Dividends
and distributions are paid in cash unless the shareholder has elected to have
such dividends and distributions reinvested in the form of additional full and
fractional shares at net asset value.
Capital Gains Distributions
The fund generally distributes net realized capital gains (including net
short-term capital gains), if any, annually. The fund does not expect to realize
any long-term capital gains and losses.
6
<PAGE> 8
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the financial
performance of the Cash Management Class. Certain information reflects financial
results for a single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
This information has been audited by KPMG LLP, whose report, along with the
fund's financial statements, is included in the fund's annual report, which is
available upon request.
<TABLE>
<CAPTION>
CASH MANAGEMENT CLASS
---------------------
Year Ended August 31,
1999
---------------------
<S> <C>
Net asset value, beginning of period $ 1.00
- -------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.05
- -------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.05)
- -------------------------------------------------------------------------
Net asset value, end of period $ 1.00
=========================================================================
Total return 4.98%
=========================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $85,113
=========================================================================
Ratio of expenses to average net assets (a) 0.14% (b)
=========================================================================
Ratio of net investment income to average net assets (c) 4.83% (b)
=========================================================================
</TABLE>
(a) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
0.30%.
(b) Ratios based on average net assets of $66,659,653.
(c) 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 4.67%.
7
<PAGE> 9
SHAREHOLDER INFORMATION
The fund currently offers six classes of shares all of which share a common
investment objective and portfolio of investments. The six classes differ only
with respect to distribution arrangements for different categories of investors.
DISTRIBUTION AND SERVICE (12b-1) FEES
The fund has adopted a 12b-1 plan with respect to the Cash Management Class that
allows the fund to pay distribution fees to Fund Management Company (the
distributor) for the sale and distribution of its shares and fees for services
provided to shareholders. Because the fund pays these fees out of its assets on
an ongoing basis, over time these fees will increase the cost of your investment
and may cost you more than paying other types of sales charges.
PURCHASING SHARES
The minimum initial investment in the Cash Management Class is $1 million. No
minimum amount is required for subsequent investments in the fund, nor are
minimum balances required.
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 fund. Purchase orders
received after such time will be processed at the next day's net asset value.
You may purchase shares by submitting an Account Application to the fund's
transfer agent, A I M Fund Services, Inc. (transfer agent) at P.O. Box 4497,
Houston, Texas 77210-4497 prior to your initial purchase of shares. You must
open a fund account through an institution in accordance with procedures
established by such institution. A purchase order is considered received at the
time The Bank of New York receives federal funds (member bank deposits with a
Federal Reserve Bank) for the order, provided the transfer agent has received
notice of the order [or at the time the order is placed, if the fund is assured
of payment]. You may obtain an Account Application from the distributor.
Subsequent purchases of shares of the funds may also be made via AIM LINK
- --Registered Trademark-- Remote, a personal computer application software
product.
If you propose to open a fund account with an institution, you should consult
with a representative of such institution to obtain a description of the rules
governing such an account. A statement with regard to your investment in the
Cash Management Class is supplied periodically, and confirmations of all
transactions for your account are provided by the institution promptly upon
request. In addition, proxies, periodic reports and other information from the
institution with regard to your shares of the Cash Management Class will be sent
to you.
You may place an order for the purchase of shares of the Cash Management Class
with the institution. The institution is responsible for the prompt transmission
of the order to the transfer agent. The fund is normally required to make
immediate settlement in federal funds for portfolio securities purchased.
Accordingly, payment for shares of the Cash Management Class purchased by
institutions on behalf of their clients must be in federal funds. If an order to
purchase shares is paid for other than in federal funds, the order may be
delayed up to two business days while the institution completes the conversion
into federal funds.
REDEEMING SHARES
You may redeem any or all of your shares at the net asset value next determined
after receipt of a redemption request in proper form by the fund. There is no
charge for redemption. Redemption requests with respect to shares of the Cash
Management Class are normally made through a customer's institution.
8
<PAGE> 10
You may request a redemption by calling the transfer agent at (800) 877-7745, or
by using AIM LINK--Registered Trademark-- Remote. Payment for redeemed shares
is normally made by Federal Reserve wire to the commercial bank account
designated in your Account Application. You may also request that payment be
made by check. We use reasonable procedures to confirm that instructions
communicated by telephone are genuine and are not liable for telephone
instructions that are reasonably believed to be genuine. Such reasonable
procedures may include recordings of telephone transactions maintained for a
reasonable period of time.
Payment for redemption orders received prior to 5:00 p.m. Eastern time will
normally be made on the same day. Payment for shares 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 fund may make payment for telephone redemptions in excess of $1,000 by
check when it is considered to be in the fund's best interest to do so.
Dividends payable up to the date of redemption on redeemed shares will normally
be paid by wire transfer on the next dividend payment date. However, if all of
the shares in your account are redeemed, you will receive dividends payable up
to the date of redemption with the proceeds of the redemption.
THE FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
o REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
o MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
o WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
PRICING OF SHARES
Determination of Net Asset Value
The price of each of the fund's shares is the fund's net asset value per share.
The fund determines the net asset value of its shares as of 5:00 p.m. Eastern
time on each day on which both the Federal Reserve Bank of New York and The Bank
of New York are open for business (business day). The fund values portfolio
securities on the basis of amortized cost, which approximates market value.
Timing of Orders
The fund prices purchase and redemption orders at the net asset value calculated
after the transfer agent receives an order in good form. If the transfer agent
receives a redemption request on a business day prior to 5:00 p.m. Eastern time,
the fund will normally wire redemption proceeds on that day. If the transfer
agent receives a redemption request after 5:00 p.m. Eastern time on a business
day of the fund, the redemption will be processed at the net asset value next
determined and the fund will normally wire proceeds on the next business day.
Shareholders will accrue dividends until the day the fund wires redemption
proceeds. The fund may postpone the right of redemption only under unusual
circumstances, as allowed by the Securities and Exchange Commission, such as
when the New York Stock Exchange restricts or suspends trading. The fund
reserves the right to change the time for which purchase and redemption orders
must be submitted to and received by the transfer agent for execution on the
same day on any day when the primary government securities dealers are either
closed for business or close early, or trading in money market securities is
limited due to national holidays.
9
<PAGE> 11
TAXES
Dividends and distributions received are taxable as ordinary income [or
long-term capital gains] for federal income tax purposes, whether reinvested in
additional shares or taken in cash. Distributions are taxable at different rates
depending on the length of time the fund holds its assets. [Different tax rates
apply to ordinary income and long-term capital gain distributions, regardless of
how long shares are held.] Every year, information will be sent showing the
amount of dividends and distributions received from the fund during the prior
year.
[Any long-term or short-term capital gains realized from redemptions of the fund
shares will be subject to federal income tax.]
The foreign, state and local tax consequences of investing in the fund may
differ materially from the federal income tax consequences described above.
Shareholders should consult their tax advisor before investing.
10
<PAGE> 12
[BACK COVER PAGE]
OBTAINING ADDITIONAL INFORMATION
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies
of the fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P. O. Box 4497
Houston, TX 77210-4497
BY TELEPHONE: (800) 877-7745
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com (prospectuses and annual and
semiannual reports only)
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
Government & Agency Portfolio
SEC 1940 Act file number: 811-2729
Back Cover Page
<PAGE> 13
[AIM LOGO]
INSTITUTIONAL CLASS
GOVERNMENT & AGENCY PORTFOLIO
PROSPECTUS
DECEMBER 17, 1999
Government & Agency Portfolio seeks to maximize current income consistent with
the preservation of capital and the maintenance of liquidity.
This prospectus contains important information about the Institutional Class of
the fund. Please read it before investing and keep it for future reference.
As with all other mutual fund securities, the Securities and Exchange Commission
has not approved or disapproved these securities or determined whether the
information in this prospectus is adequate or accurate. Anyone who tells you
otherwise is committing a crime.
There can be no assurance that the fund will be able to maintain a stable net
asset value of $1.00 per share.
<PAGE> 14
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES......................................................................3
PRINCIPAL RISKS OF INVESTING IN THE FUND ................................................................3
FEE TABLE AND EXPENSE EXAMPLE............................................................................4
FEE TABLE.......................................................................................4
EXPENSE EXAMPLE.................................................................................4
FUND MANAGEMENT..........................................................................................5
THE ADVISOR.....................................................................................5
ADVISOR COMPENSATION............................................................................5
OTHER INFORMATION........................................................................................6
SUITABILITY FOR INVESTORS.......................................................................6
DIVIDENDS AND DISTRIBUTIONS.....................................................................6
FINANCIAL HIGHLIGHTS.....................................................................................7
SHAREHOLDER INFORMATION..................................................................................8
PURCHASING SHARES...............................................................................8
REDEEMING SHARES................................................................................8
PRICING OF SHARES...............................................................................9
TAXES...........................................................................................9
OBTAINING ADDITIONAL INFORMATION...........................................................BACK COVER PAGE
</TABLE>
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, AIM Funds, AIM
Funds and Design, AIM Internet Connect and AIM Investor are service marks of
A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
2
<PAGE> 15
INVESTMENT OBJECTIVE AND STRATEGIES
The fund's investment objective is to maximize current income consistent with
the preservation of capital and maintenance of liquidity.
The fund attempts to meet this objective by investing, normally, at least 65% of
its total assets in direct obligations of the U.S. Treasury, including bills,
notes and bonds and other securities issued or guaranteed as to principal and
interest by the U.S. Government or its agencies and instrumentalities, as well
as repurchase agreements secured by those obligations. Securities issued or
guaranteed as to principal and interest by the U.S. Government or its agencies
and instrumentalities may be supported by (a) the full faith and credit of the
U.S. Treasury; (b) the right of the issuer to borrow from the U.S. Treasury; (c)
discretionary authority of the U.S. Government to purchase certain obligations
of the agency or instrumentality; or (d) the credit of the agency or
instrumentality. The fund will maintain a weighted average maturity of 90 days
or less. The fund invests in compliance with Rule 2a-7 under the Investment
Company Act of 1940.
The portfolio managers focus on securities they believe have favorable prospects
for current income consistent with the preservation of capital and the
maintenance of liquidity. The portfolio managers usually hold portfolio
securities to maturity, but may sell a particular security when they deem it
advisable, such as when any of the factors above materially changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash or shares of affiliated money market
funds. As a result, the fund may not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the fund.
Additionally, the fund's yield will vary as the short-term securities in its
portfolio mature and the proceeds are reinvested in securities with different
interest rates.
The following factors could reduce the fund's income and/or share price:
o sharply rising interest rates;
o downgrades of credit ratings or defaults of any of the fund's holdings; and
o the risks generally associated with concentrating investments in the
banking industry, such as interest rate risk, credit risk and regulatory
developments relating to the banking and financial services industries.
If the seller of a repurchase agreement in which the fund invests defaults on
its obligation or declares bankruptcy, the fund may experience delays in selling
the securities underlying the repurchase agreement. As a result, the fund may
incur losses arising from decline in the value of those securities, reduced
levels of income and expenses of enforcing its rights.
The value of your shares could be adversely affected if the computer systems
used by the fund's investment advisor and the fund's other service providers are
unable to distinguish the year 2000 from the year 1900.
The fund's investment advisor and independent technology consultants are working
to avoid year 2000-related problems in its systems and to obtain assurances that
other service providers are taking similar steps. Year 2000 problems may also
affect issuers in whose securities the fund invests.
3
<PAGE> 16
FEE TABLE AND EXPENSE EXAMPLE
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
Institutional Class
-------------------
<S> <C>
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price
or redemption proceeds, whichever is less) None
Annual Fund Operating Expenses (expenses that are deducted from fund assets)
Management Fees 0.10%
Distribution and/or Service (12b-1) Fees None
Other Expenses 0.10
Total Annual Fund Operating Expenses 0.20
Expense Reimbursement(1) 0.11
Net Expenses(2) 0.09
</TABLE>
- ----------------
(1) The investment advisor has contractually agreed to limit Total Annual Fund
Operating Expenses, excluding interest expense, taxes and extraordinary
expenses, to 0.09%.
(2) The investment advisor has voluntarily agreed to limit Net Expenses,
excluding interest expense, taxes and extraordinary expenses, to 0.06%. This
limitation can be terminated at any time.
You should also consider the effect of any account fees charged by the financial
institution managing the account.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Institutional Class of the fund with the cost of investing in other mutual
funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's gross operating expenses remain the same. To the extent fees are waived
or expenses are reimbursed, the expenses will be lower. Although your actual
returns and costs may be higher or lower, based on these assumptions your costs
would be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Institutional Class $20 $64 $113 $255
</TABLE>
4
<PAGE> 17
FUND MANAGEMENT
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provides investment advisory services to
the fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 125
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended August 31, 1999, the advisor received no
compensation and reimbursed fund expenses of 0.04% of average daily net assets.
5
<PAGE> 18
OTHER INFORMATION
SUITABILITY FOR INVESTORS
The Institutional Class of the fund is intended for use by banks and other
financial institutions, investing for themselves or in a fiduciary, advisory,
agency, custodial or other similar capacity. Shares of the Institutional Class
may not be purchased directly by individuals, although institutions may purchase
the Institutional Class for accounts maintained for individuals. Prospective
investors should determine if an investment in the Institutional Class is
consistent with the investment objectives of an account and with applicable
state and federal laws and regulations. Fund Management Company (the
distributor) will review each application for the purchase of shares of the
Institutional Class and reserves the right to reject any order to purchase based
upon a review of the suitability of the investor.
The Institutional Class is designed to be a convenient and economical way to
invest [short-term cash reserves] in an open-end diversified money market fund.
It is anticipated that most investors will perform their own subaccounting.
Investors in the Institutional 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 Institutional Class.
DIVIDENDS AND DISTRIBUTIONS
Dividends
The fund generally declares dividends on each business day and pays dividends
monthly. A business day is any day on which both the Federal Reserve Bank of New
York and The Bank of New York, the fund's custodian, are open for business.
Dividends are paid on settled shares of the fund as of 5:00 p.m. Eastern time.
Generally, shareholders whose purchase orders have been received by the fund
prior to 5:00 p.m. Eastern time and shareholders whose redemption proceeds have
not been wired to them on any business day are eligible to receive dividends on
that business day. The dividend declared on any day preceding a non-business
day of the fund will include the income accrued on such non-business day.
Dividends and distributions are paid in cash unless the shareholder has elected
to have such dividends and distributions reinvested in the form of additional
full and fractional shares at net asset value.
Capital Gains Distributions
The fund generally distributes net realized capital gains (including net
short-term capital gains), if any, annually. The fund does not expect to realize
any long-term capital gains and losses.
6
<PAGE> 19
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the financial
performance of the Institutional Class. Certain information reflects financial
results for a single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
This information has been audited by KPMG LLP, whose report, along with the
fund's financial statements, is included in the fund's annual report, which is
available upon request.
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS
---------------------
Year Ended
August 31, 1999
---------------------
<S> <C>
Net asset value, beginning of period $ 1.00
- --------------------------------------------------------- --------
Income from investment operations:
Net investment income 0.05
- --------------------------------------------------------- --------
Less distributions:
Dividends from net investment income (0.05)
========================================================= ========
Net asset value, end of period $ 1.00
========================================================= ========
Total return 5.07%
========================================================= ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $139,860
========================================================= ========
Ratio of expenses to average net assets (a) 0.06% (b)
========================================================= ========
Ratio of net investment income to average net assets (c) 4.91% (b)
========================================================= ========
</TABLE>
(a) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
0.20%.
(b) Ratios based on average net assets of $112,709,406.
(c) 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 4.77%.
7
<PAGE> 20
SHAREHOLDER INFORMATION
The fund currently offers six classes of shares all of which share a common
investment objective and portfolio of investments. The six classes differ only
with respect to distribution arrangements for different categories of investors.
PURCHASING SHARES
The minimum initial investment in the Institutional Class is $1 million. No
minimum amount is required for subsequent investments in the fund, nor are
minimum balances required.
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 fund. Purchase orders
received after such time will be processed at the next day's net asset value.
You may purchase shares by submitting an Account Application to the fund's
transfer agent, A I M Fund Services, Inc. (transfer agent) at P.O. Box 4497,
Houston, Texas 77210-4497 prior to your initial purchase of shares. A purchase
order is considered received at the time The Bank of New York receives federal
funds (member bank deposits with a Federal Reserve Bank) for the order, provided
the transfer agent has received notice of the order [or at the time the order is
placed, if the fund is assured of payment]. You may obtain an Account
Application from the distributor. Subsequent purchases of shares of the funds
may also be made via AIM LINK--Registered Trademark-- Remote, a personal
computer application software product.
We may request that an institution maintain separate master accounts in the fund
for shares held by the institution (a) for its own account, for the account of
other institutions and for accounts for which the institution acts as a
fiduciary; and (b) for accounts for which the institution acts in some other
capacity. An institution may aggregate its master accounts and subaccounts to
satisfy the minimum investment requirement.
REDEEMING SHARES
You may redeem any or all of your shares at the net asset value next determined
after receipt of a redemption request in proper form by the fund. There is no
charge for redemption.
You may request a redemption by calling the transfer agent at (800) 659-1005, or
by using AIM LINK--Registered Trademark-- Remote. Payment for redeemed shares is
normally made by Federal Reserve wire to the commercial bank account designated
in your Account Application. You may also request that payment be made by check.
We use reasonable procedures to confirm that instructions communicated by
telephone are genuine and are not liable for telephone instructions that are
reasonably believed to be genuine. Such reasonable procedures may include
recordings of telephone transactions maintained for a reasonable period of time.
Payment for redemption orders received prior to 5:00 p.m. Eastern time will
normally be made on the same day. Payment for shares 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 fund may make payment for telephone redemptions in excess of $1,000 by
check when it is considered to be in the fund's best interest to do so.
Dividends payable up to the date of redemption on redeemed shares will normally
be paid on the next dividend payment date. However, if all of the shares in your
account are redeemed, you will receive dividends payable up to the date of
redemption with the proceeds of the redemption.
8
<PAGE> 21
THE FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
o REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
o MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
o WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
PRICING OF SHARES
Determination of Net Asset Value
The price of each of the fund's shares is the fund's net asset value per share.
The fund determines the net asset value of its shares as of 5:00 p.m. Eastern
time on each day on which both the Federal Reserve Bank of New York and The Bank
of New York are open for business (business day). The fund values portfolio
securities on the basis of amortized cost, which approximates market value.
Timing of Orders
The fund prices purchase and redemption orders at the net asset value calculated
after the transfer agent receives an order in good form. If the transfer agent
receives a redemption request on a business day prior to 5:00 p.m. Eastern time,
the fund will normally wire redemption proceeds on that day. If the transfer
agent receives a redemption request after 5:00 p.m. Eastern time on a business
day of the fund, the redemption will be processed at the net asset value next
determined and the fund will normally wire proceeds on the next business day.
Shareholders will accrue dividends until the day the fund wires redemption
proceeds. The Fund may postpone the right of redemption only under unusual
circumstances, as allowed by the Securities and Exchange Commission, such as
when the New York Stock Exchange restricts or suspends trading. The fund
reserves the right to change the time for which purchase and redemption orders
must be submitted to and received by the transfer agent for execution on the
same day on any day when the primary government securities dealers are either
closed for business or close early, or trading in money market securities is
limited due to national holidays.
TAXES
Dividends and distributions received are taxable as ordinary income [or
long-term capital gains] for federal income tax purposes, whether reinvested in
additional shares or taken in cash. Distributions are taxable at different rates
depending on the length of time the fund holds its assets. [Different tax rates
apply to ordinary income and long-term capital gain distributions, regardless of
how long shares are held.] Every year, information will be sent showing the
amount of dividends and distributions received from the fund during the prior
year.
[Any long-term or short-term capital gains realized from redemptions of the fund
shares will be subject to federal income tax.]
The foreign, state and local tax consequences of investing in the fund may
differ materially from the federal income tax consequences described above.
Shareholders should consult their tax advisor before investing.
9
<PAGE> 22
[BACK COVER PAGE]
OBTAINING ADDITIONAL INFORMATION
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies of
the fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P. O. Box 4497
Houston, TX 77210-4497
BY TELEPHONE: (800) 659-1005
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com (prospectuses and annual and
semiannual reports only)
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
Government & Agency Portfolio
SEC 1940 Act file number: 811-2729
Back Cover Page
<PAGE> 23
[AIM LOGO]
PERSONAL INVESTMENT CLASS
GOVERNMENT & AGENCY PORTFOLIO
PROSPECTUS
DECEMBER 17, 1999
Government & Agency Portfolio seeks to maximize current income consistent with
the preservation of capital and the maintenance of liquidity.
This prospectus contains important information about the Personal Investment
Class of the fund. Please read it before investing and keep it for future
reference.
As with all other mutual fund securities, the Securities and Exchange Commission
has not approved or disapproved these securities or determined whether the
information in this prospectus is adequate or accurate. Anyone who tells you
otherwise is committing a crime.
There can be no assurance that the fund will be able to maintain a stable net
asset value of $1.00 per share.
<PAGE> 24
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES...........................................3
PRINCIPAL RISKS OF INVESTING IN THE FUND .....................................3
FEE TABLE AND EXPENSE EXAMPLE.................................................4
FEE TABLE.............................................................4
EXPENSE EXAMPLE.......................................................4
FUND MANAGEMENT...............................................................5
THE ADVISOR...........................................................5
ADVISOR COMPENSATION..................................................5
OTHER INFORMATION.............................................................6
SUITABILITY FOR INVESTORS.............................................6
DIVIDENDS AND DISTRIBUTIONS...........................................6
SHAREHOLDER INFORMATION.......................................................7
DISTRIBUTION AND SERVICE (12b-1) FEES.................................7
PURCHASING SHARES.....................................................7
REDEEMING SHARES......................................................7
PRICING OF SHARES.....................................................8
TAXES.................................................................9
OBTAINING ADDITIONAL INFORMATION.................................BACK COVER PAGE
</TABLE>
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, AIM Funds, AIM
Funds and Design, AIM Internet Connect and AIM Investor are service marks of
A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
2
<PAGE> 25
INVESTMENT OBJECTIVE AND STRATEGIES
The fund's investment objective is to maximize current income consistent with
the preservation of capital and maintenance of liquidity.
The fund attempts to meet this objective by investing, normally, at least 65% of
its total assets in direct obligations of the U.S. Treasury, including bills,
notes and bonds and other securities issued or guaranteed as to principal and
interest by the U.S. Government or its agencies and instrumentalities, as well
as repurchase agreements secured by those obligations. Securities issued or
guaranteed as to principal and interest by the U.S. Government or its agencies
and instrumentalities may be supported by (a) the full faith and credit of the
U.S. Treasury; (b) the right of the issuer to borrow from the U.S. Treasury; (c)
discretionary authority of the U.S. Government to purchase certain obligations
of the agency or instrumentality; or (d) the credit of the agency or
instrumentality. The fund will maintain a weighted average maturity of 90 days
or less. The fund invests in compliance with Rule 2a-7 under the Investment
Company Act of 1940.
The portfolio managers focus on securities they believe have favorable prospects
for current income consistent with the preservation of capital and the
maintenance of liquidity. The portfolio managers usually hold portfolio
securities to maturity, but may sell a particular security when they deem it
advisable, such as when any of the factors above materially changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash or shares of affiliated money market
funds. As a result, the fund may not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the fund.
Additionally, the fund's yield will vary as the short-term securities in its
portfolio mature and the proceeds are reinvested in securities with different
interest rates.
The following factors could reduce the fund's income and/or share price:
o sharply rising interest rates;
o downgrades of credit ratings or defaults of any of the fund's holdings; and
o the risks generally associated with concentrating investments in the banking
industry, such as interest rate risk, credit risk and regulatory
developments relating to the banking and financial services industries.
If the seller of a repurchase agreement in which the fund invests defaults on
its obligation or declares bankruptcy, the fund may experience delays in selling
the securities underlying the repurchase agreement. As a result, the fund may
incur losses arising from decline in the value of those securities, reduced
levels of income and expenses of enforcing its rights.
The value of your shares could be adversely affected if the computer systems
used by the fund's investment advisor and the fund's other service providers are
unable to distinguish the year 2000 from the year 1900.
The fund's investment advisor and independent technology consultants are working
to avoid year 2000-related problems in its systems and to obtain assurances that
other service providers are taking similar steps. Year 2000 problems may also
affect issuers in whose securities the fund invests.
3
<PAGE> 26
FEE TABLE AND EXPENSE EXAMPLE
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
Personal Investment Class
-------------------------
<S> <C>
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price
or redemption proceeds, whichever is less) None
Annual Fund Operating Expenses (expenses that are deducted from fund assets)(1)
Management Fees 0.10%
Distribution and/or Service (12b-1) Fees 0.75
Other Expenses 0.10
Total Annual Fund Operating Expenses 0.95
Fee Waiver and Expense Reimbursement(2) 0.36
Net Expenses(3) 0.59
</TABLE>
- -----------------------------
(1) The fees and expenses are based on estimated net assets for the current
fiscal period.
(2) The distributor has contractually agreed to waive 0.25% of the Rule 12b-1
distribution plan fee. The investment advisor has contractually agreed to limit
Total Annual Fund Operating Expenses, excluding the Rule 12b-1 distribution plan
fee, interest expense, taxes and extraordinary expenses, to 0.09%.
(3) The investment advisor has voluntarily agreed to limit Net Expenses,
excluding the Rule 12b-1 distribution plan fee, interest expense, taxes and
extraordinary expenses, to 0.06%. This limitation can be terminated at any time.
Net Expenses, net of this voluntary limitation, are 0.56%.
You should also consider the effect of any account fees charged by the financial
institution managing the account.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Personal Investment Class of the fund with the cost of investing in other mutual
funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's gross operating expenses remain the same. To the extent fees are waived
or expenses are reimbursed, the expenses will be lower. Although your actual
returns and costs may be higher or lower, based on these assumptions your costs
would be:
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
Personal Investment Class $ 97 $ 303
</TABLE>
4
<PAGE> 27
FUND MANAGEMENT
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provides investment advisory services to
the fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 125
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended August 31, 1999, the advisor received no
compensation and reimbursed fund expenses of 0.04% of average daily net assets.
5
<PAGE> 28
OTHER INFORMATION
SUITABILITY FOR INVESTORS
The Personal Investment Class of the fund is intended for use primarily by
customers of banks, certain broker-dealers and other financial institutions
(institutions). Individuals, corporations, partnerships and other businesses
that maintain qualified accounts at an institution may invest in shares of the
Personal Investment Class. Each institution will render administrative support
services to its customers who are the beneficial owners of the shares of the
Personal Investment Class. Such services include, among other things,
establishment and maintenance of shareholder accounts and records; assistance in
processing purchase and redemption transactions in shares of the Personal
Investment Class; providing periodic statements showing a client's account
balance in shares of the Personal Investment Class; distribution of fund proxy
statements, annual reports and other communications to shareholders whose
accounts are serviced by the institution; and such other services as the fund
may reasonably request. Institutions will be required to certify to the fund
that they comply with applicable state law regarding registration as
broker-dealers, or that they are exempt from such registration. Fund Management
Company (the distributor) will review each application for the purchase of
shares of the Personal Investment Class and reserves the right to reject any
order to purchase based upon a review of the suitability of the investor.
The Personal Investment Class is designed to be a convenient and economical way
to invest in an open-end diversified money market fund. It is anticipated that
most investors will perform their own subaccounting.
Investors in the Personal Investment 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 Personal Investment Class.
DIVIDENDS AND DISTRIBUTIONS
Dividends
The fund generally declares dividends on each business day and pays dividends
monthly. A business day is any day on which both the Federal Reserve Bank of New
York and The Bank of New York, the fund's custodian, are open for business.
Dividends are paid on settled shares of the fund as of 5:00 p.m. Eastern time.
Generally, shareholders whose purchase orders have been received by the fund
prior to 5:00 p.m. Eastern time and shareholders whose redemption proceeds have
not been wired to them on any business day are eligible to receive dividends on
that business day. The dividend declared on any day preceding a non-business day
of the fund will include the income accrued on such non-business day. Dividends
and distributions are paid in cash unless the shareholder has elected to have
such dividends and distributions reinvested in the form of additional full and
fractional shares at net asset value.
Capital Gains Distributions
The fund generally distributes net realized capital gains (including net
short-term capital gains), if any, annually. The fund does not expect to realize
any long-term capital gains and losses.
6
<PAGE> 29
SHAREHOLDER INFORMATION
The fund currently offers six classes of shares all of which share a common
investment objective and portfolio of investments. The six classes differ only
with respect to distribution arrangements for different categories of investors.
DISTRIBUTION AND SERVICE (12b-1) FEES
The fund has adopted a 12b-1 plan with respect to the Personal Investment Class
that allows the fund to pay distribution fees to Fund Management Company
(distributor) for the sale and distribution of its shares and fees for services
provided to shareholders. Because the fund pays these fees out of its assets on
an ongoing basis, over time these fees will increase the cost of your investment
and may cost you more than paying other types of sales charges.
PURCHASING SHARES
The minimum initial investment in the Personal Investment Class is $1,000. No
minimum amount is required for subsequent investments in the fund, nor are
minimum balances required.
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 fund. Purchase orders
received after such time will be processed at the next day's net asset value.
You may purchase shares by submitting an Account Application to the fund's
transfer agent, A I M Fund Services, Inc. (transfer agent) at P.O. Box 4497,
Houston, Texas 77210-4497 prior to your initial purchase of shares. You must
open a fund account through an institution in accordance with procedures
established by such institution. A purchase order is considered received at the
time The Bank of New York receives federal funds (member bank deposits with a
Federal Reserve Bank) for the order, provided the transfer agent has received
notice of the order [or at the time the order is placed, if the fund is assured
of payment]. You may obtain an Account Application from the distributor.
Subsequent purchases of shares of the funds may also be made via AIM LINK
- --Registered Trademark-- Remote, a personal computer application software
product.
If you propose to open a fund account with an institution, you should consult
with a representative of such institution to obtain a description of the rules
governing such an account. A statement with regard to your investment in the
Personal Investment Class is supplied periodically, and confirmations of all
transactions for your account are provided by the institution promptly upon
request. In addition, proxies, periodic reports and other information from the
institution with regard to your shares of the Personal Investment Class will be
sent to you.
You may place an order for the purchase of shares of the Personal Investment
Class with the institution. The institution is responsible for the prompt
transmission of the order to the transfer agent. The fund is normally required
to make immediate settlement in federal funds for portfolio securities
purchased. Accordingly, payment for shares of the Personal Investment Class
purchased by institutions on behalf of their clients must be in federal funds.
If an order is paid for other than in federal funds, the order may be delayed up
to two business days while the institution completes the conversion into federal
funds.
REDEEMING SHARES
You may redeem any or all of your shares at the net asset value next determined
after receipt of a redemption request in proper form by the fund. There is no
charge for redemption. Redemption requests with respect to shares of the
Personal Investment Class are normally made through your institution.
7
<PAGE> 30
You may request a redemption by calling the transfer agent at (800) 877-4744, or
by using AIM LINK--Registered Trademark-- Remote. Payment for redeemed shares
is normally made by Federal Reserve wire to the commercial bank account
designated in your Account Application. You may also request that payment be
made by check. We use reasonable procedures to confirm that instructions
communicated by telephone are genuine and are not liable for telephone
instructions that are reasonably believed to be genuine. Such reasonable
procedures may include recordings of telephone transactions maintained for a
reasonable period of time.
Payment for redemption orders received prior to 5:00 p.m. Eastern time will
normally be made on the same day. Payment for shares 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 fund may make payment for telephone redemptions in excess of $1,000 by
check when it is considered to be in the fund's best interest to do so.
Dividends payable up to the date of redemption on redeemed shares will normally
be paid by wire transfer on the next dividend payment date. However, if all of
the shares in your account are redeemed, you will receive dividends payable up
to the date of redemption with the proceeds of the redemption.
THE FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
o REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
o MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
o WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
PRICING OF SHARES
Determination of Net Asset Value
The price of each of the fund's shares is the fund's net asset value per share.
The fund determines the net asset value of its shares as of 5:00 p.m. Eastern
time on each day on which both the Federal Reserve Bank of New York and The Bank
of New York are open for business (business day). The fund values portfolio
securities on the basis of amortized cost, which approximates market value.
Timing of Orders
The fund prices purchase and redemption orders at the net asset value calculated
after the transfer agent receives an order in good form. If the transfer agent
receives a redemption request on a business day prior to 5:00 p.m. Eastern time,
the fund will normally wire redemption proceeds on that day. If the transfer
agent receives a redemption request after 5:00 p.m. Eastern time on a business
day of the fund, the redemption will be processed at the net asset value next
determined and the fund will normally wire proceeds on the next business day.
Shareholders will accrue dividends until the day the fund wires redemption
proceeds. The Fund may postpone the right of redemption only under unusual
circumstances, as allowed by the Securities and Exchange Commission, such as
when the New York Stock Exchange restricts or suspends trading. The fund
reserves the right to change the time for which purchase and redemption orders
must be submitted to and received by the transfer agent for execution on the
same day on any day when the primary government securities dealers are either
closed for business or close early, or trading in money market securities is
limited due to national holidays.
8
<PAGE> 31
TAXES
Dividends and distributions received are taxable as ordinary income [or
long-term capital gains] for federal income tax purposes, whether reinvested in
additional shares or taken in cash. Distributions are taxable at different rates
depending on the length of time the fund holds its assets. [Different tax rates
apply to ordinary income and long-term capital gain distributions, regardless of
how long shares are held.] Every year, information will be sent showing the
amount of dividends and distributions received from the fund during the prior
year.
[Any long-term or short-term capital gains realized from redemptions of the fund
shares will be subject to federal income tax.]
The foreign, state and local tax consequences of investing in the fund may
differ materially from the federal income tax consequences described above.
Shareholders should consult their tax advisor before investing.
9
<PAGE> 32
[BACK COVER PAGE]
OBTAINING ADDITIONAL INFORMATION
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies
of the fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P. O. Box 4497
Houston, TX 77210-4497
BY TELEPHONE: (800) 877-4744
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com (prospectuses and annual and
semiannual reports only)
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
Government & Agency Portfolio
SEC 1940 Act file number: 811-2729
Back Cover Page
<PAGE> 33
[AIM LOGO]
PRIVATE INVESTMENT CLASS
GOVERNMENT & AGENCY PORTFOLIO
PROSPECTUS
DECEMBER 17, 1999
Government & Agency Portfolio seeks to maximize current income consistent with
the preservation of capital and the maintenance of liquidity.
This prospectus contains important information about the Private Investment
Class of the fund. Please read it before investing and keep it for future
reference.
As with all other mutual fund securities, the Securities and Exchange Commission
has not approved or disapproved these securities or determined whether the
information in this prospectus is adequate or accurate. Anyone who tells you
otherwise is committing a crime.
There can be no assurance that the fund will be able to maintain a stable net
asset value of $1.00 per share.
1
<PAGE> 34
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES...........................................3
PRINCIPAL RISKS OF INVESTING IN THE FUND......................................3
FEE TABLE AND EXPENSE EXAMPLE.................................................4
FEE TABLE............................................................4
EXPENSE EXAMPLE......................................................4
FUND MANAGEMENT...............................................................5
THE ADVISOR..........................................................5
ADVISOR COMPENSATION.................................................5
OTHER INFORMATION.............................................................6
SUITABILITY FOR INVESTORS............................................6
DIVIDENDS AND DISTRIBUTIONS..........................................6
FINANCIAL HIGHLIGHTS..........................................................7
SHAREHOLDER INFORMATION.......................................................8
DISTRIBUTION AND SERVICE (12b-1) FEES................................8
PURCHASING SHARES....................................................8
REDEEMING SHARES.....................................................8
PRICING OF SHARES....................................................9
TAXES................................................................9
OBTAINING ADDITIONAL INFORMATION................................BACK COVER PAGE
</TABLE>
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, AIM Funds, AIM
Funds and Design, AIM Internet Connect and AIM Investor are service marks of
A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
2
<PAGE> 35
INVESTMENT OBJECTIVE AND STRATEGIES
The fund's investment objective is to maximize current income consistent with
the preservation of capital and maintenance of liquidity.
The fund attempts to meet this objective by investing, normally, at least 65% of
its total assets in direct obligations of the U.S. Treasury, including bills,
notes and bonds and other securities issued or guaranteed as to principal and
interest by the U.S. Government or its agencies and instrumentalities, as well
as repurchase agreements secured by those obligations. Securities issued or
guaranteed as to principal and interest by the U.S. Government or its agencies
and instrumentalities may be supported by (a) the full faith and credit of the
U.S. Treasury; (b) the right of the issuer to borrow from the U.S. Treasury; (c)
discretionary authority of the U.S. Government to purchase certain obligations
of the agency or instrumentality; or (d) the credit of the agency of
instrumentality. The fund will maintain a weighted averaged maturity of 90 days
or less. The fund invests in compliance with Rule 2a-7 under the Investment
Company Act of 1940.
The portfolio managers focus on securities they believe have favorable prospects
for current income consistent with the preservation of capital and the
maintenance of liquidity. The portfolio managers usually hold portfolio
securities to maturity, but may sell a particular security when they deem it
advisable, such as when any of the factors above materially changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash or shares of affiliated money market
funds. As a result, the fund may not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the fund.
Additionally, the fund's yield will vary as the short-term securities in its
portfolio mature and the proceeds are reinvested in securities with different
interest rates.
The following factors could reduce the fund's income and/or share price:
o sharply rising interest rates;
o downgrades of credit ratings or defaults of any of the fund's holdings; and
o the risks generally associated with concentrating investments in the
banking industry, such as interest rate risk, credit risk and regulatory
developments relating to the banking and financial services industries.
If the seller of a repurchase agreement in which the fund invests defaults on
its obligation or declares bankruptcy, the fund may experience delays in selling
the securities underlying the repurchase agreement. As a result, the fund may
incur losses arising from decline in the value of those securities, reduced
levels of income and expenses of enforcing its rights.
The value of your shares could be adversely affected if the computer systems
used by the fund's investment advisor and the fund's other service providers are
unable to distinguish the year 2000 from the year 1900.
The fund's investment advisor and independent technology consultants are working
to avoid year 2000-related problems in its systems and to obtain assurances that
other service providers are taking similar steps. Year 2000 problems may also
affect issuers in whose securities the fund invests.
3
<PAGE> 36
FEE TABLE AND EXPENSE EXAMPLE
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
Private Investment Class
------------------------
<S> <C>
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price
or redemption proceeds, whichever is less) None
Annual Fund Operating Expenses (expenses that are deducted from fund assets)
Management Fees 0.10%
Distribution and/or Service (12b-1) Fees 0.50
Other Expenses 0.10
Total Annual Fund Operating Expenses 0.70
Fee Waiver and Expense Reimbursement(1) 0.31
Net Expenses(2) 0.39
</TABLE>
- ------------------
(1) The distributor has contractually agreed to waive 0.20% of the Rule 12b-1
distribution plan fee. The investment advisor has contractually agreed to limit
Total Annual Fund Operating Expenses, excluding the Rule 12b-1 distribution plan
fee, interest expense, taxes and extraordinary expenses, to 0.09%.
(2) The investment advisor has voluntarily agreed to limit Net Expenses,
excluding the Rule 12b-1 distribution plan fee, interest expense, taxes and
extraordinary expenses, to 0.06%. This limitation can be terminated at any time.
Net Expenses, net of this voluntary limitation, are 0.36%.
You should also consider the effect of any account fees charged by the financial
institution managing the account.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Private Investment Class of the fund with the cost of investing in other mutual
funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's gross operating expenses remain the same. To the extent fees are waived
or expenses are reimbursed, the expenses will be lower. Although your actual
returns and costs may be higher or lower, based on these assumptions your costs
would be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Private Investment Class $ 72 $224 $390 $871
</TABLE>
4
<PAGE> 37
FUND MANAGEMENT
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provides investment advisory services to
the fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 125
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended August 31, 1999, the advisor received no
compensation and reimbursed fund expenses of 0.04% of average daily net assets.
5
<PAGE> 38
OTHER INFORMATION
SUITABILITY FOR INVESTORS
The Private Investment Class of the fund is intended for use primarily by
customers of banks, certain broker-dealers and other financial institutions
(institutions). Individuals, corporations, partnerships and other businesses
that maintain qualified accounts at an institution may invest in shares of the
Private Investment Class. Each institution will render administrative support
services to its customers who are the beneficial owners of the shares of the
Private Investment Class. Such services include, among other things,
establishment and maintenance of shareholder accounts and records; assistance in
processing purchase and redemption transactions in shares of the Private
Investment Class; providing periodic statements showing a client's account
balance in shares of the Private Investment Class; distribution of fund proxy
statements, annual reports and other communications to shareholders whose
accounts are serviced by the institution; and such other services as the fund
may reasonably request. Institutions will be required to certify to the fund
that they comply with applicable state law regarding registration as
broker-dealers, or that they are exempt from such registration. Fund Management
Company (the distributor) will review each application for the purchase of
shares of the Private Investment Class and reserves the right to reject any
order to purchase based upon a review of the suitability of the investor.
The Private Investment Class is designed to be a convenient and economical way
to invest in an open-end diversified money market fund. It is anticipated that
most investors will perform their own subaccounting.
Investors in the Private Investment 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 Private Investment Class.
DIVIDENDS AND DISTRIBUTIONS
Dividends
The fund generally declares dividends on each business day and pays dividends
monthly. A business day is any day on which both the Federal Reserve Bank of New
York and The Bank of New York, the fund's custodian, are open for business.
Dividends are paid to settled shares of the fund as of 5:00 p.m. Eastern time.
Generally, shareholders whose purchase orders have been received by the fund
prior to 5:00 p.m. Eastern time and shareholders whose redemption proceeds have
not been wired to them on any business day are eligible to receive dividends on
that business day. The dividend declared on any day preceding a non-business day
of the fund will include the income accrued on such non-business day. Dividends
and distributions are paid in cash unless the shareholder has elected to have
such dividends and distributions reinvested in the form of additional full and
fractional shares at the net asset value.
Capital Gains Distributions
The fund generally distributes net realized capital gains (including net
short-term capital gains), if any, annually. The fund does not expect to realize
any long-term capital gains and losses.
6
<PAGE> 39
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the financial
performance of the Private Investment Class. Certain information reflects
financial results for a single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
This information has been audited by KPMG LLP, whose report, along with the
fund's financial statements, is included in the fund's annual report, which is
available upon request.
<TABLE>
<CAPTION>
PRIVATE INVESTMENT CLASS
------------------------
Year Ended August 31,
1999
------------------------
<S> <C>
Net asset value, beginning of period $ 1.00
- ----------------------------------------------------------------------
Income from investment operations:
Net investment income 0.05
- ----------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.05)
======================================================================
Net asset value, end of period $ 1.00
======================================================================
Total return 4.75%
======================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $42,528
======================================================================
Ratio of expenses to average net assets (a) 0.36% (b)
======================================================================
Ratio of net investment income to average net assets (c) 4.62% (b)
======================================================================
</TABLE>
(a) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
0.70%.
(b) Ratios based on average net assets of $41,176,813.
(c) 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 4.28%.
7
<PAGE> 40
SHAREHOLDER INFORMATION
The fund currently offers six classes of shares all of which share a common
investment objective and portfolio of investments. The six classes differ only
with respect to distribution arrangements for different categories of investors.
DISTRIBUTION AND SERVICE (12b-1) FEES
The fund has adopted a 12b-1 plan with respect to the Private Investment Class
that allows the fund to pay distribution fees to Fund Management Company
(distributor) for the sale and distribution of its shares and fees for services
provided to shareholders. Because the fund pays these fees out of its assets on
an ongoing basis, over time these fees will increase the cost of your investment
and may cost you more than paying other types of sales charges.
PURCHASING SHARES
The minimum initial investment in the Private Investment Class is $10,000. No
minimum amount is required for subsequent investments in the fund, nor are
minimum balances required.
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 fund. Purchase orders
received after such time will be processed at the next day's net asset value.
You may purchase shares by submitting an Account Application to the fund's
transfer agent, A I M Fund Services, Inc. (transfer agent) at P.O. Box 4497,
Houston, Texas 77210-4497 prior to your initial purchase of shares. You must
open a fund account through an institution in accordance with procedures
established by such institution. A purchase order is considered received at the
time The Bank of New York receives federal funds (member bank deposits with a
Federal Reserve Bank) for the order, provided the transfer agent has received
notice of the order [or at the time the order is placed, if the fund is assured
of payment]. You may obtain an Account Application from the distributor.
Subsequent purchases of shares of the funds may also be made via AIM LINK
- --Registered Trademark-- Remote, a personal computer application software
product.
If you propose to open a fund account with an institution, you should consult
with a representative of such institution to obtain a description of the rules
governing such an account. A statement with regard to your investment in the
Private Investment Class is supplied periodically, and confirmations of all
transactions for your account are provided by the institution promptly upon
request. In addition, proxies, periodic reports and other information from the
institution with regard to your shares of the Private Investment Class will be
sent to you.
You may place an order for the purchase of shares of the Private Investment
Class with the institution. The institution is responsible for the prompt
transmission of the order to the transfer agent. The fund is normally required
to make immediate settlement in federal funds for portfolio securities
purchased. Accordingly, payment for shares of the Private Investment Class
purchased by institutions on behalf of their clients must be in federal funds.
If an order to purchase shares is paid for other than in federal funds, the
order may be delayed up to two business days while the institution completes the
conversion into federal funds.
REDEEMING SHARES
You may redeem any or all of your shares at the net asset value next determined
after receipt of a redemption request in proper form by the fund. There is no
charge for redemption. Redemption requests with respect to shares of the Private
Investment Class are normally made through your institution.
You may request a redemption by calling the transfer agent at (800) 877-7748, or
by using AIM LINK--Registered Trademark-- Remote. Payment for redeemed shares
is normally made by Federal Reserve wire to the commercial bank account
designated
8
<PAGE> 41
in your Account Application. You may also request that payment be made by check.
We use reasonable procedures to confirm that instructions communicated by
telephone are genuine and are not liable for telephone instructions that are
reasonably believed to be genuine. Such reasonable procedures may include
recordings of telephone transactions maintained for a reasonable period of time.
Payment for redemption orders received prior to 5:00 p.m. Eastern time will
normally be made on the same day. Payment for shares 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 fund may make payment for telephone redemptions in excess of $1,000 by
check when it is considered to be in the fund's best interest to do so.
Dividends payable up to the date of redemption on redeemed shares will normally
be paid by wire transfer on the next dividend payment date. However, if all of
the shares in your account are redeemed, you will receive dividends payable up
to the date of redemption with the proceeds of the redemption.
THE FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
o REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
o MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
o WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
PRICING OF SHARES
Determination of Net Asset Value
The price of each of the fund's shares is the fund's net asset value per share.
The fund determines the net asset value of its shares as of 5:00 p.m. Eastern
time on each day on which both the Federal Reserve Bank of New York and The Bank
of New York are open for business (business day). The fund values portfolio
securities on the basis of amortized cost, which approximates market value.
Timing of Orders
The fund prices purchase and redemption orders at the net asset value calculated
after the transfer agent receives an order in good form. If the transfer agent
receives a redemption request on a business day prior to 5:00 p.m. Eastern time,
the fund will normally wire redemption proceeds on that day. If the transfer
agent receives a redemption request after 5:00 p.m. Eastern time on a business
day of the fund, the redemption will be processed at the net asset value next
determined and the fund will normally wire proceeds on the next business day.
Shareholders will accrue dividends until the day the fund wires redemption
proceeds. The fund may postpone the right of redemption only under unusual
circumstances, as allowed by the Securities and Exchange Commission, such as
when the New York Stock Exchange restricts or suspends trading. The fund
reserves the right to change the time for which purchase and redemption orders
must be submitted to and received by the transfer agent for execution on the
same day on any day when the primary government securities dealers are either
closed for business or close early, or trading in money market securities is
limited due to national holidays.
TAXES
Dividends and distributions received are taxable as ordinary income [or
long-term capital gains] for federal income tax purposes, whether reinvested in
additional shares or taken in cash. Distributions are taxable at different rates
depending on the length of time the fund holds its assets. [Different tax rates
apply to ordinary income and long-term capital gain distributions, regardless of
how long shares are held.] Every year, information will be sent showing the
amount of dividends and distributions received from the fund during the prior
year.
[Any long-term or short-term capital gains realized from redemptions of the fund
shares will be subject to federal income tax.]
9
<PAGE> 42
The foreign, state and local tax consequences of investing in the fund may
differ materially from the federal income tax consequences described above.
Shareholders should consult their tax advisor before investing.
10
<PAGE> 43
[BACK COVER PAGE]
OBTAINING ADDITIONAL INFORMATION
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies
of the fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P. O. Box 4497
Houston, TX 77210-4497
BY TELEPHONE: (800) 877-7748
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com (prospectuses and annual and
semiannual reports only)
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
Government & Agency Portfolio
SEC 1940 Act file number: 811-2729
Back Cover Page
<PAGE> 44
[AIM LOGO]
RESERVE CLASS
GOVERNMENT & AGENCY PORTFOLIO
PROSPECTUS
DECEMBER 17, 1999
Government & Agency Portfolio seeks to maximize current income consistent with
the preservation of capital and the maintenance of liquidity.
This prospectus contains important information about the Reserve Class of the
fund. Please read it before investing and keep it for future reference.
As with all other mutual fund securities, the Securities and Exchange Commission
has not approved or disapproved these securities or determined whether the
information in this prospectus is adequate or accurate. Anyone who tells you
otherwise is committing a crime.
There can be no assurance that the fund will be able to maintain a stable net
asset value of $1.00 per share.
1
<PAGE> 45
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES......................................................................3
PRINCIPAL RISKS OF INVESTING IN THE FUND ................................................................3
FEE TABLE AND EXPENSE EXAMPLE............................................................................4
FEE TABLE.......................................................................................4
EXPENSE EXAMPLE.................................................................................4
FUND MANAGEMENT..........................................................................................5
THE ADVISOR.....................................................................................5
ADVISOR COMPENSATION............................................................................5
OTHER INFORMATION........................................................................................6
SUITABILITY FOR INVESTORS.......................................................................6
DIVIDENDS AND DISTRIBUTIONS.....................................................................6
SHAREHOLDER INFORMATION..................................................................................7
DISTRIBUTION AND SERVICE (12b-1) FEES...........................................................7
PURCHASING SHARES...............................................................................7
REDEEMING SHARES................................................................................7
PRICING OF SHARES...............................................................................8
TAXES...........................................................................................8
OBTAINING ADDITIONAL INFORMATION...........................................................BACK COVER PAGE
</TABLE>
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, AIM Funds, AIM
Funds and Design, AIM Internet Connect and AIM Investor are service marks of
A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
2
<PAGE> 46
INVESTMENT OBJECTIVE AND STRATEGIES
The fund's investment objective is to maximize current income consistent with
the preservation of capital and maintenance of liquidity.
The fund attempts to meet this objective by investing, normally, at least 65% of
its total assets in direct obligations of the U.S. Treasury, including bills,
notes and bonds and other securities issued or guaranteed as to principal and
interest by the U.S. Government or its agencies and instrumentalities, as well
as repurchase agreements secured by those obligations. Securities issued or
guaranteed as to principal and interest by the U.S. Government or its agencies
and instrumentalities may be supported by (a) the full faith and credit of the
U.S. Treasury; (b) the right of the issuer to borrow from the U.S. Treasury; (c)
discretionary authority of the U.S. Government to purchase certain obligations
of the agency or instrumentality; or (d) the credit of the agency or
instrumentality. The fund will maintain a weighted average maturity of 90 days
or less. The fund invests in compliance with Rule 2a-7 under the Investment
Company Act of 1940.
The portfolio managers focus on securities they believe have favorable prospects
for current income consistent with the preservation of capital and the
maintenance of liquidity. The portfolio managers usually hold portfolio
securities to maturity, but may sell a particular security when they deem it
advisable, such as when any of the factors above materially changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash or shares of affiliated money market
funds. As a result, the fund may not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the fund.
Additionally, the fund's yield will vary as the short-term securities in its
portfolio mature and the proceeds are reinvested in securities with different
interest rates.
The following factors could reduce the fund's income and/or share price:
o sharply rising interest rates;
o downgrades of credit ratings or defaults of any of the fund's holdings; and
o the risks generally associated with concentrating investments in the
banking industry, such as interest rate risk, credit risk and regulatory
developments relating to the banking and financial services industries.
If the seller of a repurchase agreement in which the fund invests defaults on
its obligation or declares bankruptcy, the fund may experience delays in selling
the securities underlying the repurchase agreement. As a result, the fund may
incur losses arising from decline in the value of those securities, reduced
levels of income and expenses of enforcing its rights.
The value of your shares could be adversely affected if the computer systems
used by the fund's investment advisor and the fund's other service providers are
unable to distinguish the year 2000 from the year 1900.
The fund's investment advisor and independent technology consultants are working
to avoid year 2000-related problems in its systems and to obtain assurances that
other service providers are taking similar steps. Year 2000 problems may also
affect issuers in whose securities the fund invests.
3
<PAGE> 47
FEE TABLE AND EXPENSE EXAMPLE
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
Reserve Class
-------------
<S> <C>
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price
or redemption proceeds, whichever is less) None
Annual Fund Operating Expenses (expenses that are deducted from fund assets)(1)
Management Fees 0.10%
Distribution and/or Service (12b-1) Fees 1.00
Other Expenses 0.10
Total Annual Fund Operating Expenses 1.20
Fee Waiver and Expense Reimbursement(2) 0.31
Net Expenses(3) 0.89
</TABLE>
- ------------
(1) The fees and expenses are based on estimated net assets for the current
fiscal period.
(2) The distributor has contractually agreed to waive 0.20% of the Rule 12b-1
distribution plan fee. The investment advisor has contractually agreed to limit
Total Annual Fund Operating Expenses, excluding the Rule 12b-1 distribution plan
fee, interest expense, taxes and extraordinary expenses, to 0.09%.
(3) The investment advisor has voluntarily agreed to limit Net Expenses,
excluding the Rule 12b-1 distribution plan fee, interest expense, taxes and
extraordinary expenses, to 0.06%. This limitation can be terminated at any time.
Net Expenses, net of this voluntary limitation, are 0.86%.
You should also consider the effect of any account fees charged by the financial
institution managing the account.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Reserve Class of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's gross operating expenses remain the same. To the extent fees are waived
or expenses are reimbursed, the expenses will be lower. Although your actual
returns and costs may be higher or lower, based on these assumptions your costs
would be:
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
Reserve Class $122 $381
</TABLE>
4
<PAGE> 48
FUND MANAGEMENT
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provides investment advisory services to
the fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 125
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended August 31, 1999, the advisor received no
compensation and reimbursed fund expenses of 0.04% of average daily net assets.
5
<PAGE> 49
OTHER INFORMATION
SUITABILITY FOR INVESTORS
The Reserve Class of the fund is intended for use primarily by customers of
banks, certain broker-dealers and other financial institutions (institutions).
Individuals, corporations, partnerships and other businesses that maintain
qualified accounts at an institution may invest in shares of the Reserve Class.
Each institution will render administrative support services to its customers
who are the beneficial owners of the shares of the Reserve Class. Such services
include, among other things, establishment and maintenance of shareholder
accounts and records; assistance in processing purchase and redemption
transactions in shares of the Reserve Class; providing periodic statements
showing a client's account balance in shares of the Reserve Class; distribution
of fund proxy statements, annual reports and other communications to
shareholders whose accounts are serviced by the institution; and such other
services as the fund may reasonably request. Institutions will be required to
certify to the fund that they comply with applicable state law regarding
registration as broker-dealers, or that they are exempt from such registration.
Fund Management Company (the distributor) will review each application for the
purchase shares of the Reserve Class and reserves the right to reject any order
to purchase based upon a review of the suitability of the investor.
The Reserve Class is designed to be a convenient and economical way to invest in
an open-end diversified money market fund. It is anticipated that most investors
will perform their own subaccounting.
Investors in the Reserve 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 Reserve Class.
DIVIDENDS AND DISTRIBUTIONS
Dividends
The fund generally declares dividends on each business day and pays dividends
monthly. A business day is any day on which both the Federal Reserve Bank of New
York and The Bank of New York, the fund's custodian, are open for business.
Dividends are paid on settled shares of the fund as of 5:00 p.m. Eastern time.
Generally, shareholders whose purchase orders have been received by the fund
prior to 5:00 p.m. Eastern time and shareholders whose redemption proceeds have
not been wired to them on any business day are eligible to receive dividends on
that business day. The dividend declared on any day preceding a non-business day
of the fund will include the income accrued on such non-business day. Dividends
and distributions are paid in cash unless the shareholder has elected to have
such dividends and distributions reinvested in the form of additional full and
fractional shares at the net asset value.
Capital Gains Distributions
The fund generally distributes net realized capital gains (including net
short-term capital gains), if any, annually. The fund does not expect to realize
any long-term capital gains and losses.
6
<PAGE> 50
SHAREHOLDER INFORMATION
The fund currently offers six classes of shares all of which share a common
investment objective and portfolio of investments. The six classes differ only
with respect to distribution arrangements for different categories of investors.
DISTRIBUTION AND SERVICE (12b-1) FEES
The fund has adopted a 12b-1 plan with respect to the Reserve Class that allows
the fund to pay distribution fees to Fund Management Company (distributor) for
the sale and distribution of its shares and fees for services provided to
shareholders. Because the fund pays these fees out of its assets on an ongoing
basis, over time these fees will increase the cost of your investment and may
cost you more than paying other types of sales charges.
PURCHASING SHARES
The minimum initial investment in the Reserve Class is $1,000. No minimum amount
is required for subsequent investments in the fund, nor are minimum balances
required.
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 fund. Purchase orders
received after such time will be processed at the next day's net asset value.
You may purchase shares by submitting an Account Application to the fund's
transfer agent, A I M Fund Services, Inc. (transfer agent) at P.O. Box 4497,
Houston, Texas 77210-4497 prior to your initial purchase of shares. You must
open a fund account through an institution in accordance with procedures
established by such institution. A purchase order is considered received at the
time The Bank of New York receives federal funds (member bank deposits with a
Federal Reserve Bank) for the order, provided the transfer agent has received
notice of the order [or at the time the order is placed, if the fund is assured
of payment]. You may obtain an Account Application from the distributor.
Subsequent purchases of shares of the funds may also be made via AIM LINK
- --Registered Trademark-- Remote, a personal computer application software
product.
If you propose to open a fund account with an institution you should consult
with a representative of such institution to obtain a description of the rules
governing such an account. A statement with regard to your investment in the
Reserve Class is supplied periodically, and confirmations of all transactions
for your account are provided by the institution promptly upon request. In
addition, proxies, periodic reports and other information from the institution
with regard to shares of the Reserve Class will be sent to you.
You may place an order for the purchase of shares of the Reserve Class with the
institution. The institution is responsible for the prompt transmission of the
order to the transfer agent. The fund is normally required to make immediate
settlement in federal funds for portfolio securities purchased. Accordingly,
payment for shares of the Reserve Class purchased by institutions on behalf of
their clients must be in federal funds. If an order to purchase shares is paid
for other than in federal funds, the order may be delayed up to two business
days while the institution completes the conversion into federal funds.
REDEEMING SHARES
You may redeem any or all of your shares at the net asset value next determined
after receipt of a redemption request in proper form by the fund. There is no
charge for redemption. Redemption requests with respect to shares of the Reserve
Class are normally made through your institution.
You may request a redemption by calling the transfer agent at (800) 417-8837, or
by using AIM LINK--Registered Trademark-- Remote. Payment for redeemed shares
is normally made by Federal Reserve wire to the commercial bank account
designated in your Account Application. You may also request that payment be
made by check. We use reasonable procedures to confirm that instructions
communicated by telephone are genuine and are not liable for telephone
instructions that
7
<PAGE> 51
are reasonably believed to be genuine. Such reasonable procedures may include
recordings of telephone transactions maintained for a reasonable period of time.
Payment for redemption orders received prior to 5:00 p.m. Eastern time will
normally be made on the same day. Payment for shares 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 fund may make payment for telephone redemptions in excess of $1,000 by
check when it is considered to be in the fund's best interest to do so.
Dividends payable up to the date of redemption on redeemed shares will normally
be paid by wire transfer on the next dividend payment date. However, if all of
the shares in your account are redeemed, you will receive dividends payable up
to the date of redemption with the proceeds of the redemption.
THE FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
o REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
o MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
o WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
PRICING OF SHARES
Determination of Net Asset Value
The price of each of the fund's shares is the fund's net asset value per share.
The fund determines the net asset value of its shares as of 5:00 p.m. Eastern
time on each day on which both the Federal Reserve Bank of New York and The Bank
of New York are open for business (business day). The fund values portfolio
securities on the basis of amortized cost, which approximates market value.
Timing of Orders
The fund prices purchase and redemption orders at the net asset value calculated
after the transfer agent receives an order in good form. If the transfer agent
receives a redemption request on a business day prior to 5:00 p.m. Eastern time,
the fund will normally wire redemption proceeds on that day. If the transfer
agent receives a redemption request after 5:00 p.m. Eastern time on a business
day of the fund, the redemption will be processed at the net asset value next
determined and the fund will normally wire proceeds on the next business day.
Shareholders will accrue dividends until the day the fund wires redemption
proceeds. The Fund may postpone the right of redemption only under unusual
circumstances, as allowed by the Securities and Exchange Commission, such as
when the New York Stock Exchange restricts or suspends trading. The fund
reserves the right to change the time for which purchase and redemption orders
must be submitted to and received by the transfer agent for execution on the
same day on any day when the primary government securities dealers are either
closed for business or close early, or trading in money market securities is
limited due to national holidays.
TAXES
Dividends and distributions received are taxable as ordinary income [or
long-term capital gains] for federal income tax purposes, whether reinvested in
additional shares or taken in cash. Distributions are taxable at different rates
depending on the length of time the fund holds its assets. [Different tax rates
apply to ordinary income and long-term capital gain distributions, regardless of
how long shares are held.] Every year, information will be sent showing the
amount of dividends and distributions received from the fund during the prior
year.
8
<PAGE> 52
[Any long-term or short-term capital gains realized from redemptions of the fund
shares will be subject to federal income tax.]
The foreign, state and local tax consequences of investing in the fund may
differ materially from the federal income tax consequences described above.
Shareholders should consult their tax advisor before investing.
9
<PAGE> 53
[BACK COVER PAGE]
OBTAINING ADDITIONAL INFORMATION
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies
of the fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P. O. Box 4497
Houston, TX 77210-4497
BY TELEPHONE: (800) 417-8837
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com (prospectuses and annual and
semiannual reports only)
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
Government & Agency Portfolio
SEC 1940 Act file number: 811-2729
Back Cover Page
<PAGE> 54
[AIM LOGO]
RESOURCE CLASS
GOVERNMENT & AGENCY PORTFOLIO
PROSPECTUS
DECEMBER 17, 1999
Government & Agency Portfolio seeks to maximize current income consistent with
the preservation of capital and the maintenance of liquidity.
This prospectus contains important information about the Resource Class of the
fund. Please read it before investing and keep it for future reference.
As with all other mutual fund securities, the Securities and Exchange Commission
has not approved or disapproved these securities or determined whether the
information in this prospectus is adequate or accurate. Anyone who tells you
otherwise is committing a crime.
There can be no assurance that the fund will be able to maintain a stable net
asset value of $1.00 per share.
1
<PAGE> 55
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES........................................... 3
PRINCIPAL RISKS OF INVESTING IN THE FUND ..................................... 3
FEE TABLE AND EXPENSE EXAMPLE................................................. 4
FEE TABLE............................................................. 4
EXPENSE EXAMPLE....................................................... 4
FUND MANAGEMENT............................................................... 5
THE ADVISOR........................................................... 5
ADVISOR COMPENSATION.................................................. 5
OTHER INFORMATION............................................................. 6
SUITABILITY FOR INVESTORS............................................. 6
DIVIDENDS AND DISTRIBUTIONS........................................... 6
FINANCIAL HIGHLIGHTS.......................................................... 7
SHAREHOLDER INFORMATION....................................................... 8
DISTRIBUTION AND SERVICE (12b-1) FEES................................. 8
PURCHASING SHARES..................................................... 8
REDEEMING SHARES...................................................... 8
PRICING OF SHARES..................................................... 9
TAXES.................................................................10
OBTAINING ADDITIONAL INFORMATION.................................BACK COVER PAGE
</TABLE>
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, AIM Funds, AIM
Funds and Design, AIM Internet Connect and AIM Investor are service marks of
A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
2
<PAGE> 56
INVESTMENT OBJECTIVE AND STRATEGIES
The fund's investment objective is to maximize current income consistent with
the preservation of capital and maintenance of liquidity.
The fund attempts to meet this objective by investing, normally, at least 65% of
its total assets in direct obligations of the U.S. Treasury, including bills,
notes and bonds and other securities issued or guaranteed as to principal and
interest by the U.S. Government or its agencies and instrumentalities, as well
as repurchase agreements secured by those obligations. Securities issued or
guaranteed as to principal and interest by the U.S. Government or its agencies
and instrumentalities may be supported by (a) the full faith and credit of the
U.S. Treasury; (b) the right of the issuer to borrow from the U.S. Treasury; (c)
discretionary authority of the U.S. Government to purchase certain obligations
of the agency or instrumentality; or (d) the credit of the agency or
instrumentality. The fund will maintain a weighted average maturity of 90 days
or less. The fund invests in compliance with Rule 2a-7 under the Investment
Company Act of 1940.
The portfolio managers focus on securities they believe have favorable prospects
for current income consistent with the preservation of capital and the
maintenance of liquidity. The portfolio managers usually hold portfolio
securities to maturity, but may sell a particular security when they deem it
advisable, such as when any of the factors above materially changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash or shares of affiliated money market
funds. As a result, the fund may not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the fund.
Additionally, the fund's yield will vary as the short-term securities in its
portfolio mature and the proceeds are reinvested in securities with different
interest rates.
The following factors could reduce the fund's income and/or share price:
o sharply rising interest rates;
o downgrades of credit ratings or defaults of any of the fund's holdings; and
o the risks generally associated with concentrating investments in the
banking industry, such as interest rate risk, credit risk and regulatory
developments relating to the banking and financial services industries.
If the seller of a repurchase agreement in which the fund invests defaults on
its obligation or declares bankruptcy, the fund may experience delays in selling
the securities underlying the repurchase agreement. As a result, the fund may
incur losses arising from decline in the value of those securities, reduced
levels of income and expenses of enforcing its rights.
The value of your shares could be adversely affected if the computer systems
used by the fund's investment advisor and the fund's other service providers are
unable to distinguish the year 2000 from the year 1900.
The fund's investment advisor and independent technology consultants are working
to avoid year 2000-related problems in its systems and to obtain assurances that
other service providers are taking similar steps. Year 2000 problems may also
affect issuers in whose securities the fund invests.
3
<PAGE> 57
FEE TABLE AND EXPENSE EXAMPLE
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
Resource Class
--------------
<S> <C>
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price
or redemption proceeds, whichever is less) None
Annual Fund Operating Expenses (expenses that are deducted from fund assets)
Management Fees 0.10%
Distribution and/or Service (12b-1) Fees 0.20
Other Expenses 0.10
Total Annual Fund Operating Expenses 0.40
Fee Waiver and Expense Reimbursement(1) 0.15
Net Expenses(2) 0.25
</TABLE>
- -----------------------------
(1) The distributor has contractually agreed to waive 0.04% of the Rule 12b-1
distribution plan fee. The investment advisor has contractually agreed to limit
Total Annual Fund Operating Expenses, excluding the Rule 12b-1 distribution plan
fee, interest expense, taxes and extraordinary expenses, to 0.09%.
(2) The investment advisor has voluntarily agreed to limit Net Expenses,
excluding the Rule 12b-1 distribution plan fee, interest expense, taxes and
extraordinary expenses, to 0.06%. This limitation can be terminated at any time.
Net Expenses, net of this voluntary limitation, are 0.22%.
You should also consider the effect of any account fees charged by the financial
institution managing the account.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Resource Class of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's gross operating expenses remain the same. To the extent fees are waived
or expenses are reimbursed, the expenses will be lower. Although your actual
returns and costs may be higher or lower, based on these assumptions your costs
would be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Resource Class $ 41 $ 128 $ 224 $ 505
</TABLE>
4
<PAGE> 58
FUND MANAGEMENT
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provides investment advisory services to
the fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 125
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended August 31, 1999, the advisor received no
compensation and reimbursed fund expenses of 0.04% of average daily net assets.
5
<PAGE> 59
OTHER INFORMATION
SUITABILITY FOR INVESTORS
The Resource Class of the fund is intended for use primarily by customers of
banks, certain broker-dealers and other financial institutions (institutions).
It is expected that the shares of the Resource Class may be suitable for
investment for corporate cash managers, municipalities or other public entities.
Individuals, corporations, partnerships and other businesses that maintain
qualified accounts at an institution may invest in shares of the Resource Class.
Each institution will render administrative support services to its customers
who are the beneficial owners of the shares of the Resource Class. Such services
include, among other things, establishment and maintenance of shareholder
accounts and records; assistance in processing purchase and redemption
transactions in shares of the Resource Class; providing periodic statements
showing a client's account balance in shares of the Resource Class; distribution
of fund proxy statements, annual reports and other communications to
shareholders whose accounts are serviced by the institution; and such other
services as the fund may reasonably request. Institutions will be required to
certify to the fund that they comply with applicable state law regarding
registration as broker-dealers, or that they are exempt from such registration.
Fund Management Company (the distributor) will review each application for
purchase of the Resource Class and reserves the right to reject any order to
purchase based upon a review of the suitability of the investor.
The Resource Class is designed to be a convenient and economical way to invest
in an open-end diversified money market fund. It is anticipated that most
investors will perform their own subaccounting.
Investors in the Resource 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 Resource Class.
DIVIDENDS AND DISTRIBUTIONS
Dividends
The fund generally declares dividends on each business day and pays dividends
monthly. A business day is any day on which both the Federal Reserve Bank of New
York and The Bank of New York, the fund's custodian, are open for business.
Dividends are paid to settled shares of the fund as of 5:00 p.m. Eastern time.
Generally, shareholders whose purchase orders have been received by the fund
prior to 5:00 p.m. Eastern time and shareholders whose redemption proceeds have
not been wired to them on any business day are eligible to receive dividends on
that business day. The dividend declared on any day preceding a non-business day
of the fund will include the income accrued on such non-business day. Dividends
and distributions are paid in cash unless the shareholder has elected to have
such dividends and distributions reinvested in the form of additional full and
fractional shares at the net asset value.
Capital Gains Distributions
The fund generally distributes net realized capital gains (including net
short-term capital gains), if any, annually. The fund does not expect to realize
any long-term capital gains and losses.
6
<PAGE> 60
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the financial
performance of the Resource Class. Certain information reflects financial
results for a single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
This information has been audited by KPMG LLP, whose report, along with the
fund's financial statements, is included in the fund's annual report, which is
available upon request.
<TABLE>
<CAPTION>
RESOURCE CLASS
=====================
Year Ended August 31,
1999
---------------------
<S> <C>
Net asset value, beginning of period $ 1.00
- --------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.05
- --------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.05)
================================================================================
Net asset value, end of period $ 1.00
================================================================================
Total return 4.90%
================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 11,684
================================================================================
Ratio of expenses to average net assets (a) 0.22%(b)
================================================================================
Ratio of net investment income to average net assets (c) 4.75%(b)
================================================================================
</TABLE>
(a) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
0.40%.
(b) Ratios based on average net assets of $11,674,044.
(c) 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 4.57%.
7
<PAGE> 61
SHAREHOLDER INFORMATION
The fund currently offers six classes of shares all of which share a common
investment objective and portfolio of investments. The six classes differ only
with respect to distribution arrangements for different categories of investors.
DISTRIBUTION AND SERVICE (12b-1) FEES
The fund has adopted a 12b-1 plan with respect to the Resource Class that allows
the fund to pay distribution fees to Fund Management Company (distributor) for
the sale and distribution of its shares and fees for services provided to
shareholders. Because the fund pays these fees out of its assets on an ongoing
basis, over time these fees will increase the cost of your investment and may
cost you more than paying other types of sales charges.
PURCHASING SHARES
The minimum initial investment in the Resource Class is $10,000. No minimum
amount is required for subsequent investments in the fund, nor are minimum
balances required.
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 fund. Purchase orders
received after such time will be processed at the next day's net asset value.
You may purchase shares by submitting an Account Application to the fund's
transfer agent, A I M Fund Services, Inc. (transfer agent) at P.O. Box 4497,
Houston, Texas 77210-4497 prior to your initial purchase of shares. You must
open a fund account through an institution in accordance with procedures
established by such institution. A purchase order is considered received at the
time The Bank of New York receives federal funds (member bank deposits with a
Federal Reserve Bank) for the order, provided the transfer agent has received
notice of the order [or at the time the order is placed, if the fund is assured
of payment]. You may obtain an Account Application from the distributor.
Subsequent purchases of shares of the funds may also be made via AIM LINK
- --Registered Trademark-- Remote, a personal computer application software
product.
If you propose to open a fund account with an institution, you should consult
with a representative of such institution to obtain a description of the rules
governing such an account. A statement with regard to your investment in the
Resource Class is supplied periodically, and confirmations of all transactions
for your account are provided by the institution promptly upon request. In
addition, proxies, periodic reports and other information from the institution
with regard to your shares of the Resource Class will be sent to you.
You may place an order for the purchase of shares of the Resource Class with the
institution. The institution is responsible for the prompt transmission of the
order to the transfer agent. The fund is normally required to make immediate
settlement in federal funds for portfolio securities purchased. Accordingly,
payment for shares of the Resource Class purchased by institutions on behalf of
their clients must be in federal funds. If an order to purchase shares is paid
for other than in federal funds, the order may be delayed up to two business
days while the institution completes the conversion into federal funds.
REDEEMING SHARES
You may redeem any or all of your shares at the net asset value next determined
after receipt of a redemption request in proper form by the fund. There is no
charge for redemption. Redemption requests with respect to shares of the
Resource Class are normally made through your institution.
You may request a redemption by calling the transfer agent at (800) 825-6858, or
by using AIM LINK--Registered Trademark-- Remote. Payment for redeemed shares
is normally made by Federal Reserve wire to the commercial bank account
designated
8
<PAGE> 62
in your Account Application. You may also request that payment be made by check.
We use reasonable procedures to confirm that instructions communicated by
telephone are genuine and are not liable for telephone instructions that are
reasonably believed to be genuine. Such reasonable procedures may include
recordings of telephone transactions maintained for a reasonable period of time.
Payment for redemption orders received prior to 5:00 p.m. Eastern time will
normally be made on the same day. Payment for shares 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 fund may make payment for telephone redemptions in excess of $1,000 by
check when it is considered to be in the fund's best interest to do so.
Dividends payable up to the date of redemption on redeemed shares will normally
be paid by wire transfer on the next dividend payment date. However, if all of
the shares in your account are redeemed, you will receive dividends payable up
to the date of redemption with the proceeds of the redemption.
THE FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
o REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
o MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
o WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
PRICING OF SHARES
Determination of Net Asset Value
The price of each of the fund's shares is the fund's net asset value per share.
The fund determines the net asset value of its shares as of 5:00 p.m. Eastern
time on day on which both the Federal Reserve Bank of New York and The Bank of
New York are open for business (business day). The fund values portfolio
securities on the basis of amortized cost, which approximates market value.
Timing of Orders
The fund prices purchase and redemption orders at the net asset value calculated
after the transfer agent receives an order in good form. If the transfer agent
receives a redemption request on a business day prior to 5:00 p.m. Eastern time,
the fund will normally wire redemption proceeds on that day. If the transfer
agent receives a redemption request after 5:00 p.m. Eastern time on a business
day of the fund, the redemption will be processed at the net asset value next
determined and the fund will normally wire proceeds on the next business day.
Shareholders will accrue dividends until the day the fund wires redemption
proceeds. The Fund may postpone the right of redemption only under unusual
circumstances, as allowed by the Securities and Exchange Commission, such as
when the New York Stock Exchange restricts or suspends trading. The fund
reserves the right to change the time for which purchase and redemption orders
must be submitted to and received by the transfer agent for execution on the
same day on any day when the primary government securities dealers are either
closed for business or close early, or trading in money market securities is
limited due to national holidays.
9
<PAGE> 63
TAXES
Dividends and distributions received are taxable as ordinary income [or
long-term capital gains] for federal income tax purposes, whether reinvested in
additional shares or taken in cash. Distributions are taxable at different rates
depending on the length of time the fund holds its assets. [Different tax rates
apply to ordinary income and long-term capital gain distributions, regardless of
how long shares are held.] Every year, information will be sent showing the
amount of dividends and distributions received from the fund during the prior
year.
[Any long-term or short-term capital gains realized from redemptions of the fund
shares will be subject to federal income tax.]
The foreign, state and local tax consequences of investing in the fund may
differ materially from the federal income tax consequences described above.
Shareholders should consult their tax advisor before investing.
10
<PAGE> 64
[BACK COVER PAGE]
OBTAINING ADDITIONAL INFORMATION
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies
of the fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P. O. Box 4497
Houston, TX 77210-4497
BY TELEPHONE: (800) 825-6858
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com (prospectuses and annual and
semiannual reports only)
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
Government & Agency Portfolio
SEC 1940 Act file number: 811-2729
Back Cover Page
<PAGE> 65
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 17, 1999
RELATING TO THE PROSPECTUS OF EACH OF THE FOLLOWING CLASSES OF THE GOVERNMENT &
AGENCY PORTFOLIO:
CASH MANAGEMENT CLASS PROSPECTUS DATED DECEMBER 17, 1999
INSTITUTIONAL CLASS PROSPECTUS DATED DECEMBER 17, 1999
PERSONAL INVESTMENT CLASS PROSPECTUS DATED DECEMBER 17, 1999
PRIVATE INVESTMENT CLASS PROSPECTUS DATED DECEMBER 17, 1999
RESERVE CLASS PROSPECTUS DATED DECEMBER 17, 1999
RESOURCE CLASS PROSPECTUS DATED DECEMBER 17, 1999
A-1
<PAGE> 66
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
Trustees and Officers.................................. A-5
Remuneration of Trustees............................... A-7
Investment Advisor..................................... A-9
Administrative Services................................ A-9
Expenses............................................... A-10
Transfer Agent and Custodian........................... A-10
Legal Matters.......................................... A-10
Reports................................................ A-11
Sub-accounting......................................... A-11
Principal Holders of Securities........................ A-11
Share Purchases and Redemptions............................. A-17
Purchases and Redemptions.............................. A-17
Redemptions by the Portfolio........................... A-18
Net Asset Value Determination.......................... A-18
Distribution Agreement................................. A-19
Distribution Plan...................................... A-19
Banking Regulations.................................... A-20
Performance Information................................ A-21
Investment Program and Restrictions......................... A-22
Investment Program..................................... A-22
Investment Policies.................................... A-22
Investment Restrictions................................ A-23
Portfolio Transactions and Brokerage........................ A-24
General Brokerage Policy............................... A-24
Allocation of Portfolio Transactions................... A-25
Section 28(e) Standards................................ A-26
Dividends, Distributions and Tax Matters.................... A-26
Dividends and Distributions............................ A-26
Tax Matters............................................ A-27
Qualification as a Regulated Investment Company........ A-27
Excise Tax on Regulated Investment Companies........... A-27
Portfolio Distributions................................ A-28
Sale or Redemption of Shares........................... A-28
Foreign Shareholders................................... A-28
Effect of Future Legislation; Local Tax
Considerations........................................ A-29
Financial Statements........................................ None
</TABLE>
A-2
<PAGE> 67
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 December
17, 1999, the Institutional Class Prospectus dated December 17, 1999, the
Personal Investment Class Prospectus dated December 17, 1999, the Private
Investment Class Prospectus dated December 17, 1999, the Reserve Class
Prospectus dated December 17, 1999 and the Resource Class Prospectus dated
December 17, 1999 (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 the Trust and 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 "Redeeming 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.
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.
All shares of the Trust have equal rights with respect to voting, except that
the holders of shares of a particular class will have the exclusive right to
vote on matters pertaining to distribution plans or shareholder service plans,
if any such plans are adopted, relating solely to 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, any 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 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.
A-3
<PAGE> 68
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.
Shares are fully assignable and subject to encumbrance by a shareholder. The
Board of Trustees may establish and designate and change in any manner any
portfolio or any classes or classes thereof, may fix or change the preferences,
voting rights, rights and privileges of any portfolio or classes thereof, and
may divide or combine the shares of any portfolio or classes thereof into a
greater or lesser number. The Board of Trustees also may classify or convert any
issued shares of any portfolio, or classes thereof, into a greater or lesser
number. Any such classification or reclassification will comply with the
provisions of the Investment Company Act of 1940, as amended (the "1940 Act").
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.
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 its respective classes 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 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.
A-4
<PAGE> 69
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 A I M Advisors, Inc. ("AIM"), subject always to the
objective and policies of the Trust and to the general supervision of the
Trust's Board of Trustees. 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.
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 (80) 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
Executive Vice Chairman and Director, AMVESCAP PLC.
- -----------------------------------------------------------------------------------------------------------------------
BRUCE L. CROCKETT (55) 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 (75) 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. (64) Trustee Chairman of the Board of Directors, Mercantile
2 Hopkins Plaza, 8th Floor Mortgage Corp. Formerly, Vice Chairman of the Board
Suite 805 of Directors and President, Mercantile-Safe Deposit
Baltimore, MD 21201 Trust Co.; and President, Mercantile Bankshares.
- -----------------------------------------------------------------------------------------------------------------------
JACK M. FIELDS (47) 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 (62) Trustee Partner, Kramer Levin Naftalis & Frankel, LLP (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.
A-5
<PAGE> 70
<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 (53) 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(49) 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 (57) Trustee Attorney in private practice in Houston, Texas.
6363 Woodway, Suite 825
Houston, TX 77057
- -----------------------------------------------------------------------------------------------------------------------
LOUIS S. SKLAR (60) 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
- -----------------------------------------------------------------------------------------------------------------------
GARY T. CRUM (52) Senior Vice Director and President, A I M Capital Management,
President Inc.; Director and Executive Vice President, A I M
Management Group Inc.; Director and Senior Vice
President, A I M Advisors, Inc.; and
Director, A I M Distributors, Inc. and AMVESCAP PLC.
- -----------------------------------------------------------------------------------------------------------------------
CAROL F. RELIHAN (45) Senior Vice Director, Senior Vice President, General Counsel and
President and Secretary, A I M Advisors, Inc.; Senior Vice
Secretary President, 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 (40) Vice President Vice President and Fund Controller, A I M Advisors,
and Treasurer Inc.; and Assistant Vice President and Assistant
Treasurer, Fund Management Company.
- -----------------------------------------------------------------------------------------------------------------------
MELVILLE B. COX (56) 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 (39) Vice President Senior Vice President, A I M Capital Management,
Inc.; and Vice President, A I M Advisors, Inc.
- -----------------------------------------------------------------------------------------------------------------------
J. ABBOTT SPRAGUE (44) 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>
- ---------------
* A trustee who is an "interested person" of the Trust and AIM as defined in
the 1940 Act.
A-6
<PAGE> 71
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
(Chairman), Fields, Frischling, Pennock and Sklar and Dr. Mathai-Davis. 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 and Sklar (Chairman) and Dr. Mathai-Davis. 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 and Sklar and Dr. Mathai-Davis. 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 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.
Set forth below is information regarding compensation paid or accrued for each
trustee of the Trust:
<TABLE>
<CAPTION>
RETIREMENT
BENEFITS
AGGREGATE ACCRUED TOTAL
COMPENSATION BY ALL COMPENSATION
FROM AIM FROM ALL
TRUSTEE TRUST(1) FUNDS(2) AIM FUNDS(3)
------- ------------ ---------- ------------
<S> <C> <C> <C>
Charles T. Bauer................................ $ 0 $ 0 $ 0
Bruce L. Crockett............................... 5,724 37,485 96,000
Owen Daly II.................................... 5,724 122,898 96,000
Edward K. Dunn, Jr.............................. 5,724 0 78,889
Jack Fields..................................... 5,695 15,826 95,500
Carl Frischling(4).............................. 5,694 97,791 95,500
Robert H. Graham................................ 0 0 0
John F. Kroeger(5).............................. 506 107,896 91,654
Prema Mathai-Davis.............................. 5,344 0 32,636
Lewis F. Pennock................................ 5,694 45,766 95,500
Ian W. Robinson(6).............................. 3,551 94,442 94,500
Louis S. Sklar.................................. 5,694 90,232 95,500
</TABLE>
- ---------------
(1) The total amount of compensation deferred by all trustees of the Trust
during the fiscal year ended August 31, 1999, including interest earned
thereon, was $36,280.
(2) During the fiscal year ended August 31, 1999, the total amount of expenses
allocated to the Trust in respect of such retirement benefits was $35,554.
Data reflects compensation for the calendar year ended December 31, 1998.
(3) Each trustee 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, 1998.
(4)The Trust paid the law firm of Kramer Levin Naftalis & Frankel $2,670 in
legal fees for services provided to the Portfolio during the fiscal year
ended August 31, 1999. Mr. Frischling, a trustee of the Trust, is a partner
in such firm.
A-7
<PAGE> 72
(5) Mr. Kroeger was a trustee until June 11, 1998, when he resigned. On that
date, he became a consultant to the Trust. Of the amount listed above, $0
was for compensation for services as a trustee and the remainder as a
consultant. Mr. Kroeger passed away on November 26, 1998. Mr. Kroeger's
widow will receive his pension as described below under "AIM Funds
Retirement Plan for Eligible Directors/Trustees."
(6) Mr. Robinson was a trustee until March 12, 1999, when he retired.
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, AIM Management 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 a maximum of 75% of the annual 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) and based on 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.
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 Dr. Mathai-Davis are 12, 12, 1, 2, 22, 20, 18, 11, 10 and 1
years, respectively.
ESTIMATED ANNUAL BENEFITS UPON RETIREMENT
<TABLE>
<CAPTION>
NUMBER OF
YEARS OF
SERVICE WITH ANNUAL RETIREMENT
APPLICABLE COMPENSATION PAID BY ALL
AIM FUNDS APPLICABLE AIM FUNDS
------------ ------------------------
<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, Dunn, Fields, Frischling, 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, 1999, $51,955 in trustees' fees and
expenses were allocated to the Portfolio.
A-8
<PAGE> 73
INVESTMENT ADVISOR
AIM is a wholly owned subsidiary of AIM Management, a holding company that has
been engaged in the financial services business since 1976. AIM, together with
its subsidiaries advises or manages over 125 investment portfolios encompassing
a broad range of investment objectives. 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 of the Portfolio.
AIM and the Trust have adopted a Code of Ethics which requires investment
personnel (a) to pre-clear all personal securities transactions subject to the
Code of Ethics, (b) to file reports regarding such transactions, (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 and (d) to abide by certain other
provisions under the Code of Ethics. The Code of Ethics also prohibits
investment personnel and all other AIM Employees from purchasing securities in
an initial public offering. Personal trading reports are reviewed periodically
by AIM, and the Board of Trustees reviews quarterly and annual reports
(including information on any substantial violations of the Code of Ethics).
Sanctions for violations of the Code of Ethics may include censure, monetary
penalties, suspension or termination of employment.
The Trust has entered into a Master Investment Advisory Agreement (the
"Advisory Agreement") with AIM. 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.
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.
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.
Pursuant to the Advisory Agreement between the Trust and AIM currently in
effect, AIM received fees (net of waivers, if any) from the Trust for the fiscal
year ended August 31, 1999, with respect to the Portfolio in the amount of
$232,220. For the fiscal year ended August 31, 1999, AIM waived fees with
respect to the Portfolio in the amount of $232,220.
AIM may from time to time waive or reduce its fee. Voluntary fee waivers or
reductions may be rescinded at any time without further notice to investors.
During periods of voluntary fee waivers or reductions, AIM will retain its
ability to be reimbursed for such fee prior to the end of each fiscal year.
Contractual fee waivers or reductions set forth in the Fee Table in a Prospectus
may not be terminated or amended to the Portfolio's detriment during the period
stated in the agreement between AIM and the Trust.
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."
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").
A-9
<PAGE> 74
Under the Administrative Services Agreement, AIM performs, or arranges for the
performance of, 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.
For the fiscal year ended August 31, 1999, under the Administrative Services
Agreement, AIM was reimbursed in the amount of $58,583 for fund accounting
services to the Portfolio.
EXPENSES
In addition to fees paid to AIM pursuant to the Advisory Agreement and the
expenses reimbursed to AIM under the Administrative Services Agreement, the
Trust also pays or causes to be paid all other expenses of the Trust, including,
without limitation: the charges and expenses of any registrar, any custodian or
depository appointed by the Trust for the safekeeping of its cash, portfolio
securities and other property, and any transfer, dividend or accounting agent or
agents appointed by the Trust; brokers' commissions chargeable to the Trust in
connection with portfolio securities transactions to which the Trust is a party;
all taxes, including securities issuance and transfer taxes, and fees payable by
the Trust to federal, state or other governmental agencies; the costs and
expenses of engraving or printing of certificates representing shares of the
Trust; all costs and expenses in connection with the registration and
maintenance of registration of the Trust and its shares with the SEC and various
states and other jurisdictions (including filing and legal fees and
disbursements of counsel); the costs and expenses of printing, including
typesetting, and distributing prospectuses and statements of additional
information of the Trust and supplements thereto to the Trust's shareholders;
all expenses of shareholders' and trustees' meetings and of preparing, printing
and mailing of prospectuses, proxy statements and reports to shareholders; fees
and travel expenses of trustees and trustee members of any advisory board or
committee; all expenses incident to the payment of any dividend, distribution,
withdrawal or redemption, whether in shares or in cash; charges and expenses of
any outside service used for pricing of the Trust's shares; charges and expenses
of legal counsel, including counsel to the trustees of the Trust who are not
"interested persons" (as defined in the 1940 Act) of the Trust or AIM, and of
independent accountants in connection with any matter relating to the Trust;
membership dues of industry associations; interest payable on Trust borrowings;
postage; insurance premiums on property or personnel (including officers and
trustees) of the Trust which inure to its benefit; and extraordinary expenses
(including, but not limited to, legal claims and liabilities and litigation
costs and any indemnification related thereto). 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.
TRANSFER AGENT AND CUSTODIAN
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 all
classes of the Portfolio pursuant to a Transfer Agency and Service Agreement.
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. Such compensation may be changed from time to time as
is agreed to by AFS and the Trust.
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.
LEGAL MATTERS
The law firm of Ballard Spahr Andrews & Ingersoll, LLP, Philadelphia,
Pennsylvania serves as counsel to the Trust.
A-10
<PAGE> 75
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 LLP, 700 Louisiana, Houston, Texas 77002, as
the independent auditors to audit the financial statements and review the tax
returns of the Portfolio.
SUB-ACCOUNTING
The Trust and FMC have arranged for AFS or the Portfolio to offer
sub-accounting services to shareholders of the Portfolio and to maintain
information with respect to the underlying beneficial ownership of the shares of
each class of the Portfolio. Investors who purchase shares of the Portfolio for
the account of others can make arrangements through the Trust or FMC for these
sub-accounting services. In addition, shareholders utilizing certain versions of
AIM Link--Registered Trademark-- Remote, a personal computer application
software product, may receive sub-accounting services via such software.
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 each class of the Government
& Agency Portfolio as of November 1, 1999, and the percentage of such shares
owned by such shareholders as of such date are as follows:
CASH MANAGEMENT CLASS
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- ------------- -------------
<S> <C> <C>
Fund Services Associates, Inc............................... 44.67% --
1875 Century Park East -- Suite 1345
Los Angeles, CA 90067
Orlando-Orange Co. 40700.................................. 31.01% --
225 Water Street, 3rd Floor
P.O. Box 44204
Jacksonville, FL 32202
Cruttendon Roth, Incorporated............................. 7.06% --
24 Corporate Plaza
Newport Beach, CA 92660
Gardnyr Michael Capital, Inc.............................. 6.68% --
2281 Lee Rd. Ste. 104
Winter Park, FL 32789
</TABLE>
INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- ------------- -------------
<S> <C> <C>
AIM Fund of Funds Account................................... 42.22%(b) --
Money Market Portfolio Admin.
11 Greenway Plaza, Ste 100
Houston, TX
Gardnyr Michael Capital, Inc.............................. 24.45% --
2281 Lee Rd Ste 104
Winter Park, FL 32789
</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-11
<PAGE> 76
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- ------------- -------------
<S> <C> <C>
Waukesha County............................................. 8.36% --
Finance Division, Dept. Of Admin
1320 Pewaukee Road, Room 310
Waukesha, WI 53188 3878
</TABLE>
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- ------------- -------------
<S> <C> <C>
Fund Services Associates, Inc............................... 78.47% --
1875 Century Park East -- Suite 1345
Los Angeles, CA 90067
Huntington Capital Corp................................... 17.21% --
41 S. High St., Ninth Floor
Columbus, OH 43287
</TABLE>
RESOURCE CLASS
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- -------------- -------------
<S> <C> <C>
Kansas City Power & Light................................... 76.73% --
P.O. Box 418679
Kansas City, MO 64106
Craigie Incorporated...................................... 12.08% --
P.O. Box 29715
Richmond, VA 23242
Hambrecht & Quist LLC..................................... 8.47% --
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.
A-12
<PAGE> 77
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 each class of the Treasury
Portfolio as of November 1, 1999 and the percentage of such shares owned by such
shareholders as of such date are as follows:
CASH MANAGEMENT CLASS
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- -------------- -------------
<S> <C> <C>
Bank Of New York............................................ 36.16% --
One Wall Street
5Th Floor
Stif/Master Note
New York, NY 10286
Bank of Oklahoma.......................................... 12.46% --
P.O. Box 2180
Tulsa, OK 74101
Chase Bank of Texas....................................... 12.10% --
600 Travis St, 8th Fl
8-CBT-39
Houston, TX 77252-8009
CIBC World Markets........................................ 11.11% --
200 Liberty Street
World Financial Center
New York, NY 10281
Fund Services Associates, Inc............................. 7.91% --
1875 Century Park East -- Suite 1345
Los Angeles, CA 90067
Huntington Capital Corp................................... 6.18% --
41 S. High St., Ninth Floor
Columbus, OH 43287
</TABLE>
- ---------------
(a) The Trust has no knowledge as to whether all or any portion of the shares
owned of record only are also owned beneficially.
A-13
<PAGE> 78
INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- ------------- -------------
<S> <C> <C>
City of New York Deferred Compensation Plan................. 8.23% --
40 Rector Street 3rd Floor
New York, NY 10006
Trust Company Bank........................................ 7.22% --
Center 3139
P.O. Box 105504
Atlanta, GA 30348
Weststar Bank Trust Dept.................................. 5.67% --
P.O. Box 1156
Bartlesville, OK 74005 1156
Trustmark National Bank, Trust Department................. 5.37% --
248 East Capitol
Jackson, MS 39205
Turtle & Co Sweep......................................... 5.14% --
P.O. Box 9427
Boston, MA 02209
Texas Commerce Bank National Association, as Custo........ 5.04% --
1585 Broadway
New York, NY 10036
Chase Bank of Texas, National Association,................ 5.04% --
600 Travis, 9th Floor
Houston, TX 77002
</TABLE>
PERSONAL INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- ------------- -------------
<S> <C> <C>
Cullen/Frost Discount Brokers............................... 83.98% --
P.O. Box 2358
San Antonio, TX 78299
Kinco & Co c/o Rnb Securities............................. 7.50% --
1 Hanson Pl., Lower Level
Brooklyn, NY 11243
</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> 79
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- ------------- -------------
<S> <C> <C>
Bank Of New York............................................ 40.73% --
One Wall Street
5Th Floor
Stif/Master Note
New York, NY 10286
Huntington Capital Corp................................... 17.70% --
41 S. High St., Ninth Floor
Columbus, OH 43287
Strafe & Co............................................... 6.24% --
1111 Polaris Parkway
Columbus, OH 43271-0211
New Haven Savings Bank Trust Department................... 5.58% --
P.O. Box 302
Trust Department
New Haven, CT 06502
Zions First National Bank (NV)............................ 5.39% --
P.O. Box 30880
Salt Lake City, UT 84130
</TABLE>
RESERVE CLASS
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- ------------- -------------
<S> <C> <C>
Bank of New York............................................ 99.83% --
440 Mamoroneck, 5th Fl.
Harrison, NY 10286
</TABLE>
RESOURCE CLASS
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- ------------- -------------
<S> <C> <C>
First Union Subaccounts..................................... 65.49% --
8739 Research Drive
Capital Markets
Charlotte, NC 28262-0675
Mellon Bank NA............................................ 13.12% --
P.O. Box 710
Pittsburgh, PA 15230-0710
CIBC World Markets........................................ 10.08% --
200 Liberty Street
World Financial Center
New York, NY 10281
</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> 80
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 each class of the Treasury
TaxAdvantage Portfolio as of November 1, 1999 and the percentage of such shares
owned by such shareholders as of such date are as follows:
INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- -------------- -------------
<S> <C> <C>
Frost National Bank TX...................................... 14.43% --
Muir & Co.
C/O Frost
P.O. Box 2479
San Antonio, TX 78298-2479
First Trust / Var & Co. .................................. 14.36% --
Funds Control Suite 0404
180 East Fifth Street
St. Paul, MN 55101
Bank of America N.A. ..................................... 13.38% --
1401 Elm Street 11th Floor
P.O. Box 831000
Dallas, TX 75202-2911
Key Trust Company......................................... 12.07% --
Mail Code OH-01-49-3040
P.O. Box 94871
Cleveland, OH 44101-5971
Kanaly Trust Company...................................... 10.79% --
4550 Post Oak Place Drive
Suite 139
Houston, TX 77027
Mason-Dixon Trust Company................................. 10.27% --
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> 81
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- -------------- -------------
<S> <C> <C>
Bank of New York............................................ 32.25% --
One Wall Street
5th Floor
Stif/Master Note
New York, NY 10286
Frost National Bank Tx.................................... 21.35% --
Muir & Co
C/O Frost
P.O. Box 2479
San Antonio, TX 78298-2479
Huntington Capital Corp .................................. 20.65% --
41 S. High St., Ninth Floor
Columbus, OH 43287
First Union Securities, Inc. ............................. 19.39% --
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.
To the best of the knowledge of the Trust, as of November 1, 1999, the
trustees and officers of the Trust as a group beneficially owned less than 1% of
each class of the Trust's outstanding shares.
SHARE PURCHASES AND REDEMPTIONS
PURCHASES AND REDEMPTIONS
A complete description of the manner by which shares of a particular class may
be purchased or redeemed appears in each Prospectus under the headings
"Purchasing Shares" and "Redeeming Shares."
Prior to the initial purchase of Portfolio shares, an investor must complete
and send an Account Application to AFS at P.O. Box 4497, Houston, Texas
77210-4497. An Account Application may be obtained from the distributor. An
investor may make changes to the information provided in the Account Application
by submitting such changes in writing to the transfer agent or by completing and
submitting to the transfer agent a new Account Application.
The Trust reserves the right to reject any purchase order and to withdraw all
or any part of the offering made by a Prospectus. 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 promptly returned to an
investor. Any request for correction to a transaction of Portfolio shares must
be submitted in writing to AFS. AFS 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.
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 Cash Management Class, Personal Investment Class, Private Investment Class,
Reserve Class or the Resource Class directly, except through reinvestment of
dividends and distributions.
Payment for redeemed shares of the Portfolio is normally made by Federal
Reserve wire to the commercial bank account designated in the shareholder's
Account Application on the day specified below, but may be remitted by check
upon request by a shareholder. 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
trust company (which may include the shareholder). Additional documentation may
be required when deemed appropriate by the Portfolio or AFS.
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The Trust may postpone the right of redemption only under unusual
circumstances, as allowed by the Securities and Exchange Commission, such as
when the New York Stock Exchange restricts or suspends trading.
A "Business Day" of the Trust is any day on which member banks of the Federal
Reserve Bank of New York and The Bank of New York are open for business. If AFS
receives a redemption request on a Business Day prior to 3:00 p.m. Eastern time,
the redemption will be effected at the net asset value of the Portfolio
determined as of 3:00 p.m. Eastern time and the Trust will normally wire
redemption proceeds on that day. A redemption request received by AFS after 3:00
p.m. Eastern time 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 and proceeds
will normally be wired on the next Business Day. If proceeds are not wired on
the same day, shareholders will accrue dividends until the day the proceeds are
wired. The Trust, however, reserves the right to change the time for which
purchase and redemption orders must be submitted to and received by the transfer
agent for execution on the same day on any day when the primary government
securities dealers are either closed for business or close early, or trading in
money market securities is limited due to national holidays.
Any request for correction to a redemption transaction of Portfolio shares
must be submitted in writing to AFS.
REDEMPTIONS BY THE PORTFOLIO
If the Trust determines that you have provided incorrect information in
opening an account or in the course of conducting subsequent transactions, the
Trust may, at its discretion, redeem the account and distribute the proceeds to
you.
The Board of Trustees may redeem shares if it determines in its sole
discretion that failure to so redeem may have materially adverse consequences to
the shareholders of the Portfolio.
NET ASSET VALUE DETERMINATION
The net asset value per share of the Portfolio is determined as of 3:00 p.m.
Eastern time on each Business Day of the Trust. For the purpose of determining
the price at which all shares of the Portfolio are issued and redeemed, the net
asset value per share is calculated by: (a) valuing all securities and
instruments of the Portfolio as set forth below; (b) adding other assets of the
Portfolio, if any; (c) deducting the liabilities of the Portfolio; (d) dividing
the resulting amount by the number of shares outstanding of the Portfolio; and
(e) rounding such per share net asset value to the nearest whole cent. Among
other items, the Portfolio's liabilities include accrued expenses and dividends
payable, and its total assets include portfolio securities valued at their
market value as well as income accrued but not yet received.
The debt instruments held in the Portfolio are valued on the basis of
amortized cost. This method involves valuing an instrument at its cost and
thereafter assuming a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument. 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 Trust would receive if it sold the entire
portfolio.
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 under 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.
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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.
FMC may, from time to time, at its expense, pay a bonus or other consideration
or incentive to dealers or institutions who sell a minimum dollar amount of the
shares of a particular 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 or 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 or the amount received as proceeds from such sales. Dealers
or institutions may not use sales of the shares 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, with respect to the Cash Management Class, Personal
Investment Class, Private Investment Class, Reserve Class and Resource Class.
The Plan provides that the Trust may compensate FMC in connection with the
distribution of shares of the Portfolio. Such compensation 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.
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 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.
The Plan does not obligate the Trust to reimburse FMC for the actual expenses
FMC may incur in fulfilling its obligations under the Plan. Thus, 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.
FMC may from time to time waive or reduce any portion of its 12b-1 fee for
Cash Management Class, Personal Investment Class, Private Investment Class,
Reserve Class and Resource Class shares. Voluntary fee waivers or reductions may
be rescinded at any time without further notice to investors. During periods of
voluntary fee waivers or reductions, FMC will retain its ability to be
reimbursed for such fee prior to the end of each fiscal year. Contractual fee
waivers or reductions set forth in the Fee Table
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in a Prospectus may not be terminated or amended to the Portfolio's detriment
during the period stated in the agreement between FMC and the Trust.
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.
With respect to the [Cash Management Class, Private Investment Class and
Resource Class,] the amount paid to dealers and financial institutions pursuant
to the Plan for the fiscal year ended August 31, 1999 was $53,328, $123,530 and
$18,678, respectively, (or an amount equal to [0.08%, 0.30% and 0.16%] of the
average daily net assets of [Cash Management Class, Private Investment
Class and Resource Class] respectively). With respect to the [Cash Management
Class, Private Investment Class and Resource Class,] FMC received no
compensation pursuant to the Plan for the fiscal year ended and Resource Class,
August 31, 1999. [During the fiscal year ended August 31, 1999, [AIM] waived
fees with respect to the Portfolio in the amount of $100,356.]
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 would
benefit the Trust and the holders of shares of the applicable classes of the
Portfolio. Anticipated benefits that may result from the Plan are: (i) FMC,
brokerage firms and financial institutions will provide a shareholder with rapid
access to his account for the purpose of effecting executions of purchase and
redemption orders; (ii) FMC and shareholder service agents will provide prompt,
efficient and reliable responses to shareholder inquiries concerning account
status; (iii) a well-developed, dependable network of shareholder service agents
may help to curb sharp fluctuations in rates of redemptions and sales, thereby
reducing the chance that an unanticipated increase in net redemptions could
adversely affect the performance of the Portfolio; and (iv) a successful
distribution effort will assist FMC in maintaining and increasing the
organizational strength needed to service the Portfolio.
The Plan complies with the Conduct Rules of the National Association of
Securities Dealers, Inc. and provides for payment of a service fee to dealers
and other financial institutions that provide continuing personal shareholder
services to their customers who purchase and own shares of each applicable class
of the Portfolio, in amounts of up to 0.25% of the average net assets of such
class of the Portfolio attributable to the customers of such dealers or
financial institutions. Payments to dealers and other financial institutions in
excess of such amount and payments to FMC would be characterized as an
asset-based sales charge pursuant to the amended 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 each applicable class.
The Plan, unless sooner terminated in accordance with its terms, shall
continue in effect as to each applicable class from year to year as long as such
continuance is specifically approved at least annually by the Board of Trustees,
including a majority of the Qualified Trustees.
FMC is a wholly owned subsidiary of AIM, an indirect wholly owned subsidiary
of AMVESCAP PLC. Charles T. Bauer, a Trustee and Chairman of the Trust and
Robert H. Graham, a Trustee and President of the Trust, own shares of AMVESCAP
PLC.
The Plan may be terminated as to a particular class of the Portfolio by vote
of a majority of the Qualified Trustees, or by vote of a majority of the holders
of the outstanding voting securities of such class. Any change in the Plan that
would increase materially the distribution expenses paid by an applicable 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.
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,
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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.
PERFORMANCE INFORMATION
As stated under the caption "Performance Information -- Performance Table" in
each Prospectus, yield information for the shares of each class of the Portfolio
may be obtained by calling the telephone number set forth in the Prospectus for
that class. Performance will vary from time to time and past results are not
necessarily indicative of future results. Investors should understand that
performance is a function of the type and quality of the Portfolio's investments
as well as its operating expenses and market conditions. Performance information
for the shares of the Portfolio may not provide a basis for comparison with
investments which pay fixed rates of interest for a stated period of time, with
other investments or with investment companies which use a different method of
calculating performance. A shareholder's investment in the Portfolio is not
insured or guaranteed. These factors should be carefully considered by the
investor before making an investment in the Portfolio.
Calculations of yield will take into account the total income received by the
Portfolio. To the extent that different classes of shares bear different
expenses, the yields of such classes will vary. To the extent that institutions
charge fees in connection with services provided in conjunction with the Trust,
the yield will be lower for those beneficial owners paying such fees.
The current yields quoted will be the net average annualized yield for an
identified period, such as seven consecutive calendar days or a month. Yields
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 any 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 yields that assumes the reinvestment of
dividends for a 365 day year and a return for the entire year equal to the
average annualized yields for the period, which will be computed by compounding
the unannualized current yields for the period by adding 1 to the unannualized
current yields, 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.
From time to time, AIM or its affiliates may waive all or a portion of their
fees and/or assume certain expenses of the Portfolio. Voluntary fee waivers or
reductions or commitments to assume expenses may be rescinded at any time
without further notice to investors. During periods of voluntary fee waivers or
reductions or commitments to assume expenses, AIM will retain its ability to be
reimbursed for such fee prior to the end of each fiscal year. Contractual fee
waivers or reductions or reimbursement of expenses set forth in the Fee Table in
a Prospectus may not be terminated or amended to the Portfolio's detriment
during the period stated in the agreement between AIM and the Trust. Fee waivers
or reductions or commitments to reduce expenses will have the effect of the
increasing the Portfolio's yield and total return.
For the seven-day period ended August 31, 1999, the current and effective
yields for the Private Investment Class were 4.92% and 5.04%, respectively. For
the seven-day period ended August 31, 1999, the current and effective yields for
the Institutional Class were 5.22% and 5.36%, respectively. For the seven-day
period ended August 31, 1999, the current and effective yields for the Cash
Management Class were 5.14% and 5.27%, respectively. For the seven-day period
ended August 31, 1999, the current and effective yields for the Personal
Investment Class were 4.72% and 4.82%, respectively. For the seven-day period
ended August 31, 1999, the current and effective yields for the Reserve Class
were 4.42% and 4.52%, respectively. For the seven-day period ended August 31,
1999, the current and effective yields for the Resource Class were 5.06% and
5.19%, respectively. These yields are quoted for illustration purposes only. The
yields for any other seven-day period may be substantially different from the
yields quoted above.
The Trust may compare the performance of a class or the performance of
securities in which it may invest to:
- IBC/Donoghue's Money Fund Averages, which are average yields of various
types of money market funds that include the effect of compounding
distributions;
- other mutual funds, especially those with similar investment objectives.
These comparisons may be based on data published by IBC/Donoghue's Money
Fund Report or by Lipper, Inc., a widely recognized independent service,
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").
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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.
INVESTMENT PROGRAM AND RESTRICTIONS
INVESTMENT PROGRAM
Information concerning the Portfolio's investment objective and operating
policies is set forth in each Prospectus. The principal features of the
Portfolio's investment program and the primary risks associated with that
investment program are also discussed in each Prospectus. There can be no
assurance that the Portfolio will achieve its objective. The values of the
securities in which the Portfolio invests fluctuate based upon interest rates,
the financial stability of the issuer and market factors. The following is a
more detailed description of the portfolio instruments eligible for purchase by
the Portfolio, which augments the summary of the Portfolio's investment program
which appears under the heading "Investment Objective and Strategies" in each
Prospectus.
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. 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 POLICIES
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.
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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.
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 or 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 Investment Company Act of 1940, as amended (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.
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.
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
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
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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;
(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 the 1940 Act, and rules and regulations thereunder, and if
applicable, exemptive orders granted by the SEC. The Portfolio has obtained an
exemptive order from the SEC allowing it to invest in money market funds that
have AIM or an affiliate of AIM as an investment advisor (the "Affiliated Money
Market Fund"), provided that investments in Affiliated Money Market Funds do not
exceed 25% of the total assets of the Portfolio. If other funds advised by AIM
invest in the Portfolio, however, the Portfolio will be subject to the
provisions of Section 12(d)(1) of the 1940 Act, which limits the ability of an
investment company to invest in another investment company. With respect to the
Portfolio's purchase of shares of the Affiliated Money Market Funds, the
Portfolio will indirectly pay the advisory fees and other operating expenses of
the Affiliated Money Market Funds.
PORTFOLIO TRANSACTIONS AND BROKERAGE
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
A-24
<PAGE> 89
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.
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 is 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.
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.
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<PAGE> 90
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, in
written form or on computer software. 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.
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Dividends with respect to each class of the Portfolio are declared to
shareholders of record as of 3:00 p.m. Eastern time on the date of declaration.
Accordingly, dividends accrue on the first day that a purchase order for shares
of a particular class is effective, provided that the purchase order has been
accepted prior to 3:00 p.m. Eastern time and payment in the form of federal
funds wired has been received by AFS. Dividends do not accrue on the day that a
redemption order is effective, unless the redemption is effective after 3:00
p.m. Eastern time on that day and redemption proceeds have not been wired to the
shareholder on the same day. Thus, if a purchase order is accepted prior to 3:00
p.m. Eastern time, the shareholder will receive its pro rata share of dividends
beginning with those declared on that day.
Dividends and distributions are paid in cash unless the shareholder has
elected to have such dividends and distributions reinvested in the form of
additional full and fractional shares at the net asset value hereof. Such
election, or any revocation thereof, must be made in writing and sent by the
shareholder to the AFS at P.O. Box 4497, Houston, Texas 77210-4497. Such
election or revocation will be effective with dividends paid after it is
received by the transfer agent.
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.
If a shareholder redeems all the shares in his 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. 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.
A-26
<PAGE> 91
The dividend accrued and paid for each class of shares of the Portfolio will
consist of: (a) interest accrued and original issue discount earned less
amortization of premiums, if any, for the portfolio to which such class relates,
allocated based upon such class's pro rata share of the total shares outstanding
which relate to such portfolio, less (b) Trust expenses accrued for the
applicable dividend period attributable to such portfolio, such as custodian
fees and accounting expenses, allocated based upon each such class' pro rata
share of the net assets of such portfolio, less (c) expenses directly
attributable to each class which are accrued for the applicable dividend period,
such as distribution expenses, if any.
Should the Trust incur or anticipate any unusual expense, loss or
depreciation, which would adversely affect the net asset value per share of the
Portfolio or the net income per share of a class of the Portfolio for a
particular period, the 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 then prevailing circumstances. For example, if the net asset value per share
of the Portfolio were reduced, or were anticipated to be reduced, below $1.00,
the Board of Trustees might suspend further dividend payments on shares of the
Portfolio until the net asset value returns to $1.00. Thus, such expense or loss
or depreciation might result in a shareholder receiving no dividends for the
period during which it held shares of the Portfolio and/or in its receiving upon
redemption a price per share lower than that which it paid.
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
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<PAGE> 92
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 may either retain or distribute to shareholders its net capital
gain, if any, for each taxable year. The Portfolio currently intends to
distribute any such amounts. If net capital gain is distributed and designed as
a capital gain dividend, it will be taxable to shareholders as long-term capital
gain, regardless of the length of time the shareholder has held his shares or
whether such gain was recognized by the Portfolio prior to the date on which the
shareholder acquired his shares.
Distributions by the Portfolio that do not constitute ordinary income
dividends or capital gain dividends will be treated as a return of capital to
the extent of (and in reduction of) the shareholder's tax basis in his shares;
any excess will be treated as gain from the sale of his shares.
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. 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
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<PAGE> 93
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.
Foreign persons who file a United States tax return 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 transfer agent.
EFFECT OF FUTURE LEGISLATION; LOCAL TAX CONSIDERATIONS
The foregoing general discussion of U.S. federal income tax consequences is
based on the Code and the regulations issued thereunder as in effect on November
1, 1999. 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.
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<PAGE> 94
FINANCIAL STATEMENTS
FS
<PAGE> 95
SCHEDULE OF INVESTMENTS
August 31, 1999
PAR
MATURITY (000) VALUE
U.S. GOVERNMENT AGENCY SECURITIES(a) - 32.22%
FEDERAL HOME LOAN MORTGAGE CORP. DISCOUNT NOTES - 15.93%
4.80% 09/03/99 $5,000 $ 4,998,667
- -------------------------------------------------------------------------------
4.74% 09/10/99 5,000 4,994,075
- -------------------------------------------------------------------------------
4.70% 10/05/99 5,000 4,977,805
- -------------------------------------------------------------------------------
4.71% 10/08/99 5,000 4,975,796
- -------------------------------------------------------------------------------
5.04% 12/10/99 5,000 4,930,000
- -------------------------------------------------------------------------------
5.04% 12/14/99 5,000 4,927,200
- -------------------------------------------------------------------------------
5.23% 01/21/00 10,000 9,793,705
- -------------------------------------------------------------------------------
5.46% 02/17/00 5,000 4,871,842
- -------------------------------------------------------------------------------
44,469,090
- -------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION DISCOUNT NOTES - 16.29%
4.74% 09/15/99 10,000 9,981,567
- -------------------------------------------------------------------------------
4.75% 09/22/99 5,000 4,986,146
- -------------------------------------------------------------------------------
4.71% 10/21/99 2,000 1,986,917
- -------------------------------------------------------------------------------
4.80% 11/05/99 5,000 4,956,667
- -------------------------------------------------------------------------------
4.76% 11/12/99 5,000 4,952,400
- -------------------------------------------------------------------------------
4.89% 11/26/99 4,000 3,953,273
- -------------------------------------------------------------------------------
5.25% 01/26/00 10,000 9,785,625
- -------------------------------------------------------------------------------
5.49% 02/25/00 5,000 4,865,037
- -------------------------------------------------------------------------------
45,467,632
- -------------------------------------------------------------------------------
Total U.S. Government Agency Securities (Cost $89,936,722) 89,936,722
- -------------------------------------------------------------------------------
Total Investments (excluding Repurchase Agreements) 89,936,722
- -------------------------------------------------------------------------------
REPURCHASE AGREEMENTS(b) - 68.17%
Banc One Capital Markets, Inc.(c)
5.60% 09/01/99 68,000 68,000,000
- -------------------------------------------------------------------------------
Barclays Capital Inc.(d)
5.51% 09/01/99 12,000 12,000,000
- -------------------------------------------------------------------------------
Credit Suisse First Boston Corp.(e)
5.50% 09/01/99 12,000 12,000,000
- -------------------------------------------------------------------------------
Dean Witter Reynolds, Inc.(f)
5.51% 09/01/99 12,000 12,000,000
- -------------------------------------------------------------------------------
Greenwich Capital Markets, Inc.(g)
5.60% 09/01/99 45,000 45,000,000
- -------------------------------------------------------------------------------
Salomon Smith Barney Inc.(h)
5.51% -- 12,000 12,000,000
- -------------------------------------------------------------------------------
Warburg Dillon Read LLC(i)
5.55% 09/01/99 25,000 25,000,000
- -------------------------------------------------------------------------------
Westdeutsche Landesbank Girozentrale(j)
5.50% 09/01/99 4,329 4,329,056
- -------------------------------------------------------------------------------
Total Repurchase Agreements (Cost $190,329,056) 190,329,056
- -------------------------------------------------------------------------------
FS-1
<PAGE> 96
VALUE
TOTAL INVESTMENTS -- 100.39% $280,265,778(k)
- -------------------------------------------------------------------------
OTHER LIABILITIES LESS ASSETS -- 0.39% (1,080,666)
- -------------------------------------------------------------------------
NET ASSETS -- 100.00% $279,185,112
=========================================================================
NOTES TO SCHEDULE OF INVESTMENTS:
(a) U.S. Agency Discount Notes 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) Joint repurchase agreement entered into 08/31/99 with a maturing value of
$100,015,556. Collateralized by $102,450,000 U.S. Government obligations,
0% due 09/01/99 to 07/13/00 with an aggregate market value at 08/31/99 of
$102,004,236.
(d) Joint repurchase agreement entered into 08/31/99 with a maturing value of
$300,045,917. Collateralized by $307,517,000 U.S. Government obligations,
0% to 5.10% due 09/08/99 to 12/14/01 with an aggregate market value at
08/31/99 of $306,000,188.
(e) Joint repurchase agreement entered into 08/31/99 with a maturing value of
$500,076,389. Collateralized by $540,361,000 U.S. Government obligations,
0% to 9.05% due 09/20/99 to 01/13/14 with an aggregate market value at
08/31/99 of $527,119,365.
(f) Joint repurchase agreement entered into 08/31/99 with a maturing value of
$300,045,917. Collateralized by $312,373,000 U.S. Government obligations,
0% to 8.25% due 09/14/99 to 05/15/29 with an aggregate market value at
08/31/99 of $306,004,298.
(g) Repurchase agreement entered into 08/31/99 with a maturing value of
$45,007,000. Collateralized by $42,529,000 U.S. Government obligations,
5.375% to 7.50% due 06/30/00 to 11/15/16 with an aggregate market value at
08/31/99 of $45,900,470.
(h) Open joint repurchase agreement. Either party may terminate the agreement
upon demand. Interest rates, par and collateral are redetermined daily.
Collateralized by $880,779,143 U.S. Government obligations, 0% to 6.85% due
10/21/99 to 01/15/29 with an aggregate market value at 08/31/99 of
$889,114,611.
(i) Joint repurchase agreement entered into 08/31/99 with a maturing value of
$100,015,417. Collateralized by $102,040,000 U.S. Government obligations,
0% to 6.73% due 11/02/99 to 06/22/09 with an aggregate market value at
08/31/99 of $102,002,704.
(j) Joint repurchase agreement entered into 08/31/99 with a maturing value of
$150,022,917. Collateralized by $154,785,000 U.S. Government obligations,
4.875% to 8.75% due 01/26/01 to 11/15/08 with an aggregate market value at
08/31/99 of $153,004,905.
(k) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
FS-2
<PAGE> 97
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1999
ASSETS:
<TABLE>
<CAPTION>
<S> <C>
Investments, excluding repurchase agreements, at value (amortized cost) $ 89,936,722
- -----------------------------------------------------------------------------------------
Repurchase agreements 190,329,056
- -----------------------------------------------------------------------------------------
Interest receivable 29,437
- -----------------------------------------------------------------------------------------
Investment for deferred compensation plan 5,102
- -----------------------------------------------------------------------------------------
Other assets 20,533
- -----------------------------------------------------------------------------------------
Total assets 280,320,850
- -----------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Dividends 1,072,081
- -----------------------------------------------------------------------------------------
Deferred compensation 5,102
- -----------------------------------------------------------------------------------------
Accrued administrative services fees 4,400
- -----------------------------------------------------------------------------------------
Accrued distribution fees 17,693
- -----------------------------------------------------------------------------------------
Accrued transfer agent fees 2,497
- -----------------------------------------------------------------------------------------
Accrued trustees' fees 1,433
- -----------------------------------------------------------------------------------------
Accrued operating expenses 32,532
- -----------------------------------------------------------------------------------------
Total liabilities 1,135,738
- -----------------------------------------------------------------------------------------
NET ASSETS $279,185,112
=========================================================================================
NET ASSETS:
Institutional Class $139,860,355
=========================================================================================
Private Investment Class $ 42,527,994
=========================================================================================
Cash Management Class $ 85,113,041
=========================================================================================
Resource Class $ 11,683,722
=========================================================================================
SHARES OF BENEFICIAL INTEREST, $.01 PAR VALUE PER SHARE:
Institutional Class 139,859,943
=========================================================================================
Private Investment Class 42,528,044
=========================================================================================
Cash Management Class 85,113,383
=========================================================================================
Resource Class 11,683,742
=========================================================================================
NET ASSET VALUE PER SHARE:
Net asset value, offering and redemption price per share $ 1.00
=========================================================================================
See Notes to Financial Statements.
</TABLE>
FS-3
<PAGE> 98
STATEMENT OF OPERATIONS
For the year ended August 31, 1999
INVESTMENT INCOME:
Interest income $11,543,223
- ------------------------------------------------------------------
EXPENSES:
Advisory fees 232,220
- ------------------------------------------------------------------
Custodian fees 13,101
- ------------------------------------------------------------------
Administrative services fees 58,583
- ------------------------------------------------------------------
Trustees' fees and expenses 10,479
- ------------------------------------------------------------------
Transfer agent fees 22,907
- ------------------------------------------------------------------
Distribution fees (Note 2) 295,892
- ------------------------------------------------------------------
Printing fees 59,593
- ------------------------------------------------------------------
Other 62,220
- ------------------------------------------------------------------
Total expenses 754,995
- ------------------------------------------------------------------
Less: Fee waivers and reimbursements (427,183)
- ------------------------------------------------------------------
Net expenses 327,812
- ------------------------------------------------------------------
Net investment income 11,215,411
- ------------------------------------------------------------------
Net increase in net assets resulting from operations $11,215,411
==================================================================
STATEMENT OF CHANGES IN NET ASSETS
For the year ended August 31, 1999
OPERATIONS:
Net investment income $ 11,215,411
- ------------------------------------------------------------------------
Net increase in net assets resulting from operations 11,215,411
- ------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Institutional Class (5,533,351)
- ------------------------------------------------------------------------
Private Investment Class (1,913,875)
- ------------------------------------------------------------------------
Cash Management Class (3,191,932)
- ------------------------------------------------------------------------
Resource Class (576,253)
- ------------------------------------------------------------------------
Share transactions-net (See Note 4) 279,185,112
- ------------------------------------------------------------------------
Net increase in net assets 279,185,112
- ------------------------------------------------------------------------
NET ASSETS:
Beginning of period --
- ------------------------------------------------------------------------
End of period $279,185,112
========================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $279,185,112
========================================================================
See Notes to Financial Statements.
FS-4
<PAGE> 99
NOTES TO FINANCIAL STATEMENTS
August 31, 1999
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 Government & Agency Portfolio (the
"Portfolio"), with the assets, liabilities and operations of each portfolio
being accounted for separately. The Portfolio currently offers different
classes of shares: the Institutional Class, the Private Investment Class, the
Personal Investment Class, the Cash Management Class, the Reserve Class and the
Resource Class. Sales of the Personal Investment Class and the Reserve Class
have not yet commenced. 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 maximum annual rate of 0.10% to the average daily net assets of
the Portfolio. During the year ended August 31, 1999, AIM waived fees and
reimbursed expenses of $326,827.
FS-5
<PAGE> 100
The Fund, pursuant to a master administrative services agreement with AIM,
has agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the year ended August 31, 1999, AIM was
paid $58,583 for such services.
The Fund, pursuant to a transfer agency and shareholder service agreement,
has agreed to pay A I M Fund Services, Inc. ("AFS") a fee for providing transfer
agent and shareholder services to the Fund. During the year ended August 31,
1999, AFS was paid $22,907 for such services.
Under the terms of a master distribution agreement between Fund Management
Company ("FMC") and the Fund, FMC acts as the exclusive distributor of the
Fund's shares. The Fund has adopted a master distribution plan (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act with respect to the Private
Investment Class, the Personal Investment Class, the Cash Management Class, the
Reserve Class, and the Resource Class of the Portfolio. The Plan provides that
the Private Investment Class, the Personal Investment Class, the Cash
Management Class, the Reserve Class, and the Resource Class pay up to a 0.50%,
0.75%, 0.10%, 1.00%, 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, Personal Investment Class, and the Reserve 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, the Reserve 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, 1999, the Private Investment Class, the
Cash Management Class, and the Resource Class paid $123,530, $53,328, and
$18,678, respectively, as compensation under the Plan. FMC waived fees of
$100,356 for the same period. Certain officers and trustees of the Trust are
officers of AIM, FMC and AFS.
During the year ended August 31, 1999, the Portfolio paid legal fees of
$2,670 for services rendered by Kramer, Levin, Naftalis & Frankel LLP 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 to trustees who are 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-6
<PAGE> 101
NOTE 4-SHARE INFORMATION
Changes in shares outstanding during the year ended August 31, 1999:
SHARES AMOUNT
------------ ------------
Sold:
Institutional Class 596,607,970 $596,607,970
- -----------------------------------------------------------------
Private Investment Class 101,447,592 101,447,592
- -----------------------------------------------------------------
Cash Management Class 281,678,849 281,678,849
- -----------------------------------------------------------------
Resource Class 167,590,664 167,590,664
- -----------------------------------------------------------------
Issued as reinvestment of dividends:
Institutional Class 3,376,023 3,376,023
- -----------------------------------------------------------------
Private Investment Class 1,572,109 1,572,109
- -----------------------------------------------------------------
Cash Management Class 2,457,651 2,457,651
- -----------------------------------------------------------------
Resource Class 383,792 383,792
- -----------------------------------------------------------------
Reacquired:
Institutional Class (460,124,050) (460,124,050)
- -----------------------------------------------------------------
Private Investment Class (60,491,657) (60,491,657)
- -----------------------------------------------------------------
Cash Management Class (199,023,117) (199,023,117)
- -----------------------------------------------------------------
Resource Class (156,290,714) (156,290,714)
- -----------------------------------------------------------------
Net increase 279,185,112 $279,185,112
=================================================================
FS-7
<PAGE> 102
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
Government & Agency Portfiolio (a series portfolio of Short-Term Investments
Trust), including the schedule of investments, as of August 31, 1999, and the
related statement of operations, changes in net assets, and financial
highlights for the year 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 audit.
We conducted our audit 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, 1999, 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 audit provides 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
Government & Agency Portfolio as of August 31, 1999, the results of its
operations, changes in its net assets, and financial highlights for the year
then ended, in conformity with generally accepted accounting principles.
KPMG LLP
/s/ KPMG LLP
October 1, 1999
Houston, Texas
FS-8
<PAGE> 103
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Cash Management
Class outstanding during the year ended August 31, 1999.
1999
-------
Net asset value, beginning of period $ 1.00
- ------------------------------------------------------- -------
Income from investment operations:
Net investment income 0.05
- ------------------------------------------------------- -------
Less distributions:
Dividends from net investment income (0.05)
- ------------------------------------------------------- -------
Net asset value, end of period $ 1.00
======================================================= =======
Total return 4.98%
======================================================= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $85,113
======================================================= =======
Ratio of expenses to average net assets(a) 0.14%(b)
======================================================= =======
Ratio of net investment income to average net assets(c) 4.83%(b)
======================================================= =======
(a) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
0.30%.
(b) Ratios based on average net assets of $66,659,653.
(c) After fee waivers and/or expense reimbursements. Ratio of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements was 4.67%.
FS-9
<PAGE> 104
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
Government & Agency Portfiolio (a series portfolio of Short-Term Investments
Trust), including the schedule of investments, as of August 31, 1999, and the
related statement of operations, changes in net assets, and financial
highlights for the year 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 audit.
We conducted our audit 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, 1999, 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 audit provides 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
Government & Agency Portfolio as of August 31, 1999, the results of its
operations, changes in its net assets, and financial highlights for the year
then ended, in conformity with generally accepted accounting principles.
KPMG LLP
/s/ KPMG LLP
October 1, 1999
Houston, Texas
FS-10
<PAGE> 105
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Institutional Class
outstanding during the year ended August 31, 1999.
1999
--------
Net asset value, beginning of period $ 1.00
- ------------------------------------------------------- --------
Income from investment operations:
Net investment income 0.05
- ------------------------------------------------------- --------
Less distributions:
Dividends from net investment income (0.05)
- ------------------------------------------------------- --------
Net asset value, end of period $ 1.00
======================================================= ========
Total return 5.07%
======================================================= ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $139,860
======================================================= ========
Ratio of expenses to average net assets(a) 0.06%(b)
======================================================= ========
Ratio of net investment income to average net assets(c) 4.91%(b)
======================================================= ========
(a) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
0.20%.
(b) Ratios based on average net assets of $112,709,406.
(c) After fee waivers and/or expense reimbursements. Ratio of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements was 4.77%.
- --------------------------------------------------------------------------------
FS-11
<PAGE> 106
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
Government & Agency Portfolio (a series portfolio of Short-Term Investments
Trust), including the schedule of investments, as of August 31, 1999, and the
related statement of operations, changes in net assets, and financial
highlights for the year 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 audit.
We conducted our audit 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, 1999, 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 audit provides 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
Government & Agency Portfolio as of August 31, 1999, the results of its
operations, changes in its net assets, and financial highlights for the year
then ended, in conformity with generally accepted accounting principles.
KPMG LLP
/s/ KPMG LLP
October 1, 1999
Houston, Texas
FS-12
<PAGE> 107
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Private Investment
Class outstanding during the year ended August 31, 1999.
1999
-------
Net asset value, beginning of period $ 1.00
- ------------------------------------------------------- -------
Income from investment operations:
Net investment income 0.05
- ------------------------------------------------------- -------
Less distributions:
Dividends from net investment income (0.05)
- ------------------------------------------------------- -------
Net asset value, end of period $ 1.00
======================================================= =======
Total return 4.75%
======================================================= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $42,528
======================================================= =======
Ratio of expenses to average net assets(a) 0.36%(b)
======================================================= =======
Ratio of net investment income to average net assets(c) 4.62%(b)
======================================================= =======
(a) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursement was
0.70%.
(b) Ratios based on average net assets of $41,176,813.
(c) 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 4.28%.
FS-13
<PAGE> 108
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
Government & Agency Portfolio (a series portfolio of Short-Term Investments
Trust), including the schedule of investments, as of August 31, 1999, and the
related statement of operations, changes in net assets, and financial
highlights for the year 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 audit.
We conducted our audit 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, 1999, 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 audit provides 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
Government & Agency Portfolio as of August 31, 1999, the results of its
operations, changes in its net assets, and financial highlights for the year
then ended, in conformity with generally accepted accounting principles.
KPMG LLP
/s/ KPMG LLP
October 1, 1999
Houston, Texas
FS-14
<PAGE> 109
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Resource Class
outstanding during the year ended August 31, 1999.
1999
-------
Net asset value, beginning of period $ 1.00
- ------------------------------------------------------- -------
Income from investment operations:
Net investment income 0.05
- ------------------------------------------------------- -------
Less distributions:
Dividends from net investment income (0.05)
- ------------------------------------------------------- -------
Net asset value, end of period $ 1.00
======================================================= =======
Total return 4.90%
======================================================= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $11,684
======================================================= =======
Ratio of expenses to average net assets(a) 0.22%(b)
======================================================= =======
Ratio of net investment income to average net assets(c) 4.75%(b)
======================================================= =======
(a) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursement was
0.40%.
(b) Ratios based on average net assets of $11,674,044.
(c) 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 4.57%.
FS-15
<PAGE> 110
[AIM LOGO]
CASH MANAGEMENT CLASS
TREASURY PORTFOLIO
PROSPECTUS
DECEMBER 17, 1999
Treasury Portfolio seeks to maximize current income consistent with the
preservation of capital and the maintenance of liquidity.
This prospectus contains important information about the Cash Management Class
of the fund. Please read it before investing and keep it for future reference.
As with all other mutual fund securities, the Securities and Exchange Commission
has not approved or disapproved these securities or determined whether the
information in this prospectus is adequate or accurate. Anyone who tells you
otherwise is committing a crime.
There can be no assurance that the fund will be able to maintain a stable net
asset value of $1.00 per share.
1
<PAGE> 111
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES......................................................................3
PRINCIPAL RISKS OF INVESTING IN THE FUND ................................................................3
PERFORMANCE INFORMATION..................................................................................4
ANNUAL TOTAL RETURNS............................................................................4
PERFORMANCE TABLE...............................................................................5
FEE TABLE AND EXPENSE EXAMPLE............................................................................6
FEE TABLE.......................................................................................6
EXPENSE EXAMPLE.................................................................................6
FUND MANAGEMENT..........................................................................................7
THE ADVISOR.....................................................................................7
ADVISOR COMPENSATION............................................................................7
OTHER INFORMATION........................................................................................8
SUITABILITY FOR INVESTORS.......................................................................8
DIVIDENDS AND DISTRIBUTIONS.....................................................................8
FINANCIAL HIGHLIGHTS.....................................................................................9
SHAREHOLDER INFORMATION.................................................................................10
DISTRIBUTION AND SERVICE (12b-1) FEES..........................................................10
PURCHASING SHARES..............................................................................10
REDEEMING SHARES...............................................................................10
PRICING OF SHARES..............................................................................11
TAXES..........................................................................................12
OBTAINING ADDITIONAL INFORMATION...........................................................BACK COVER PAGE
</TABLE>
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, AIM Funds, AIM
Funds and Design, AIM Internet Connect and AIM Investor are service marks of
A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
2
<PAGE> 112
INVESTMENT OBJECTIVE AND STRATEGIES
The fund's investment objective is to maximize current income consistent with
the preservation of capital and the maintenance of liquidity. The fund's
investment objective may be changed by the fund's Board of Trustees without
shareholder approval.
The fund attempts to meet this objective by investing in direct obligations of
the U.S. Treasury, including bills, notes and bonds, and repurchase agreements
secured by those obligations. The fund will maintain a weighted average maturity
of 90 days or less. The fund invests in compliance with Rule 2a-7 under the
Investment Company Act of 1940.
The portfolio managers focus on securities they believe have favorable prospects
for current income consistent with the preservation of capital and the
maintenance of liquidity. The portfolio managers usually hold portfolio
securities to maturity, but may sell a particular security when they deem it
advisable, such as when any of the factors above materially changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash or shares of affiliated money market
funds. As a result, the fund may not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the fund.
Additionally, the fund's yield will vary as the short-term securities in its
portfolio mature and the proceeds are reinvested in securities with different
interest rates.
The following factors could reduce the fund's income and/or share price:
o sharply rising interest rates;
o downgrades of credit ratings or defaults of any of the fund's holdings; and
o the risks generally associated with concentrating investments in the
banking industry, such as interest rate risk, credit risk and regulatory
developments relating to the banking and financial services industries.
If the seller of a repurchase agreement in which the fund invests defaults on
its obligation or declares bankruptcy, the fund may experience delays in selling
the securities underlying the repurchase agreement. As a result, the fund may
incur losses arising from decline in the value of those securities, reduced
levels of income and expenses of enforcing its rights.
The value of your shares could be adversely affected if the computer systems
used by the fund's investment advisor and the fund's other service providers are
unable to distinguish the year 2000 from the year 1900.
The fund's investment advisor and independent technology consultants are working
to avoid year 2000-related problems in its systems and to obtain assurances that
other service providers are taking similar steps. Year 2000 problems may also
affect issuers in whose securities the fund invests.
3
<PAGE> 113
PERFORMANCE INFORMATION
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
The following bar chart shows changes in the performance of the Cash Management
Class shares from year to year. Cash Management Class shares are not subject to
sales loads.
CASH MANAGEMENT CLASS
[CHART]
<TABLE>
<CAPTION>
YEAR RETURN(%)
- ---- ---------
<S> <C>
1994 4.07%
1995 5.86%
1996 5.32%
1997 5.48%
1998 5.39%
</TABLE>
The Cash Management Class shares' year-to-date total return as of September 30,
1999 was 3.58%.
During the periods shown in the bar chart, the highest quarterly return was
1.47% (quarter ended June 30, 1995) and the lowest quarterly return was 0.78%
(quarter ended March 31, 1994).
4
<PAGE> 114
PERFORMANCE TABLE
The following performance table reflects the performance of Cash Management
Class shares over the periods indicated.
<TABLE>
<CAPTION>
=============================================================================================================
Average Annual Total Returns
(for the periods ended December 31, 1998)
Since Inception
1 Year 5 Years 10 Years Inception Date
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash Management Class 5.39% 5.22% -- 5.08% 08/18/93
=============================================================================================================
</TABLE>
Cash Management Class shares' seven-day yield on December 31, 1998 was 4.73%.
For the current seven-day yield, call (800) 877-7745.
5
<PAGE> 115
FEE TABLE AND EXPENSE EXAMPLE
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
Cash Management Class
---------------------
<S> <C>
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price
or redemption proceeds, whichever is less) None
Annual Fund Operating Expenses (expenses that are deducted
from fund assets)
Management Fees 0.06%
Distribution and/or Service (12b-1) Fees 0.10
Other Expenses 0.03
Total Annual Fund Operating Expenses 0.19
Fee Waiver(1) 0.02
Net Expenses 0.17
</TABLE>
- ----------------
(1) The distributor has contractually agreed to waive 0.02% of the Rule 12b-1
distribution plan fee.
You should also consider the effect of any account fees charged by the financial
institution managing the account.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the Cash
Management Class of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's gross operating expenses remain the same. To the extent fees are waived
or expenses are reimbursed, the expenses will be lower. Although your actual
returns and costs may be higher or lower, based on these assumptions your costs
would be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Cash Management Class $19 $61 $107 $243
</TABLE>
6
<PAGE> 116
FUND MANAGEMENT
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provides investment advisory services to
the fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 125
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended August 31, 1999, the advisor received compensation
of 0.06% of average daily net assets.
7
<PAGE> 117
OTHER INFORMATION
SUITABILITY FOR INVESTORS
The Cash Management Class of the fund is intended for use primarily by customers
of banks, certain broker-dealers and other institutions (institutions). It is
expected that the shares of the Cash Management Class may be particularly
suitable investments for corporate cash managers, municipalities or other public
entities. Individuals, corporations, partnerships and other businesses that
maintain qualified accounts at an institution may invest in shares of the Cash
Management Class. Each institution will render administrative support services
to its customers who are the beneficial owners of the shares of the Cash
Management Class. Such services include, among other things, establishment and
maintenance of shareholder accounts and records; assistance in processing
purchase and redemption transactions in shares of the Cash Management Class;
providing periodic statements showing a client's account balance in shares of
the Cash Management Class; distribution of fund proxy statements, annual reports
and other communications to shareholders whose accounts are serviced by the
institution; and such other services as the fund may reasonably request.
Institutions will be required to certify to the fund that they comply with
applicable state law regarding registration as broker-dealers, or that they are
exempt from such registration. Fund Management Company (the distributor) will
review each application for the purchase of shares of the Cash Management Class
and reserves the right to reject any order to purchase based upon a review of
the suitability of the investor.
The Cash Management Class is designed to be a convenient and economical way to
invest in an open-end diversified money market fund. It is anticipated that most
investors will perform their own subaccounting.
Investors in the Cash Management 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 Cash Management Class.
DIVIDENDS AND DISTRIBUTIONS
Dividends
The fund generally declares dividends on each business day and pays dividends
monthly. A business day is any day on which both the Federal Reserve Bank of New
York and The Bank of New York, the fund's custodian, are open for business.
Dividends are paid on settled shares of the fund as of 5:00 p.m. Eastern time.
Generally, shareholders whose purchase orders have been received by the fund
prior to 5:00 p.m. Eastern time and shareholders whose redemption proceeds have
not been wired to them on any business day are eligible to receive dividends on
that business day. The dividend declared on any day preceding a non-business day
of the fund will include the income accrued on such non-business day. Dividends
and distributions are paid in cash unless the shareholder has elected to have
such dividends and distributions reinvested in the form of additional full and
fractional shares at net asset value.
Capital Gains Distributions
The fund generally distributes net realized capital gains (including net
short-term capital gains), if any, annually. The fund does not expect to realize
any long-term capital gains and losses.
8
<PAGE> 118
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the financial
performance of the Cash Management Class. Certain information reflects financial
results for a single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
This information has been audited by KPMG LLP, whose report, along with the
fund's financial statements, is included in the fund's annual report, which is
available upon request.
<TABLE>
<CAPTION>
CASH MANAGEMENT CLASS
--------------------------------------------------------------------
Year Ended August 31,
1999 1998 1997 1996 1995
--------- ----------- --------- --------- --------
<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 0.05
- ------------------------------------------- --------- ----------- --------- --------- --------
Less distributions:
Dividends from net investment income (0.05) (0.05) (0.05) (0.05) (0.05)
=========================================== ========= =========== ========= ========= ========
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=========================================== ========= =========== ========= ========= ========
Total return 4.89% 5.56% 5.39% 5.48% 5.57%
=========================================== ========= =========== ========= ========= ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 860,354 $ 933,791 $ 829,243 $ 789,627 $ 81,219
=========================================== ========= =========== ========= ========= ========
Ratio of expenses to average net assets (a) 0.17%(b) 0.17% 0.17% 0.17% 0.18%
=========================================== ========= =========== ========= ========= ========
Ratio of net investment income to average net assets (c) 4.77%(b) 5.42% 5.25% 5.25% 5.42%
======================================================== ========= =========== ========= ========= ========
</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%, 0.19% and 0.20% for the periods 1999-1995,
respectively.
(b) Ratios are based on average net assets of $979,097,144.
(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 4.75%, 5.40%, 5.24%, 5.23% and 5.40% for the periods
1999 - 1995, respectively.
9
<PAGE> 119
SHAREHOLDER INFORMATION
The fund currently offers six classes of shares all of which share a common
investment objective and portfolio of investments. The six classes differ only
with respect to distribution arrangements for different categories of investors.
DISTRIBUTION AND SERVICE (12b-1) FEES
The fund has adopted a 12b-1 plan with respect to the Cash Management Class that
allows the fund to pay distribution fees to Fund Management Company (the
distributor) for the sale and distribution of its shares and fees for services
provided to shareholders. Because the fund pays these fees out of its assets on
an ongoing basis, over time these fees will increase the cost of your investment
and may cost you more than paying other types of sales charges.
PURCHASING SHARES
The minimum initial investment in the Cash Management Class is $1 million. No
minimum amount is required for subsequent investments in the fund, nor are
minimum balances required.
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 fund. Purchase orders
received after such time will be processed at the next day's net asset value.
You may purchase shares by submitting an Account Application to the fund's
transfer agent, A I M Fund Services, Inc. (transfer agent) at P.O. Box 4497,
Houston, Texas 77210-4497 prior to your initial purchase of shares. You must
open a fund account through an institution in accordance with procedures
established by such institution. A purchase order is considered received at the
time The Bank of New York receives federal funds (member bank deposits with a
Federal Reserve Bank) for the order, provided the transfer agent has received
notice of the order or at the time the order is placed, if the fund is assured
of payment. You may obtain an Account Application from the distributor.
Subsequent purchases of shares of the funds may also be made via AIM
LINK--Registered Trademark-- Remote, a personal computer application software
product.
If you propose to open a fund account with an institution, you should consult
with a representative of such institution to obtain a description of the rules
governing such an account. A statement with regard to your investment in the
Cash Management Class is supplied periodically, and confirmations of all
transactions for your account are provided by the institution promptly upon
request. In addition, proxies, periodic reports and other information from the
institution with regard to your shares of the Cash Management Class will be sent
to you.
You may place an order for the purchase of shares of the Cash Management Class
with the institution. The institution is responsible for the prompt transmission
of the order to the transfer agent. The fund is normally required to make
immediate settlement in federal funds for portfolio securities purchased.
Accordingly, payment for shares of the Cash Management Class purchased by
institutions on behalf of their clients must be in federal funds. If an order to
purchase shares is paid for other than in federal funds, the order may be
delayed up to two business days while the institution completes the conversion
into federal funds.
REDEEMING SHARES
You may redeem any or all of your shares at the net asset value next determined
after receipt of a redemption request in proper form by the fund. There is no
charge for redemption. Redemption requests with respect to shares of the Cash
Management Class are normally made through a customer's institution.
10
<PAGE> 120
You may request a redemption by calling the transfer agent at (800) 877-7745, or
by using AIM LINK--Registered Trademark-- Remote. Payment for redeemed shares is
normally made by Federal Reserve wire to the commercial bank account designated
in your Account Application. You may also request that payment be made by check.
We use reasonable procedures to confirm that instructions communicated by
telephone are genuine and are not liable for telephone instructions that are
reasonably believed to be genuine. Such reasonable procedures may include
recordings of telephone transactions maintained for a reasonable period of time.
Payment for redemption orders received prior to 5:00 p.m. Eastern time will
normally be made on the same day. Payment for shares 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 fund may make payment for telephone redemptions in excess of $1,000 by
check when it is considered to be in the fund's best interest to do so.
Dividends payable up to the date of redemption on redeemed shares will normally
be paid by wire transfer on the next dividend payment date. However, if all of
the shares in your account are redeemed, you will receive dividends payable up
to the date of redemption with the proceeds of the redemption.
THE FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
o REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
o MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
o WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
PRICING OF SHARES
Determination of Net Asset Value
The price of each of the fund's shares is the fund's net asset value per share.
The fund determines the net asset value of its shares as of 5:00 p.m. Eastern
time on each day on both of the Federal Reserve Bank of New York and The Bank of
New York are open for business (business day). The fund values portfolio
securities on the basis of amortized cost, which approximates market value.
Timing of Orders
The fund prices purchase and redemption orders at the net asset value calculated
after the transfer agent receives an order in good form. If the transfer agent
receives a redemption request on a business day prior to 5:00 p.m. Eastern time,
the fund will normally wire redemption proceeds on that day. If the transfer
agent receives a redemption request after 5:00 p.m. Eastern time on a business
day of the fund, the redemption will be processed at the net asset value next
determined and the fund will normally wire proceeds on the next business day.
Shareholders will accrue dividends until the day the fund wires redemption
proceeds. The fund may postpone the right of redemption only under unusual
circumstances, as allowed by the Securities and Exchange Commission, such as
when the New York Stock Exchange restricts or suspends trading. The fund
reserves the right to change the time for which purchase and redemption orders
must be submitted to and received by the transfer agent for execution on the
same day on any day when the primary government securities dealers are either
closed for business or close early, or trading in money market securities is
limited due to national holidays.
11
<PAGE> 121
TAXES
Dividends and distributions received are taxable as ordinary income [or
long-term capital gains] for federal income tax purposes, whether reinvested in
additional shares or taken in cash. Distributions are taxable at different rates
depending on the length of time the fund holds its assets. [Different tax rates
apply to ordinary income and long-term capital gain distributions, regardless of
how long shares are held.] Every year, information will be sent showing the
amount of dividends and distributions received from the fund during the prior
year.
[Any long-term or short-term capital gains realized from redemptions of the fund
shares will be subject to federal income tax.]
The foreign, state and local tax consequences of investing in the fund may
differ materially from the federal income tax consequences described above.
Shareholders should consult their tax advisor before investing.
12
<PAGE> 122
[BACK COVER PAGE]
OBTAINING ADDITIONAL INFORMATION
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds(R) or your account, or wish to obtain free copies of the fund's current
SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P. O. Box 4497
Houston, TX 77210-4497
BY TELEPHONE: (800) 877-7745
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com (prospectuses and annual and
semiannual reports only)
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
Treasury Portfolio
SEC 1940 Act file number: 811-2729
BACK COVER PAGE
<PAGE> 123
[AIM LOGO]
INSTITUTIONAL CLASS
TREASURY PORTFOLIO
PROSPECTUS
DECEMBER 17, 1999
Treasury Portfolio seeks to maximize current income consistent with the
preservation of capital and the maintenance of liquidity.
This prospectus contains important information about the Institutional Class of
the fund. Please read it before investing and keep it for future reference.
As with all other mutual fund securities, the Securities and Exchange Commission
has not approved or disapproved these securities or determined whether the
information in this prospectus is adequate or accurate. Anyone who tells you
otherwise is committing a crime.
There can be no assurance that the fund will be able to maintain a stable net
asset value of $1.00 per share.
<PAGE> 124
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES......................................................................3
PRINCIPAL RISKS OF INVESTING IN THE FUND ................................................................3
PERFORMANCE INFORMATION..................................................................................4
ANNUAL TOTAL RETURNS............................................................................4
PERFORMANCE TABLE...............................................................................5
FEE TABLE AND EXPENSE EXAMPLE............................................................................6
FEE TABLE.......................................................................................6
EXPENSE EXAMPLE.................................................................................6
FUND MANAGEMENT..........................................................................................7
THE ADVISOR.....................................................................................7
ADVISOR COMPENSATION............................................................................7
OTHER INFORMATION........................................................................................8
SUITABILITY FOR INVESTORS.......................................................................8
DIVIDENDS AND DISTRIBUTIONS.....................................................................8
FINANCIAL HIGHLIGHTS.....................................................................................9
SHAREHOLDER INFORMATION.................................................................................10
PURCHASING SHARES..............................................................................10
REDEEMING SHARES...............................................................................10
PRICING OF SHARES..............................................................................11
TAXES..........................................................................................11
OBTAINING ADDITIONAL INFORMATION...........................................................BACK COVER PAGE
</TABLE>
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, AIM Funds, AIM
Funds and Design, AIM Internet Connect and AIM Investor are service marks of
A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
2
<PAGE> 125
INVESTMENT OBJECTIVE AND STRATEGIES
The fund's investment objective is to maximize current income consistent with
the preservation of capital and the maintenance of liquidity.
The fund attempts to meet this objective by investing in direct obligations of
the U.S. Treasury, including bills, notes and bonds, and repurchase agreements
secured by those obligations. The fund will maintain a weighted average maturity
of 90 days or less. The fund invests in compliance with Rule 2a-7 under the
Investment Company Act of 1940.
The portfolio managers focus on securities they believe have favorable prospects
for current income consistent with the preservation of capital and the
maintenance of liquidity. The portfolio managers usually hold portfolio
securities to maturity, but may sell a particular security when they deem it
advisable, such as when any of the factors above materially changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash or shares of affiliated money market
funds. As a result, the fund may not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the fund.
Additionally, the fund's yield will vary as the short-term securities in its
portfolio mature and the proceeds are reinvested in securities with different
interest rates.
The following factors could reduce the fund's income and/or share price:
o sharply rising interest rates;
o downgrades of credit ratings or defaults of any of the fund's holdings; and
o the risks generally associated with concentrating investments in the
banking industry, such as interest rate risk, credit risk and regulatory
developments relating to the banking and financial services industries.
If the seller of a repurchase agreement in which the fund invests defaults on
its obligation or declares bankruptcy, the fund may experience delays in selling
the securities underlying the repurchase agreement. As a result, the fund may
incur losses arising from decline in the value of those securities, reduced
levels of income and expenses of enforcing its rights.
The value of your shares could be adversely affected if the computer systems
used by the fund's investment advisor and the fund's other service providers are
unable to distinguish the year 2000 from the year 1900.
The fund's investment advisor and independent technology consultants are working
to avoid year 2000-related problems in its systems and to obtain assurances that
other service providers are taking similar steps. Year 2000 problems may also
affect issuers in whose securities the fund invests.
3
<PAGE> 126
PERFORMANCE INFORMATION
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
The following bar chart shows changes in the performance of the Institutional
Class shares from year to year. Institutional Class shares are not subject to
sales loads.
INSTITUTIONAL CLASS
[CHART]
<TABLE>
<CAPTION>
YEAR RETURN(%)
- ---- ---------
<S> <C>
1989 9.21%
1990 8.27%
1991 6.16%
1992 3.86%
1993 3.15%
1994 4.15%
1995 5.95%
1996 5.41%
1997 5.56%
1998 5.48%
</TABLE>
The Institutional Class shares' year-to-date total return as of September 30,
1999 was 3.64%.
During the periods shown in the bar chart, the highest quarterly return was
2.32% (quarter ended June 30, 1989) and the lowest quarterly return was 0.77%
(quarter ended June 30, 1993).
4
<PAGE> 127
PERFORMANCE TABLE
The following performance table reflects the performance of the Institutional
Class shares over the periods indicated.
<TABLE>
<CAPTION>
============================================================================================================
Average Annual Total Returns
(for the periods ended December 31, 1998)
Since Inception
1 Year 5 Years 10 Years Inception Date
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Institutional Class 5.48% 5.31% 5.71% 6.34% 04/12/84
============================================================================================================
</TABLE>
Institutional Class shares' seven-day yield on December 31, 1998 was 4.81%. For
the current seven-day yield, call (800) 659-1005.
5
<PAGE> 128
FEE TABLE AND EXPENSE EXAMPLE
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
Institutional Class
-------------------
<S> <C>
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price
or redemption proceeds, whichever is less) None
Annual Fund Operating Expenses (expenses that are deducted from fund assets)
Management Fees 0.06%
Distribution and/or Service (12b-1) Fees None
Other Expenses 0.03
Total Annual Fund Operating Expenses 0.09
</TABLE>
- ---------------
You should also consider the effect of any account fees charged by the financial
institution managing the account.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Institutional Class of the fund with the cost of investing in other mutual
funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's gross operating expenses remain the same. To the extent fees are waived
or expenses are reimbursed, the expenses will be lower. Although your actual
returns and costs may be higher or lower, based on these assumptions your costs
would be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Institutional Class $9 $29 $51 $115
</TABLE>
6
<PAGE> 129
FUND MANAGEMENT
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provides investment advisory services to
the fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 125
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended August 31, 1999, the advisor received compensation
of 0.06% of average daily net assets.
7
<PAGE> 130
OTHER INFORMATION
SUITABILITY FOR INVESTORS
The Institutional Class of the fund is intended for use by banks and other
institutions, investing for themselves or in a fiduciary, advisory, agency,
custodial or other similar capacity. Shares of the Institutional Class may not
be purchased directly by individuals, although institutions may purchase the
Institutional Class for accounts maintained for individuals. Prospective
investors should determine if an investment in the Institutional Class is
consistent with the investment objectives of an account and with applicable
state and federal laws and regulations. Fund Management Company (the
distributor) will review each application for the purchase of shares of the
Institutional Class and reserves the right to reject any order to purchase based
upon a review of the suitability of the investor.
The Institutional Class is designed to be a convenient and economical way to
invest [short-term cash reserves] in an open-end diversified money market fund.
It is anticipated that most investors will perform their own subaccounting.
Investors in the Institutional 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 Institutional Class.
DIVIDENDS AND DISTRIBUTIONS
Dividends
The fund generally declares dividends on each business day and pays dividends
monthly. A business day is any day on which both the Federal Reserve Bank of New
York and The Bank of New York, the fund's custodian, are open for business.
Dividends are paid on settled shares of the fund as of 5:00 p.m. Eastern time.
Generally, shareholders whose purchase orders have been received by the fund
prior to 5:00 p.m. Eastern time and shareholders whose redemption proceeds have
not been wired to them on any business day are eligible to receive dividends on
that business day. The dividend declared on any day preceding a non-business day
of the fund will include the income accrued on such non-business day. Dividends
and distributions are paid in cash unless the shareholder has elected to have
such dividends and distributions reinvested in the form of additional full and
fractional shares at net asset value.
Capital Gains Distributions
The fund generally distributes net realized capital gains (including net
short-term capital gains), if any, annually. The fund does not expect to realize
any long-term capital gains and losses.
8
<PAGE> 131
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the financial
performance of the Institutional Class. Certain information reflects financial
results for a single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
This information has been audited by KPMG LLP, whose report, along with the
fund's financial statements, is included in the fund's annual report, which is
available upon request.
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS
---------------------------------------------------------------------------
Year Ended August 31,
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<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 0.06
Less distributions:
Dividends from net investment income (0.05) (0.05) (0.05) (0.05) (0.06)
- ------------------------------------------------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------------- ----------- ----------- ----------- ----------- -----------
Total return 4.97% 5.64% 5.47% 5.57% 5.66%
- ------------------------------------------------- ----------- ----------- ----------- ----------- -----------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 3,164,199 $ 2,988,375 $ 3,408,010 $ 2,335,441 $ 2,669,637
- ------------------------------------------------- ----------- ----------- ----------- ----------- -----------
Ratio of expenses to average net assets 0.09% (a) 0.08% 0.09% 0.09% 0.10%
================================================= =========== =========== =========== =========== ===========
Ratio of net investment income to average net
assets 4.85% (a) 5.50% 5.35% 5.43% 5.53%
================================================= =========== =========== =========== =========== ===========
</TABLE>
(a) Ratios are based on average net assets of $3,197,910,489.
9
<PAGE> 132
SHAREHOLDER INFORMATION
The fund currently offers six classes of shares all of which share a common
investment objective and portfolio of investments. The six classes differ only
with respect to distribution arrangements for different categories of investors.
PURCHASING SHARES
The minimum initial investment in the Institutional Class is $1 million. No
minimum amount is required for subsequent investments in the fund, nor are
minimum balances required.
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 fund. Purchase orders
received after such time will be processed at the next day's net asset value.
You may purchase shares by submitting an Account Application to the fund's
transfer agent, A I M Fund Services, Inc. (transfer agent) at P.O. Box 4497,
Houston, Texas 77210-4497 prior to your initial purchase of shares. A purchase
order is considered received at the time The Bank of New York receives federal
funds (member bank deposits with a Federal Reserve Bank) for the order, provided
the transfer agent has received notice of the order or at the time the order is
placed, if the fund is assured of payment. You may obtain an Account Application
from the distributor. Subsequent purchases of shares of the funds may also be
made via AIM LINK--Registered Trademark-- Remote, a personal computer
application software product.
We may request that an institution maintain separate master accounts in the fund
for shares held by the institution (a) for its own account, for the account of
other institutions and for accounts for which the institution acts as a
fiduciary; and (b) for accounts for which the institution acts in some other
capacity. An institution may aggregate its master accounts and subaccounts to
satisfy the minimum investment requirement.
REDEEMING SHARES
You may redeem any or all of your shares at the net asset value next determined
after receipt of a redemption request in proper form by the fund. There is no
charge for redemption.
You may request a redemption by calling the transfer agent at (800) 659-1005, or
by using AIM LINK--Registered Trademark-- Remote. Payment for redeemed shares is
normally made by Federal Reserve wire to the commercial bank account designated
in your Account Application. You may also request that payment be made by check.
We use reasonable procedures to confirm that instructions communicated by
telephone are genuine and are not liable for telephone instructions that are
reasonably believed to be genuine. Such reasonable procedures may include
recordings of telephone transactions maintained for a reasonable period of time.
Payment for redemption orders received prior to 5:00 p.m. Eastern time will
normally be made on the same day. Payment for shares 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 fund may make payment for telephone redemptions in excess of $1,000 by
check when it is considered to be in the fund's best interest to do so.
Dividends payable up to the date of redemption on redeemed shares will normally
be paid on the next dividend payment date. However, if all of the shares in your
account are redeemed, you will receive dividends payable up to the date of
redemption with the proceeds of the redemption.
10
<PAGE> 133
THE FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
o REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
o MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
o WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
PRICING OF SHARES
Determination of Net Asset Value
The price of each of the fund's shares is the fund's net asset value per share.
The fund determines the net asset value of its shares as of 5:00 p.m. Eastern
time on each day on which both the Federal Reserve Bank of New York and The Bank
of New York are open for business (business day). The fund values portfolio
securities on the basis of amortized cost, which approximates market value.
Timing of Orders
The fund prices purchase and redemption orders at the net asset value calculated
after the transfer agent receives an order in good form. If the transfer agent
receives a redemption request on a business day prior to 5:00 p.m. Eastern time,
the fund will normally wire redemption proceeds on that day. If the transfer
agent receives a redemption request after 5:00 p.m. Eastern time on a business
day of the fund, the redemption will be processed at the net asset value next
determined and the fund will normally wire proceeds on the next business day.
Shareholders will accrue dividends until the day the fund wires redemption
proceeds. The Fund may postpone the right of redemption only under unusual
circumstances, as allowed by the Securities and Exchange Commission, such as
when the New York Stock Exchange restricts or suspends trading. The fund
reserves the right to change the time for which purchase and redemption orders
must be submitted to and received by the transfer agent for execution on the
same day on any day when the primary government securities dealers are either
closed for business or close early, or trading in money market securities is
limited due to national holidays.
TAXES
Dividends and distributions received by shareholders are taxable as ordinary
income [or long-term capital gains] for federal income tax purposes, whether
reinvested in additional shares or taken in cash. Distributions are taxable at
different rates depending on the length of time the fund holds its assets.
[Different tax rates apply to ordinary income and long-term capital gain
distributions, regardless of how long shares are held.] Every year, information
will be sent showing the amount of dividends and distribution received from the
fund during the prior year.
[Any long-term or short-term capital gains realized from redemptions of the fund
shares will be subject to federal income tax.]
The foreign, state and local tax consequences of investing in the fund may
differ materially from the federal income tax consequences described above.
Shareholders should consult their tax advisor before investing.
11
<PAGE> 134
[BACK COVER PAGE]
OBTAINING ADDITIONAL INFORMATION
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies of
the fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P. O. Box 4497
Houston, TX 77210-4497
BY TELEPHONE: (800) 659-1005
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com (prospectuses and annual and
semiannual reports only)
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
Treasury Portfolio
SEC 1940 Act file number: 811-2729
BACK COVER PAGE
<PAGE> 135
[AIM LOGO]
PERSONAL INVESTMENT CLASS
TREASURY PORTFOLIO
PROSPECTUS
DECEMBER 17, 1999
Treasury Portfolio seeks to maximize current income consistent with the
preservation of capital and the maintenance of liquidity.
This prospectus contains important information about the Personal Investment
Class of the fund. Please read it before investing and keep it for future
reference.
As with all other mutual fund securities, the Securities and Exchange Commission
has not approved or disapproved these securities or determined whether the
information in this prospectus is adequate or accurate.
Anyone who tells you otherwise is committing a crime.
There can be no assurance that the fund will be able to maintain a stable net
asset value of $1.00 per share.
<PAGE> 136
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES......................................................................3
PRINCIPAL RISKS OF INVESTING IN THE FUND.................................................................3
PERFORMANCE INFORMATION..................................................................................4
ANNUAL TOTAL RETURNS............................................................................4
PERFORMANCE TABLE...............................................................................5
FEE TABLE AND EXPENSE EXAMPLE............................................................................6
FEE TABLE.......................................................................................6
EXPENSE EXAMPLE.................................................................................6
FUND MANAGEMENT..........................................................................................7
THE ADVISOR.....................................................................................7
ADVISOR COMPENSATION............................................................................7
OTHER INFORMATION........................................................................................8
SUITABILITY FOR INVESTORS.......................................................................8
DIVIDENDS AND DISTRIBUTIONS.....................................................................8
FINANCIAL HIGHLIGHTS.....................................................................................9
SHAREHOLDER INFORMATION.................................................................................10
DISTRIBUTION AND SERVICE (12b-1) FEES..........................................................10
PURCHASING SHARES..............................................................................10
REDEEMING SHARES...............................................................................10
PRICING OF SHARES..............................................................................11
TAXES..........................................................................................12
OBTAINING ADDITIONAL INFORMATION...........................................................BACK COVER PAGE
</TABLE>
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, AIM Funds, AIM
Funds and Design, AIM Internet Connect and AIM Investor are service marks of
A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
2
<PAGE> 137
INVESTMENT OBJECTIVE AND STRATEGIES
The fund's investment objective is to maximize current income consistent with
the preservation of capital and the maintenance of liquidity.
The fund attempts to meet this objective by investing in direct obligations of
the U.S. Treasury, including bills, notes and bonds, and repurchase agreements
secured by those obligations. The fund will maintain a weighted average maturity
of 90 days or less. The fund invests in compliance with Rule 2a-7 under the
Investment Company Act of 1940.
The portfolio managers focus on securities they believe have favorable prospects
for current income consistent with the preservation of capital and the
maintenance of liquidity. The portfolio managers usually hold portfolio
securities to maturity, but may sell a particular security when they deem it
advisable, such as when any of the factors above materially changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash or shares of affiliated money market
funds. As a result, the fund may not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the fund.
Additionally, the fund's yield will vary as the short-term securities in its
portfolio mature and the proceeds are reinvested in securities with different
interest rates.
The following factors could reduce the fund's income and/or share price:
o sharply rising interest rates;
o downgrades of credit ratings or defaults of any of the fund's holdings; and
o the risks generally associated with concentrating investments in the
banking industry, such as interest rate risk, credit risk and regulatory
developments relating to the banking and financial services industries.
If the seller of a repurchase agreement in which the fund invests defaults on
its obligation or declares bankruptcy, the fund may experience delays in selling
the securities underlying the repurchase agreement. As a result, the fund may
incur losses arising from decline in the value of those securities, reduced
levels of income and expenses of enforcing its rights.
The value of your shares could be adversely affected if the computer systems
used by the fund's investment advisor and the fund's other service providers are
unable to distinguish the year 2000 from the year 1900.
The fund's investment advisor and independent technology consultants are working
to avoid year 2000-related problems in its systems and to obtain assurances
that other service providers are taking similar steps. Year 2000 problems may
also affect issuers in whose securities the fund invests.
3
<PAGE> 138
PERFORMANCE INFORMATION
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
The following bar chart shows changes in the performance of the Personal
Investment Class shares from year to year. Personal Investment Class shares are
not subject to sales loads.
PERSONAL INVESTMENT CLASS
[CHART]
<TABLE>
<CAPTION>
YEAR RETURN(%)
---- ---------
<S> <C> <C>
1992 3.43%
1993 2.68%
1994 3.63%
1995 5.42%
1996 4.88%
1997 5.04%
1998 4.95%
</TABLE>
The Personal Investment Class shares year-to-date total return as of September
30, 1999 was 3.26%.
During the periods shown in the bar chart, the highest quarterly return was
1.37% (quarter ended June 30, 1995) and the lowest quarterly return was 0.66%
(quarter ended June 30, 1993).
4
<PAGE> 139
PERFORMANCE TABLE
The following performance table reflects the performance of Personal Investment
Class shares over the periods indicated.
<TABLE>
<CAPTION>
=============================================================================================================
Average Annual Total Returns
(for the periods ended December 31, 1998)
Since Inception
1 Year 5 Years 10 Years Inception Date
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Personal Investment Class 4.95% 4.78% -- 4.32% 08/08/91
=============================================================================================================
</TABLE>
Personal Investment Class shares' seven-day yield on December 31, 1998 was
4.31%. For the current seven-day yield, call (800) 877-4744.
5
<PAGE> 140
FEE TABLE AND EXPENSE EXAMPLE
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
Personal Investment Class
-------------------------
<S> <C>
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price
or redemption proceeds, whichever is less) None
Annual Fund Operating Expenses (expenses that are deducted from fund assets)
Management Fees 0.06%
Distribution and/or Service (12b-1) Fees 0.75
Other Expenses 0.03
Total Annual Fund Operating Expenses 0.84
Fee Waiver(1) 0.25
Net Expenses 0.59
</TABLE>
- ---------------------
(1) The distributor has contractually agreed to waive 0.25% of the Rule
12b-1 distribution plan fee.
You should also consider the effect of any account fees charged by the financial
institution managing the account.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Personal Investment Class of the fund with the cost of investing in other mutual
funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's gross operating expenses remain the same. To the extent fees are waived
or expenses are reimbursed, the expenses will be lower. Although your actual
returns and costs may be higher or lower, based on these assumptions your costs
would be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Personal Investment Class $86 $268 $466 $1,037
</TABLE>
6
<PAGE> 141
FUND MANAGEMENT
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provides investment advisory services to
the fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 125
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended August 31, 1999, the advisor received compensation
of 0.06% of average daily net assets.
7
<PAGE> 142
OTHER INFORMATION
SUITABILITY FOR INVESTORS
The Personal Investment Class of the fund is intended for use primarily by
customers of banks, certain broker-dealers and other institutions
(institutions). Individuals, corporations, partnerships and other businesses
that maintain qualified accounts at an institution may invest in shares of the
Personal Investment Class. Each institution will render administrative support
services to its customers who are the beneficial owners of the shares of the
Personal Investment Class. Such services include, among other things,
establishment and maintenance of shareholder accounts and records; assistance in
processing purchase and redemption transactions in shares of the Personal
Investment Class; providing periodic statements showing a client's account
balance in shares of the Personal Investment Class; distribution of fund proxy
statements, annual reports and other communications to shareholders whose
accounts are serviced by the institution; and such other services as the fund
may reasonably request. Institutions will be required to certify to the fund
that they comply with applicable state law regarding registration as
broker-dealers, or that they are exempt from such registration. Fund Management
Company (the distributor) will review each application for the purchase of
shares of the Personal Investment Class and reserves the right to reject any
order to purchase based upon a review of the suitability of the investor.
The Personal Investment Class is designed to be a convenient and economical way
to invest in an open-end diversified money market fund. It is anticipated that
most investors will perform their own subaccounting.
Investors in the Personal Investment 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 Personal Investment Class.
DIVIDENDS AND DISTRIBUTIONS
Dividends
The fund generally declares dividends on each business day and pays dividends
monthly. A business day is any day on which both the Federal Reserve Bank of New
York and The Bank of New York, the fund's custodian, are open for business.
Dividends are paid on settled shares of the fund as of 5:00 p.m. Eastern time.
Generally, shareholders whose purchase orders have been received by the fund
prior to 5:00 p.m. Eastern time and shareholders whose redemption proceeds have
not been wired to them on any business day are eligible to receive dividends on
that business day. The dividend declared on any day preceding a non-business day
of the fund will include the income accrued on such non-business day. Dividends
and distributions are paid in cash unless the shareholder has elected to have
such dividends and distributions reinvested in the form of additional full and
fractional shares at net asset value.
Capital Gains Distributions
The fund generally distributes net realized capital gains (including net
short-term capital gains), if any, annually. The fund does not expect to realize
any long-term capital gains and losses.
8
<PAGE> 143
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the financial
performance of the Personal Investment Class. Certain information reflects
financial results for a single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
This information has been audited by KPMG LLP, whose report, along with the
fund's financial statements, is included in the fund's annual report, which is
available upon request.
<TABLE>
<CAPTION>
PERSONAL INVESTMENT CLASS
-----------------------------------------------------------------
Year Ended August 31,
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<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 0.04 0.05 0.05 0.05 0.05
- -----------------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.04) (0.05) (0.05) (0.05) (0.05)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Total return 4.45% 5.12% 4.95% 5.04% 5.13%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 284,932 $ 405,801 $ 322,971 $ 192,947 $ 114,527
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (a) 0.59%(b) 0.58% 0.60% 0.59% 0.60%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average net assets (c) 4.35%(b) 5.01% 4.85% 4.91% 5.03%
- -----------------------------------------------------------------------------------------------------------------------------------
</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
0.84%, 0.83%, 0.86%, 0.92%, and 0.90% for the periods 1999-1995,
respectively.
(b) Ratios are based on average net assets of $375,615,292.
(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 4.10%, 4.76%, 4.59%, 4.58% and 4.73% for the periods
1999 - 1995, respectively.
9
<PAGE> 144
SHAREHOLDER INFORMATION
The fund currently offers six classes of shares all of which share a common
investment objective and portfolio of investments. The six classes differ only
with respect to distribution arrangements for different categories of investors.
DISTRIBUTION AND SERVICE (12b-1) FEES
The fund has adopted a 12b-1 plan with respect to the Personal Investment Class
that allows the fund to pay distribution fees to Fund Management Company
(distributor) for the sale and distribution of its shares and fees for services
provided to shareholders. Because the fund pays these fees out of its assets on
an ongoing basis, over time these fees will increase the cost of your investment
and may cost you more than paying other types of sales charges.
PURCHASING SHARES
The minimum initial investment in the Personal Investment Class is $1,000. No
minimum amount is required for subsequent investments in the fund, nor are
minimum balances required.
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 fund. Purchase orders
received after such time will be processed at the next day's net asset value.
You may purchase shares by submitting an Account Application to the fund's
transfer agent, A I M Fund Services, Inc. (transfer agent) at P.O. Box 4497,
Houston, Texas 77210-4497 prior to your initial purchase of shares. You must
open a fund account through an institution in accordance with procedures
established by such institution. A purchase order is considered received at the
time The Bank of New York receives federal funds (member bank deposits with a
Federal Reserve Bank) for the order, provided the transfer agent has received
notice of the order or at the time the order is placed, if the fund is assured
of payment. You may obtain an Account Application from the distributor.
Subsequent purchases of shares of the funds may also be made via AIM
LINK--Registered Trademark-- Remote, a personal computer application software
product.
If you propose to open a fund account with an institution, you should consult
with a representative of such institution to obtain a description of the rules
governing such an account. A statement with regard to your investment in the
Personal Investment Class is supplied periodically, and confirmations of all
transactions for your account are provided by the institution promptly upon
request. In addition, proxies, periodic reports and other information from the
institution with regard to your shares of the Personal Investment Class will be
sent to you.
You may place an order for the purchase of shares of the Personal Investment
Class with the institution. The institution is responsible for the prompt
transmission of the order to the transfer agent. The fund is normally required
to make immediate settlement in federal funds for portfolio securities
purchased. Accordingly, payment for shares of the Personal Investment Class
purchased by institutions on behalf of their clients must be in federal funds.
If an order is paid for other than in federal funds, the order may be delayed up
to two business days while the institution completes the conversion into federal
funds.
REDEEMING SHARES
You may redeem any or all of your shares at the net asset value next determined
after receipt of a redemption request in proper form by the fund. There is no
charge for redemption. Redemption requests with respect to shares of the
Personal Investment Class are normally made through your institution.
You may request a redemption by calling the transfer agent at (800) 877-4744, or
by using AIM LINK--Registered Trademark-- Remote. Payment for redeemed shares
is normally made by Federal Reserve wire to the commercial bank account
designated
10
<PAGE> 145
in your Account Application. You may also request that payment be made by check.
We use reasonable procedures to confirm that instructions communicated by
telephone are genuine and are not liable for telephone instructions that are
reasonably believed to be genuine. Such reasonable procedures may include
recordings of telephone transactions maintained for a reasonable period of time.
Payment for redemption orders received prior to 5:00 p.m. Eastern time will
normally be made on the same day. Payment for shares 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 fund may make payment for telephone redemptions in excess of $1,000 by
check when it is considered to be in the fund's best interest to do so.
Dividends payable up to the date of redemption on redeemed shares will normally
be paid by wire transfer on the next dividend payment date. However, if all of
the shares in your account are redeemed, you will receive dividends payable up
to the date of redemption with the proceeds of the redemption.
THE FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
o REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
o MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
o WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
PRICING OF SHARES
Determination of Net Asset Value
The price of each of the fund's shares is the fund's net asset value per share.
The fund determines the net asset value of its shares as of 5:00 p.m. Eastern
time on each day on which both the Federal Reserve Bank of New York and The Bank
of New York are open for business (business day). The fund values portfolio
securities on the basis of amortized cost, which approximates market value.
Timing of Orders
The fund prices purchase and redemption orders at the net asset value calculated
after the transfer agent receives an order in good form. If the transfer agent
receives a redemption request on a business day prior to 5:00 p.m. Eastern time,
the fund will normally wire redemption proceeds on that day. If the transfer
agent receives a redemption request after 5:00 p.m. Eastern time on a business
day of the fund, the redemption will be processed at the net asset value next
determined and the fund will normally wire proceeds on the next business day.
Shareholders will accrue dividends until the day the fund wires redemption
proceeds. The Fund may postpone the right of redemption only under unusual
circumstances, as allowed by the Securities and Exchange Commission, such as
when the New York Stock Exchange restricts or suspends trading. The fund
reserves the right to change the time for which purchase and redemption orders
must be submitted to and received by the transfer agent for execution on the
same day on any day when the primary government securities dealers are either
closed for business or close early, or trading in money market securities is
limited due to national holidays.
11
<PAGE> 146
TAXES
Dividends and distributions received by shareholders are taxable as ordinary
income [or long-term capital gains] for federal income tax purposes, whether
reinvested in additional shares or taken in cash. Distributions are taxable at
different rates depending on the length of time the fund holds its assets.
[Different tax rates apply to ordinary income and long-term capital gain
distributions, regardless of how long shares are held.] Every year, information
will be sent showing the amount of dividends and distributions received from the
fund during the prior year.
[Any long-term or short-term capital gains realized from redemptions of the fund
shares will be subject to federal income tax.]
The foreign, state and local tax consequences of investing in the fund may
differ materially from the federal income tax consequences described above.
Shareholders should consult their tax advisor before investing.
12
<PAGE> 147
[BACK COVER PAGE]
OBTAINING ADDITIONAL INFORMATION
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies
of the fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P. O. Box 4497
Houston, TX 77210-4497
BY TELEPHONE: (800) 877-4744
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com (prospectuses and annual and
semiannual reports only)
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
Treasury Portfolio
SEC 1940 Act file number: 811-2729
Back Cover Page
<PAGE> 148
[AIM LOGO]
PRIVATE INVESTMENT CLASS
TREASURY PORTFOLIO
PROSPECTUS
DECEMBER 17, 1999
Treasury Portfolio seeks to maximize current income consistent with the
preservation of capital and the maintenance of liquidity.
This prospectus contains important information about the Private Investment
Class of the fund. Please read it before investing and keep it for future
reference.
As with all other mutual fund securities, the Securities and Exchange Commission
has not approved or disapproved these securities or determined whether the
information in this prospectus is adequate or accurate.
Anyone who tells you otherwise is committing a crime.
There can be no assurance that the fund will be able to maintain a stable net
asset value of $1.00 per share.
1
<PAGE> 149
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES...........................................3
PRINCIPAL RISKS OF INVESTING IN THE FUND......................................3
PERFORMANCE INFORMATION.......................................................4
ANNUAL TOTAL RETURNS.................................................4
PERFORMANCE TABLE....................................................5
FEE TABLE AND EXPENSE EXAMPLE.................................................6
FEE TABLE............................................................6
EXPENSE EXAMPLE......................................................6
FUND MANAGEMENT...............................................................7
THE ADVISOR..........................................................7
ADVISOR COMPENSATION.................................................7
OTHER INFORMATION.............................................................8
SUITABILITY FOR INVESTORS............................................8
DIVIDENDS AND DISTRIBUTIONS..........................................8
FINANCIAL HIGHLIGHTS..........................................................9
SHAREHOLDER INFORMATION......................................................10
DISTRIBUTION AND SERVICE (12b-1) FEES...............................10
PURCHASING SHARES...................................................10
REDEEMING SHARES....................................................10
PRICING OF SHARES...................................................11
TAXES...............................................................12
OBTAINING ADDITIONAL INFORMATION................................BACK COVER PAGE
</TABLE>
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, AIM Funds, AIM
Funds and Design, AIM Internet Connect and AIM Investor are service marks of
A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
2
<PAGE> 150
INVESTMENT OBJECTIVE AND STRATEGIES
The fund's investment objective is to maximize current income consistent with
the preservation of capital and the maintenance of liquidity.
The fund attempts to meet this objective by investing in direct obligations of
the U.S. Treasury, including bills, notes and bonds, and repurchase agreements
secured by those obligations. The fund will maintain a weighted average maturity
of 90 days or less. The fund invests in compliance with Rule 2a-7 under the
Investment Company Act of 1940.
The portfolio managers focus on securities they believe have favorable prospects
for current income consistent with the preservation of capital and the
maintenance of liquidity. The portfolio managers usually hold portfolio
securities to maturity, but may sell a particular security when they deem it
advisable, such as when any of the factors above materially changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash or shares of affiliated money market
funds. As a result, the fund may not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the fund.
Additionally, the fund's yield will vary as the short-term securities in its
portfolio mature and the proceeds are reinvested in securities with different
interest rates.
The following factors could reduce the fund's income and/or share price:
o sharply rising interest rates;
o downgrades of credit ratings or defaults of any of the fund's holdings; and
o the risks generally associated with concentrating investments in the
banking industry, such as interest rate risk, credit risk and regulatory
developments relating to the banking and financial services industries.
If the seller of a repurchase agreement in which the fund invests defaults on
its obligation or declares bankruptcy, the fund may experience delays in selling
the securities underlying the repurchase agreement. As a result, the fund may
incur losses arising from decline in the value of those securities, reduced
levels of income and expenses of enforcing its rights.
The value of your shares could be adversely affected if the computer systems
used by the fund's investment advisor and the fund's other service providers are
unable to distinguish the year 2000 from the year 1900.
The fund's investment advisor and independent technology consultants are working
to avoid year 2000-related problems in its systems and to obtain assurances that
other service providers are taking similar steps. Year 2000 problems may also
affect issuers in whose securities the fund invests.
3
<PAGE> 151
PERFORMANCE INFORMATION
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
The following bar chart shows changes in the performance of the Private
Investment Class shares from year to year. Private Investment Class shares are
not subject to sales loads.
PRIVATE INVESTMENT CLASS
[CHART]
<TABLE>
<CAPTION>
YEAR RETURN%
- ---- -------
<S> <C>
1992 3.53%
1993 2.85%
1994 3.84%
1995 5.63%
1996 5.09%
1997 5.25%
1998 5.16%
</TABLE>
The Private Investment Class shares' year-to-date total return as of September
30, 1999 was 3.41%.
During the periods shown in the bar chart, the highest quarterly return was
1.42% (quarter ended June 30, 1995) and the lowest quarterly return was 0.70%
(quarter ended June 30, 1993).
4
<PAGE> 152
PERFORMANCE TABLE
The following performance table reflects the performance of Private Investment
Class shares over the periods indicated.
<TABLE>
<CAPTION>
==========================================================================================================
Average Annual Total Returns
(for the periods ended December 31, 1998)
Since Inception
1 Year 5 Years 10 Years Inception Date
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Private Investment Class 5.16% 4.99% -- 4.48% 11/22/91
==========================================================================================================
</TABLE>
Private Investment Class shares' seven-day yield on December 31, 1998 was 4.51%.
For the current seven-day yield, call (800) 877-7748.
5
<PAGE> 153
FEE TABLE AND EXPENSE EXAMPLE
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
Private Investment Class
------------------------
<S> <C>
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price
or redemption proceeds, whichever is less) None
Annual Fund Operating Expenses (expenses that are deducted from fund assets)
Management Fees 0.06%
Distribution and/or Service (12b-1) Fees 0.50
Other Expenses 0.03
Total Annual Fund Operating Expenses 0.59
Fee Waiver(1) 0.20
Net Expenses 0.39
</TABLE>
- --------------------
(1) The distributor has contractually agreed to waive 0.20% of the Rule 12b-1
distribution plan fee.
You should also consider the effect of any account fees charged by the financial
institution managing the account.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Private Investment Class of the fund with the cost of investing in other mutual
funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's gross operating expenses remain the same. To the extent fees are waived
or expenses are reimbursed, the expenses will be lower. Although your actual
returns and costs may be higher or lower, based on these assumptions your costs
would be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Private Investment Class $ 60 $189 $329 $738
</TABLE>
6
<PAGE> 154
FUND MANAGEMENT
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provides investment advisory services to
the fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 125
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended August 31, 1999, the advisor received compensation
of 0.06% of average daily net assets.
7
<PAGE> 155
OTHER INFORMATION
SUITABILITY FOR INVESTORS
The Private Investment Class of the fund is intended for use primarily by
customers of banks, certain broker-dealers and other institutions
(institutions). Individuals, corporations, partnerships and other businesses
that maintain qualified accounts at an institution may invest in shares of the
Private Investment Class. Each institution will render administrative support
services to its customers who are the beneficial owners of the shares of the
Private Investment Class. Such services include, among other things,
establishment and maintenance of shareholder accounts and records; assistance in
processing purchase and redemption transactions in shares of the Private
Investment Class; providing periodic statements showing a client's account
balance in shares of the Private Investment Class; distribution of fund proxy
statements, annual reports and other communications to shareholders whose
accounts are serviced by the institution; and such other services as the fund
may reasonably request. Institutions will be required to certify to the fund
that they comply with applicable state law regarding registration as
broker-dealers, or that they are exempt from such registration. Fund Management
Company (the distributor) will review each application for the purchase of
shares of the Private Investment Class and reserves the right to reject any
order to purchase based upon a review of the suitability of the investor.
The Private Investment Class is designed to be a convenient and economical way
to invest in an open-end diversified money market fund. It is anticipated that
most investors will perform their own subaccounting.
Investors in the Private Investment 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 Private Investment Class.
DIVIDENDS AND DISTRIBUTIONS
Dividends
The fund generally declares dividends on each business day and pays dividends
monthly. A business day is any day on which both the Federal Reserve Bank of New
York and The Bank of New York, the fund's custodian, are open for business.
Dividends are paid to settled shares of the fund as of 5:00 p.m. Eastern time.
Generally, shareholders whose purchase orders have been received by the fund
prior to 5:00 p.m. Eastern time and shareholders whose redemption proceeds have
not been wired to them on any business day are eligible to receive dividends on
that business day. The dividend declared on any day preceding a non-business day
of the fund will include the income accrued on such non-business day. Dividends
and distributions are paid in cash unless the shareholder has elected to have
such dividends and distributions reinvested in the form of additional full and
fractional shares at the net asset value.
Capital Gains Distributions
The fund generally distributes net realized capital gains (including net
short-term capital gains), if any, annually. The fund does not expect to realize
any long-term capital gains and losses.
8
<PAGE> 156
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the financial
performance of the Private Investment Class. Certain information reflects
financial results for a single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
This information has been audited by KPMG LLP, whose report, along with the
fund's financial statements, is included in the fund's annual report, which is
available upon request.
<TABLE>
<CAPTION>
PRIVATE INVESTMENT CLASS
-------------------------------------------------------------
Year Ended August 31,
1999 1998 1997 1996 1995
-----------------------------------------------------------------------------------------------------------------------
<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 0.05
-----------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.05) (0.05) (0.05) (0.05) (0.05)
-----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-----------------------------------------------------------------------------------------------------------------------
Total return 4.66% 5.33% 5.16% 5.25% 5.34%
-----------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $415,184 $360,307 $463,441 $352,537 $394,585
-----------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets(a) 0.39%(b) 0.38% 0.39% 0.39% 0.40%
-----------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets(c) 4.55%(b) 5.20% 5.05% 5.14% 5.23%
-----------------------------------------------------------------------------------------------------------------------
</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
0.59%, 0.58%, 0.59%, 0.59% and 0.60% for the periods 1999-1995,
respectively.
(b) Ratios based on average net assets of $354,442,723.
(c) After few waivers and/or expense reimbursements. Ratios of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements were 4.35%, 5.00%, 4.85%, 4.94% and 5.03% for the periods
1999-1995, respectively.
9
<PAGE> 157
SHAREHOLDER INFORMATION
The fund currently offers six classes of shares all of which share a common
investment objective and portfolio of investments. The six classes differ only
with respect to distribution arrangements for different categories of investors.
DISTRIBUTION AND SERVICE (12b-1) FEES
The fund has adopted a 12b-1 plan with respect to the Private Investment Class
that allows the fund to pay distribution fees to Fund Management Company
(distributor) for the sale and distribution of its shares and fees for services
provided to shareholders. Because the fund pays these fees out of its assets on
an ongoing basis, over time these fees will increase the cost of your investment
and may cost you more than paying other types of sales charges.
PURCHASING SHARES
The minimum initial investment in the Private Investment Class is $10,000. No
minimum amount is required for subsequent investments in the fund, nor are
minimum balances required.
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 fund. Purchase orders
received after such time will be processed at the next day's net asset value.
You may purchase shares by submitting an Account Application to the fund's
transfer agent, A I M Fund Services, Inc. (transfer agent) at P.O. Box 4497,
Houston, Texas 77210-4497 prior to your initial purchase of shares. You must
open a fund account through an institution in accordance with procedures
established by such institution. A purchase order is considered received at the
time The Bank of New York receives federal funds (member bank deposits with a
Federal Reserve Bank) for the order, provided the transfer agent has received
notice of the order or at the time the order is placed, if the fund is assured
of payment. You may obtain an Account Application from the distributor.
Subsequent purchases of shares of the funds may also be made via AIM
LINK--Registered Trademark-- Remote, a personal computer application software
product.
If you propose to open a fund account with an institution, you should consult
with a representative of such institution to obtain a description of the rules
governing such an account. A statement with regard to your investment in the
Private Investment Class is supplied periodically, and confirmations of all
transactions for your account are provided by the institution promptly upon
request. In addition, proxies, periodic reports and other information from the
institution with regard to your shares of the Private Investment Class will be
sent to you.
You may place an order for the purchase of shares of the Private Investment
Class with the institution. The institution is responsible for the prompt
transmission of the order to the transfer agent. The fund is normally required
to make immediate settlement in federal funds for portfolio securities
purchased. Accordingly, payment for shares of the Private Investment Class
purchased by institutions on behalf of their clients must be in federal funds.
If an order to purchase shares is paid for other than in federal funds, the
order may be delayed up to two business days while the institution completes the
conversion into federal funds.
REDEEMING SHARES
You may redeem any or all of your shares at the net asset value next determined
after receipt of a redemption request in proper form by the fund. There is no
charge for redemption. Redemption requests with respect to shares of the Private
Investment Class are normally made through your institution.
You may request a redemption by calling the transfer agent at (800) 877-7748, or
by using AIM LINK--Registered Trademark-- Remote. Payment for redeemed shares
is normally made by Federal Reserve wire to the commercial bank account
designated
10
<PAGE> 158
in your Account Application. You may also request that payment be made by check.
We use reasonable procedures to confirm that instructions communicated by
telephone are genuine and are not liable for telephone instructions that are
reasonably believed to be genuine. Such reasonable procedures may include
recordings of telephone transactions maintained for a reasonable period of time.
Payment for redemption orders received prior to 5:00 p.m. Eastern time will
normally be made on the same day. Payment for shares 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 fund may make payment for telephone redemptions in excess of $1,000 by
check when it is considered to be in the fund's best interest to do so.
Dividends payable up to the date of redemption on redeemed shares will normally
be paid by wire transfer on the next dividend payment date. However, if all of
the shares in your account are redeemed, you will receive dividends payable up
to the date of redemption with the proceeds of the redemption.
THE FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
o REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
o MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
o WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
PRICING OF SHARES
Determination of Net Asset Value
The price of each of the fund's shares is the fund's net asset value per share.
The fund determines the net asset value of its shares as of 5:00 p.m. Eastern
time on each day on which both the Federal Reserve Bank of New York and The Bank
of New York are open for business (business day). The fund values portfolio
securities on the basis of amortized cost, which approximates market value.
Timing of Orders
The fund prices purchase and redemption orders at the net asset value calculated
after the transfer agent receives an order in good form. If the transfer agent
receives a redemption request on a business day prior to 5:00 p.m. Eastern time,
the fund will normally wire redemption proceeds on that day. If the transfer
agent receives a redemption request after 5:00 p.m. Eastern time on a business
day of the fund, the redemption will be processed at the net asset value next
determined and the fund will normally wire proceeds on the next business day.
Shareholders will accrue dividends until the day the fund wires redemption
proceeds. The Fund may postpone the right of redemption only under unusual
circumstances, as allowed by the Securities and Exchange Commission, such as
when the New York Stock Exchange restricts or suspends trading. The fund
reserves the right to change the time for which purchase and redemption orders
must be submitted to and received by the transfer agent for execution on the
same day on any day when the primary government securities dealers are either
closed for business or close early, or trading in money market securities is
limited due to national holidays.
11
<PAGE> 159
TAXES
Dividends and distributions received by shareholders are taxable as ordinary
income [or long-term capital gains] for federal income tax purposes, whether
reinvested in additional shares or taken in cash. Distributions are taxable at
different rates depending on the length of time the fund holds its assets.
[Different tax rates apply to ordinary income and long-term capital gain
distributions, regardless of how long shares are held.] Every year, information
will be sent showing the amount of dividends and distributions received from the
fund during the prior year.
[Any long-term or short-term capital gains realized from redemptions of the fund
shares will be subject to federal income tax.]
The foreign, state and local tax consequences of investing in the fund may
differ materially from the federal income tax consequences described above.
Shareholders should consult their tax advisor before investing.
12
<PAGE> 160
[BACK COVER PAGE]
OBTAINING ADDITIONAL INFORMATION
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies
of the fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P. O. Box 4497
Houston, TX 77210-4497
BY TELEPHONE: (800) 877-7748
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com (prospectuses and annual and
semiannual reports only)
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
Treasury Portfolio
SEC 1940 Act file number: 811-2729
Back Cover Page
<PAGE> 161
[AIM LOGO]
RESERVE CLASS
TREASURY PORTFOLIO
PROSPECTUS
DECEMBER 17, 1999
Treasury Portfolio seeks to maximize current income consistent with the
preservation of capital and the maintenance of liquidity.
This prospectus contains important information about the Reserve Class of the
fund. Please read it before investing and keep it for future reference.
As with all other mutual fund securities, the Securities and Exchange Commission
has not approved or disapproved these securities or determined whether the
information in this prospectus is adequate or accurate. Anyone who tells you
otherwise is committing a crime.
There can be no assurance that the fund will be able to maintain a stable net
asset value of $1.00 per share.
<PAGE> 162
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES..........................................3
PRINCIPAL RISKS OF INVESTING IN THE FUND ....................................3
PERFORMANCE INFORMATION......................................................4
ANNUAL TOTAL RETURNS..................................................4
PERFORMANCE TABLE.....................................................5
FEE TABLE AND EXPENSE EXAMPLE................................................6
FEE TABLE.............................................................6
EXPENSE EXAMPLE.......................................................6
FUND MANAGEMENT..............................................................7
THE ADVISOR...........................................................7
ADVISOR COMPENSATION..................................................7
OTHER INFORMATION............................................................8
SUITABILITY FOR INVESTORS.............................................8
DIVIDENDS AND DISTRIBUTIONS...........................................8
FINANCIAL HIGHLIGHTS.........................................................9
SHAREHOLDER INFORMATION.....................................................10
DISTRIBUTION AND SERVICE (12b-1) FEES................................10
PURCHASING SHARES....................................................10
REDEEMING SHARES.....................................................10
PRICING OF SHARES....................................................11
TAXES................................................................12
OBTAINING ADDITIONAL INFORMATION...............................BACK COVER PAGE
</TABLE>
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, AIM Funds, AIM
Funds and Design, AIM Internet Connect and AIM Investor are service marks of
A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
2
<PAGE> 163
INVESTMENT OBJECTIVE AND STRATEGIES
The fund's investment objective is to maximize current income consistent with
the preservation of capital and the maintenance of liquidity.
The fund attempts to meet this objective by investing in direct obligations of
the U.S. Treasury, including bills, notes and bonds, and repurchase agreements
secured by those obligations. The fund will maintain a weighted average maturity
of 90 days or less. The fund invests in compliance with Rule 2a-7 under the
Investment Company Act of 1940.
The portfolio managers focus on securities they believe have favorable prospects
for current income consistent with the preservation of capital and the
maintenance of liquidity. The portfolio managers usually hold portfolio
securities to maturity, but may sell a particular security when they deem it
advisable, such as when any of the factors above materially changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash or shares of affiliated money market
funds. As a result, the fund may not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the fund.
Additionally, the fund's yield will vary as the short-term securities in its
portfolio mature and the proceeds are reinvested in securities with different
interest rates.
The following factors could reduce the fund's income and/or share price:
o sharply rising interest rates;
o downgrades of credit ratings or defaults of any of the fund's holdings; and
o the risks generally associated with concentrating investments in the banking
industry, such as interest rate risk, credit risk and regulatory
developments relating to the banking and financial services industries.
If the seller of a repurchase agreement in which the fund invests defaults on
its obligation or declares bankruptcy, the fund may experience delays in selling
the securities underlying the repurchase agreement. As a result, the fund may
incur losses arising from decline in the value of those securities, reduced
levels of income and expenses of enforcing its rights.
The value of your shares could be adversely affected if the computer systems
used by the fund's investment advisor and the fund's other service providers are
unable to distinguish the year 2000 from the year 1900.
The fund's investment advisor and independent technology consultants are working
to avoid year 2000-related problems in its systems and to obtain assurances that
other service providers are taking similar steps. Year 2000 problems may also
affect issuers in whose securities the fund invests.
3
<PAGE> 164
PERFORMANCE INFORMATION
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
The following bar chart shows changes in the performance of the Institutional
Class shares from year to year. Neither the Reserve Class shares nor the
Institutional Class shares are subject to sales loads.
INSTITUTIONAL INVESTMENT CLASS
[CHART]
<TABLE>
<CAPTION>
YEAR RETURN(%)
---- ---------
<S> <C>
1989 9.21%
1990 8.27%
1991 6.16%
1992 3.86%
1993 3.15%
1994 4.15%
1995 5.95%
1996 5.41%
1997 5.56%
1998 5.48%
</TABLE>
The returns are those of the fund's Institutional Class shares, which are not
offered in this prospectus. Reserve Class shares would have substantially
similar annual returns because the shares are invested in the same portfolio of
securities but would be lower to the extent that the classes have different
expenses.
The Institutional Class shares' year-to-date total return as of September 30,
1999 was 3.64%.
During the periods shown in the bar chart, Institutional Class' highest
quarterly return was 2.32% (quarter ended June 30, 1989) and its lowest
quarterly return was 0.77% (quarter ended June 30, 1993).
4
<PAGE> 165
PERFORMANCE TABLE
The following performance table reflects the performance of Institutional Class
shares over the periods indicated.
<TABLE>
<CAPTION>
==========================================================================================================
Average Annual Total Returns
(for the periods ended December 31, 1998)
Since Inception
1 Year 5 Years 10 Years Inception Date
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Institutional Class 5.48% 5.31% 5.71% 6.34% 04/12/84
Reserve Class -- -- -- -- 01/04/99
==========================================================================================================
</TABLE>
For the current seven-day yield of Reserve Class shares, call (800) 417-8837.
5
<PAGE> 166
FEE TABLE AND EXPENSE EXAMPLE
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
Reserve Class
-------------
<S> <C>
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price
or redemption proceeds, whichever is less) None
Annual Fund Operating Expenses (expenses that are deducted from fund assets)
Management Fees 0.06%
Distribution and/or Service (12b-1) Fees 1.00
Other Expenses 0.03
Total Annual Fund Operating Expenses 1.09
Fee Waiver(1) 0.20
Net Expenses 0.89
</TABLE>
- ---------------------------------
(1) The distributor has contractually agreed to waive 0.20% of the Rule 12b-1
distribution plan fee.
You should also consider the effect of any account fees charged by the financial
institution managing the account.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Reserve Class of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's gross operating expenses remain the same. To the extent fees are waived
or expenses are reimbursed, the expenses will be lower. Although your actual
returns and costs may be higher or lower, based on these assumptions your costs
would be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Reserve Class $111 $347 $601 $1,329
</TABLE>
6
<PAGE> 167
FUND MANAGEMENT
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provides investment advisory services to
the fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 125
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended August 31, 1999, the advisor received compensation
of 0.06% of average daily net assets.
7
<PAGE> 168
OTHER INFORMATION
SUITABILITY FOR INVESTORS
The Reserve Class of the fund is intended for use primarily by customers of
banks, certain broker-dealers and other institutions (institutions).
Individuals, corporations, partnerships and other businesses that maintain
qualified accounts at an institution may invest in shares of the Reserve Class.
Each institution will render administrative support services to its customers
who are the beneficial owners of the shares of the Reserve Class. Such services
include, among other things, establishment and maintenance of shareholder
accounts and records; assistance in processing purchase and redemption
transactions in shares of the Reserve Class; providing periodic statements
showing a client's account balance in shares of the Reserve Class; distribution
of fund proxy statements, annual reports and other communications to
shareholders whose accounts are serviced by the institution; and such other
services as the fund may reasonably request. Institutions will be required to
certify to the fund that they comply with applicable state law regarding
registration as broker-dealers, or that they are exempt from such registration.
Fund Management Company (the distributor) will review each application for the
purchase of shares of the Reserve Class and reserves the right to reject any
order to purchase based upon a review of the suitability of the investor.
The Reserve Class is designed to be a convenient and economical way to invest in
an open-end diversified money market fund. It is anticipated that most investors
will perform their own subaccounting.
Investors in the Reserve 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 Reserve Class.
DIVIDENDS AND DISTRIBUTIONS
Dividends
The fund generally declares dividends on each business day and pays dividends
monthly. A business day is any day on which both the Federal Reserve Bank of New
York and The Bank of New York, the fund's custodian, are open for business.
Dividends are paid on settled shares of the fund as of 5:00 p.m. Eastern time.
Generally, shareholders whose purchase orders have been received by the fund
prior to 5:00 p.m. Eastern time and shareholders whose redemption proceeds have
not been wired to them on any business day are eligible to receive dividends on
that business day. The dividend declared on any day preceding a non-business day
of the fund will include the income accrued on such non-business day. Dividends
and distributions are paid in cash unless the shareholder has elected to have
such dividends and distributions reinvested in the form of additional full and
fractional shares at the net asset value.
Capital Gains Distributions
The fund generally distributes net realized capital gains (including net
short-term capital gains), if any, annually. The fund does not expect to realize
any long-term capital gains and losses.
8
<PAGE> 169
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the financial
performance of the Reserve Class. Certain information reflects financial results
for a single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
This information has been audited by KPMG LLP, whose report, along with the
fund's financial statements, is included in the fund's annual report, which is
available upon request.
<TABLE>
<CAPTION>
RESERVE CLASS
=============
For the Period
January 4, 1999
through
August 31,
1999
- --------------------------------------------------------------------------------
<S> <C>
Net asset value, beginning of period $ 1.00
- --------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.03
- --------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.03)
================================================================================
Net asset value, end of period $ 1.00
================================================================================
Total return (a) 2.63%
================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 119,976
================================================================================
Ratio of expenses to average net assets (b) 0.89%(c)
================================================================================
Ratio of net investment income to average net assets (d) 2.09%(c)
================================================================================
</TABLE>
(a) Not annualized for periods less than one year.
(b) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
1.09%.
(c) Ratios based on average net assets of $28,324,369.
(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 1.89%.
9
<PAGE> 170
SHAREHOLDER INFORMATION
The fund currently offers six classes of shares all of which share a common
investment objective and portfolio of investments. The six classes differ only
with respect to distribution arrangements for different categories of investors.
DISTRIBUTION AND SERVICE (12b-1) FEES
The fund has adopted a 12b-1 plan with respect to the Reserve Class that allows
the fund to pay distribution fees to Fund Management Company (distributor) for
the sale and distribution of its shares and fees for services provided to
shareholders. Because the fund pays these fees out of its assets on an ongoing
basis, over time these fees will increase the cost of your investment and may
cost you more than paying other types of sales charges.
PURCHASING SHARES
The minimum initial investment in the Reserve Class is $1,000. No minimum amount
is required for subsequent investments in the fund, nor are minimum balances
required.
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 fund. Purchase orders
received after such time will be processed at the next day's net asset value.
You may purchase shares by submitting an Account Application to the fund's
transfer agent, A I M Fund Services, Inc. (transfer agent) at P.O. Box 4497,
Houston, Texas 77210-4497 prior to your initial purchase of shares. You must
open a fund account through an institution in accordance with procedures
established by such institution. A purchase order is considered received at the
time The Bank of New York receives federal funds (member bank deposits with a
Federal Reserve Bank) for the order, provided the transfer agent has received
notice of the order or at the time the order is placed, if the fund is assured
of payment. You may obtain an Account Application from the distributor.
Subsequent purchases of shares of the funds may also be made via
AIM LINK--Registered Trademark-- Remote, a personal computer application
software product.
If you propose to open a fund account with an institution you should consult
with a representative of such institution to obtain a description of the rules
governing such an account. A statement with regard to your investment in the
Reserve Class is supplied periodically, and confirmations of all transactions
for your account are provided by the institution promptly upon request. In
addition, proxies, periodic reports and other information from the institution
with regard to shares of the Reserve Class will be sent to you.
You may place an order for the purchase of shares of the Reserve Class with the
institution. The institution is responsible for the prompt transmission of the
order to the transfer agent. The fund is normally required to make immediate
settlement in federal funds for portfolio securities purchased. Accordingly,
payment for shares of the Reserve Class purchased by institutions on behalf of
their clients must be in federal funds. If an order to purchase shares is paid
for other than in federal funds, the order may be delayed up to two business
days while the institution completes the conversion into federal funds.
REDEEMING SHARES
You may redeem any or all of your shares at the net asset value next determined
after receipt of a redemption request in proper form by the fund. There is no
charge for redemption. Redemption requests with respect to shares of the Reserve
Class are normally made through your institution.
You may request a redemption by calling the transfer agent at (800) 417-8837, or
by using AIM LINK--Registered Trademark-- Remote. Payment for redeemed shares is
normally made by Federal Reserve wire to the commercial bank account designated
10
<PAGE> 171
in your Account Application. You may also request that payment be made by check.
We use reasonable procedures to confirm that instructions communicated by
telephone are genuine and are not liable for telephone instructions that are
reasonably believed to be genuine. Such reasonable procedurees may include
recordings of telephone transactions maintained for a reasonable period of time.
Payment for redemption orders received prior to 5:00 p.m. Eastern time will
normally be made on the same day. Payment for shares 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 fund may make payment for telephone redemptions in excess of $1,000 by
check when it is considered to be in the fund's best interest to do so.
Dividends payable up to the date of redemption on redeemed shares will normally
be paid by wire transfer on the next dividend payment date. However, if all of
the shares in your account are redeemed, you will receive dividends payable up
to the date of redemption with the proceeds of the redemption.
THE FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
o REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
o MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
o WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
PRICING OF SHARES
Determination of Net Asset Value
The price of each of the fund's shares is the fund's net asset value per share.
The fund determines the net asset value of its shares as of 5:00 p.m. Eastern
time on each day on which both the Federal Reserve Bank of New York and The Bank
of New York are open for business (business day). The fund values portfolio
securities on the basis of amortized cost, which approximates market value.
Timing of Orders
The fund prices purchase and redemption orders at the net asset value calculated
after the transfer agent receives an order in good form. If the transfer agent
receives a redemption request on a business day prior to 5:00 p.m. Eastern time,
the fund will normally wire redemption proceeds on that day. If the transfer
agent receives a redemption request after 5:00 p.m. Eastern time on a business
day of the fund, the redemption will be processed at the net asset value next
determined and the fund will normally wire proceeds on the next business day.
Shareholders will accrue dividends until the day the fund wires redemption
proceeds. The Fund may postpone the right of redemption only under unusual
circumstances, as allowed by the Securities and Exchange Commission, such as
when the New York Stock Exchange restricts or suspends trading. The fund
reserves the right to change the time for which purchase and redemption orders
must be submitted to and received by the transfer agent for execution on the
same day on any day when the primary government securities dealers are either
closed for business or close early, or trading in money market securities is
limited due to national holidays.
11
<PAGE> 172
TAXES
Dividends and distributions received are taxable as ordinary income [or
long-term capital gains] for federal income tax purposes, whether reinvested in
additional shares or taken in cash. Distributions are taxable at different rates
depending on the length of time the fund holds its assets. [Different tax rates
apply to ordinary income and long-term capital gain distributions, regardless of
how long shares are held.] Every year, information will be sent showing the
amount of dividends and distributions received from the fund during the prior
year.
[Any long-term or short-term capital gains realized from redemptions of the fund
shares will be subject to federal income tax.]
The foreign, state and local tax consequences of investing in the fund may
differ materially from the federal income tax consequences described above.
Shareholders should consult their tax advisor before investing.
12
<PAGE> 173
[BACK COVER PAGE]
OBTAINING ADDITIONAL INFORMATION
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies of
the fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P. O. Box 4497
Houston, TX 77210-4497
BY TELEPHONE: (800) 417-8837
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com (prospectuses and annual and
semiannual reports only)
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
Treasury Portfolio
SEC 1940 Act file number: 811-2729
Back Cover Page
<PAGE> 174
[AIM LOGO]
RESOURCE CLASS
TREASURY PORTFOLIO
PROSPECTUS
DECEMBER 17, 1999
Treasury Portfolio seeks to maximize current income consistent with the
preservation of capital and the maintenance of liquidity.
This prospectus contains important information about the Resource Class of the
fund. Please read it before investing and keep it for future reference.
As with all other mutual fund securities, the Securities and Exchange Commission
has not approved or disapproved these securities or determined whether the
information in this prospectus is adequate or accurate. Anyone who tells you
otherwise is committing a crime.
There can be no assurance that the fund will be able to maintain a stable net
asset value of $1.00 per share.
<PAGE> 175
TABLE OF CONTENTS
<TABLE>
PAGE
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES..........................................3
PRINCIPAL RISKS OF INVESTING IN THE FUND.....................................3
PERFORMANCE INFORMATION......................................................4
ANNUAL TOTAL RETURNS................................................4
PERFORMANCE TABLE...................................................5
FEE TABLE AND EXPENSE EXAMPLE................................................6
FEE TABLE...........................................................6
EXPENSE EXAMPLE.....................................................6
FUND MANAGEMENT..............................................................7
THE ADVISOR.........................................................7
ADVISOR COMPENSATION................................................7
OTHER INFORMATION............................................................8
SUITABILITY FOR INVESTORS...........................................8
DIVIDENDS AND DISTRIBUTIONS.........................................8
FINANCIAL HIGHLIGHTS.........................................................9
SHAREHOLDER INFORMATION.....................................................10
DISTRIBUTION AND SERVICE (12b-1) FEES..............................10
PURCHASING SHARES..................................................10
REDEEMING SHARES...................................................10
PRICING OF SHARES..................................................11
TAXES..............................................................12
OBTAINING ADDITIONAL INFORMATION...............................BACK COVER PAGE
</TABLE>
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, AIM Funds, AIM
Funds and Design, AIM Internet Connect and AIM Investor are service marks of
A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
2
<PAGE> 176
INVESTMENT OBJECTIVE AND STRATEGIES
The fund's investment objective is to maximize current income consistent with
the preservation of capital and the maintenance of liquidity.
The fund attempts to meet this objective by investing in direct obligations of
the U.S. Treasury, including bills, notes and bonds, and repurchase agreements
secured by those obligations. The fund will maintain a weighted average maturity
of 90 days or less. The fund invests in compliance with Rule 2a-7 under the
Investment Company Act of 1940.
The portfolio managers focus on securities they believe have favorable prospects
for current income consistent with the preservation of capital and the
maintenance of liquidity. The portfolio managers usually hold portfolio
securities to maturity, but may sell a particular security when they deem it
advisable, such as when any of the factors above materially changes.
In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash or shares of affiliated money market
funds. As a result, the fund may not achieve its investment objective.
PRINCIPAL RISKS OF INVESTING IN THE FUND
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the fund.
Additionally, the fund's yield will vary as the short-term securities in its
portfolio mature and the proceeds are reinvested in securities with different
interest rates.
The following factors could reduce the fund's income and/or share price:
o sharply rising interest rates;
o downgrades of credit ratings or defaults of any of the fund's holdings; and
o the risks generally associated with concentrating investments in the
banking industry, such as interest rate risk, credit risk and regulatory
developments relating to the banking and financial services industries.
If the seller of a repurchase agreement in which the fund invests defaults on
its obligation or declares bankruptcy, the fund may experience delays in selling
the securities underlying the repurchase agreement. As a result, the fund may
incur losses arising from decline in the value of those securities, reduced
levels of income and expenses of enforcing its rights.
The value of your shares could be adversely affected if the computer systems
used by the fund's investment advisor and the fund's other service providers are
unable to distinguish the year 2000 from the year 1900.
The fund's investment advisor and independent technology consultants are working
to avoid year 2000-related problems in its systems and to obtain assurances that
other service providers are taking similar steps. Year 2000 problems may also
affect issuers in whose securities the fund invests.
3
<PAGE> 177
PERFORMANCE INFORMATION
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
The following bar chart shows changes in the performance of the Resource Class
shares from year to year. Resource Class shares are not subject to sales loads.
RESOURCE CLASS
[CHART]
<TABLE>
<CAPTION>
YEAR RETURN(%)
- ---- ---------
<S> <C>
1997 5.39%
1998 5.31%
</TABLE>
The Resource Class shares' year-to-date total return as of September 30, 1999
was 3.52%.
During the periods shown in the bar chart, the highest quarterly return was
1.36% (quarter ended December 31, 1997) and the lowest quarterly return was
1.21% (quarter ended December 31, 1998).
4
<PAGE> 178
PERFORMANCE TABLE
The following performance table reflects the performance of Resource Class
shares over the periods indicated.
<TABLE>
<CAPTION>
==========================================================================================================
Average Annual Total Returns
(for the periods ended December 31, 1998)
Since Inception
1 Year 5 Years 10 Years Inception Date
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Resource Class 5.31% -- -- 5.31% 03/16/96
==========================================================================================================
</TABLE>
Resource Class share's seven-day yield on December 31, 1998 was 4.65%. For the
current seven-day yield, call (800) 825-6858.
5
<PAGE> 179
FEE TABLE AND EXPENSE EXAMPLE
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
Resource Class
--------------
<S> <C>
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price
or redemption proceeds, whichever is less) None
Annual Fund Operating Expenses (expenses that are deducted from fund assets)
Management Fees 0.06%
Distribution and/or Service (12b-1) Fees 0.20
Other Expenses 0.03
Total Annual Fund Operating Expenses 0.29
Fee Waiver(1) 0.04
Net Expenses 0.25
</TABLE>
- -----------------
(1) The distributor has contractually agreed to waive 0.04% of the Rule 12b-1
distribution plan fee.
You should also consider the effect of any account fees charged by the financial
institution managing the account.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Resource Class of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's gross operating expenses remain the same. To the extent fees are waived
or expenses are reimbursed, the expenses will be lower. Although your actual
returns and costs may be higher or lower, based on these assumptions your costs
would be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Resource Class $ 30 $ 93 $163 $368
</TABLE>
6
<PAGE> 180
FUND MANAGEMENT
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provides investment advisory services to
the fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 125
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended August 31, 1999, the advisor received compensation
of 0.06% of average daily net assets.
7
<PAGE> 181
OTHER INFORMATION
SUITABILITY FOR INVESTORS
The Resource Class of the fund is intended for use primarily by customers of
banks, certain broker-dealers and other institutions (institutions). It is
expected that the shares of the Resource Class may be particularly suitable
investments for corporate cash managers, municipalities or other public
entities. Individuals, corporations, partnerships and other businesses that
maintain qualified accounts at an institution may invest in shares of the
Resource Class. Each institution will render administrative support services to
its customers who are the beneficial owners of the shares of the Resource Class.
Such services include, among other things, establishment and maintenance of
shareholder accounts and records; assistance in processing purchase and
redemption transactions in shares of the Resource Class; providing periodic
statements showing a client's account balance in shares of the Resource Class;
distribution of fund proxy statements, annual reports and other communications
to shareholders whose accounts are serviced by the institution; and such other
services as the fund may reasonably request. Institutions will be required to
certify to the fund that they comply with applicable state law regarding
registration as broker-dealers, or that they are exempt from such registration.
Fund Management Company (the distributor) will review each application for
purchase of the Resource Class and reserves the right to reject any order to
purchase based upon a review of the suitability of the investor.
The Resource Class is designed to be a convenient and economical way to invest
in an open-end diversified money market fund. It is anticipated that most
investors will perform their own subaccounting.
Investors in the Resource 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 Resource Class.
DIVIDENDS AND DISTRIBUTIONS
Dividends
The fund generally declares dividends on each business day and pays dividends
monthly. A business day is any day on which both the Federal Reserve Bank of New
York and The Bank of New York, the fund's custodian, are open for business.
Dividends are paid to settled shares of the fund as of 5:00 p.m. Eastern time.
Generally, shareholders whose purchase orders have been received by the fund
prior to 5:00 p.m. Eastern time and shareholders whose redemption proceeds have
not been wired to them on any business day are eligible to receive dividends on
that business day. The dividend declared on any day preceding a non-business day
of the fund will include the income accrued on such non-business day. Dividends
and distributions are paid in cash unless the shareholder has elected to have
such dividends and distributions reinvested in the form of additional full and
fractional shares at the net asset value.
Capital Gains Distributions
The fund generally distributes net realized capital gains (including net
short-term capital gains), if any, annually. The fund does not expect to realize
any long-term capital gains and losses.
8
<PAGE> 182
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the financial
performance of the Resource Class. Certain information reflects financial
results for a single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
This information has been audited by KPMG LLP, whose report, along with the
fund's financial statements, is included in the fund's annual report, which is
available upon request.
<TABLE>
<CAPTION>
RESOURCE CLASS
---------------------------------------------------------
For the Period
March 12, 1996
through
Year Ended August 31, August 31,
1999 1998 1997 1996
-------- -------- -------- --------
<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 0.03
- --------------------------------------------------------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.05) (0.05) (0.05) (0.03)
- --------------------------------------------------------- -------- -------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
- --------------------------------------------------------- -------- -------- -------- --------
Total return 4.80% 5.47% 5.30% 2.43%
- --------------------------------------------------------- -------- -------- -------- --------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $359,101 $455,961 $237,123 $ 33,339
- --------------------------------------------------------- -------- -------- -------- --------
Ratio of expenses to average net assets (a) 0.25% (b) 0.24% 0.25% 0.25% (c)
========================================================= ======== ======== ======== ========
Ratio of net investment income to average net assets (d) 4.69% (b) 5.34% 5.19% 5.07% (c)
========================================================= ======== ======== ======== ========
</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
0.29%, 0.28%, 0.29%, and 0.29% (annualized) for the periods 1999-1996,
respectively.
(b) Ratios based on average net assets of $369,242,180.
(c) Annualized
(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 4.65%, 5.30%, 5.15%, and 5.03% (annualized) for the
periods 1999 - 1996, respectively.
9
<PAGE> 183
SHAREHOLDER INFORMATION
The fund currently offers six classes of shares all of which share a common
investment objective and portfolio of investments. The six classes differ only
with respect to distribution arrangements for different categories of investors.
DISTRIBUTION AND SERVICE (12b-1) FEES
The fund has adopted a 12b-1 plan with respect to the Resource Class that allows
the fund to pay distribution fees to Fund Management Company (distributor) for
the sale and distribution of its shares and fees for services provided to
shareholders. Because the fund pays these fees out of its assets on an ongoing
basis, over time these fees will increase the cost of your investment and may
cost you more than paying other types of sales charges.
PURCHASING SHARES
The minimum initial investment in the Resource Class is $10,000. No minimum
amount is required for subsequent investments in the fund, nor are minimum
balances required.
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 fund. Purchase orders
received after such time will be processed at the next day's net asset value.
You may purchase shares by submitting an Account Application to the fund's
transfer agent, A I M Fund Services, Inc. (transfer agent) at P.O. Box 4497,
Houston, Texas 77210-4497 prior to your initial purchase of shares. You must
open a fund account through an institution in accordance with procedures
established by such institution. A purchase order is considered received at the
time The Bank of New York receives federal funds (member bank deposits with a
Federal Reserve Bank) for the order, provided the transfer agent has received
notice of the order or at the time the order is placed, if the fund is assured
of payment. You may obtain an Account Application from the distributor.
Subsequent purchases of shares of the funds may also be made via AIM
LINK--Registered Trademark-- Remote, a personal computer application software
product.
If you propose to open a fund account with an institution, you should consult
with a representative of such institution to obtain a description of the rules
governing such an account. A statement with regard to your investment in the
Resource Class is supplied periodically, and confirmations of all transactions
for your account are provided by the institution promptly upon request. In
addition, proxies, periodic reports and other information from the institution
with regard to your shares of the Resource Class will be sent to you.
You may place an order for the purchase of shares of the Resource Class with the
institution. The institution is responsible for the prompt transmission of the
order to the transfer agent. The fund is normally required to make immediate
settlement in federal funds for portfolio securities purchased. Accordingly,
payment for shares of the Resource Class purchased by institutions on behalf of
their clients must be in federal funds. If an order to purchase shares is paid
for other than in federal funds, the order may be delayed up to two business
days while the institution completes the conversion into federal funds.
REDEEMING SHARES
You may redeem any or all of your shares at the net asset value next determined
after receipt of a redemption request in proper form by the fund. There is no
charge for redemption. Redemption requests with respect to shares of the
Resource Class are normally made through your institution.
10
<PAGE> 184
You may request a redemption by calling the transfer agent at (800) 825-6858, or
by using AIM LINK--Registered Trademark-- Remote. Payment for redeemed shares is
normally made by Federal Reserve wire to the commercial bank account designated
in your Account Application. You may also request that payment be made by check.
We use reasonable procedures to confirm that instructions communicated by
telephone are genuine and are not liable for telephone instructions that are
reasonably believed to be genuine. Such reasonable procedures may include
recordings of telephone transactions maintained for a reasonable period of time.
Payment for redemption orders received prior to 5:00 p.m. Eastern time will
normally be made on the same day. Payment for shares 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 fund may make payment for telephone redemptions in excess of $1,000 by
check when it is considered to be in the fund's best interest to do so.
Dividends payable up to the date of redemption on redeemed shares will normally
be paid by wire transfer on the next dividend payment date. However, if all of
the shares in your account are redeemed, you will receive dividends payable up
to the date of redemption with the proceeds of the redemption.
THE FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
o REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
o MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
o WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
PRICING OF SHARES
Determination of Net Asset Value
The price of each of the fund's shares is the fund's net asset value per share.
The fund determines the net asset value of its shares as of 5:00 p.m. Eastern
time on each day on which both the Federal Reserve Bank of New York and The Bank
of New York are open for business (business day). The fund values portfolio
securities on the basis of amortized cost, which approximates market value.
Timing of Orders
The fund prices purchase and redemption orders at the net asset value calculated
after the transfer agent receives an order in good form. If the transfer agent
receives a redemption request on a business day prior to 5:00 p.m. Eastern time,
the fund will normally wire redemption proceeds on that day. If the transfer
agent receives a redemption request after 5:00 p.m. Eastern time on a business
day of the fund, the redemption will be processed at the net asset value next
determined and the fund will normally wire proceeds on the next business day.
Shareholders will accrue dividends until the day the fund wires redemption
proceeds. The Fund may postpone the right of redemption only under unusual
circumstances, as allowed by the Securities and Exchange Commission, such as
when the New York Stock Exchange restricts or suspends trading. The fund
reserves the right to change the time for which purchase and redemption orders
must be submitted to and received by the transfer agent for execution on the
same day on any day when the primary government securities dealers are either
closed for business or close early, or trading in money market securities is
limited due to national holidays.
11
<PAGE> 185
TAXES
Dividends and distributions received are taxable as ordinary income [or
long-term capital gains] for federal income tax purposes, whether reinvested in
additional shares or taken in cash. Distributions are taxable at different rates
depending on the length of time the fund holds its assets. [Different tax rates
apply to ordinary income and long-term capital gain distributions, regardless of
how long shares are held.] Every year, information will be sent showing the
amount of dividends and distributions received from the fund during the prior
year.
[Any long-term or short-term capital gains realized from redemptions of the fund
shares will be subject to federal income tax.]
The foreign, state and local tax consequences of investing in the fund may
differ materially from the federal income tax consequences described above.
Shareholders should consult their tax advisor before investing.
12
<PAGE> 186
[BACK COVER PAGE]
OBTAINING ADDITIONAL INFORMATION
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies
of the fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P. O. Box 4497
Houston, TX 77210-4497
BY TELEPHONE: (800) 825-6858
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com (prospectuses and
annual and semiannual reports only)
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
Treasury Portfolio
SEC 1940 Act file number: 811-2729
Back Cover Page
<PAGE> 187
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 17, 1999
RELATING TO THE PROSPECTUS OF EACH OF THE FOLLOWING CLASSES OF THE TREASURY
PORTFOLIO:
CASH MANAGEMENT CLASS PROSPECTUS DATED DECEMBER 17, 1999,
INSTITUTIONAL CLASS PROSPECTUS DATED DECEMBER 17, 1999,
PERSONAL INVESTMENT CLASS PROSPECTUS DATED DECEMBER 17, 1999,
PRIVATE INVESTMENT CLASS PROSPECTUS DATED DECEMBER 17, 1999,
RESERVE CLASS PROSPECTUS DATED DECEMBER 17, 1999
AND RESOURCE CLASS PROSPECTUS DATED DECEMBER 17, 1999
A-1
<PAGE> 188
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Introduction................................................ A-4
General Information about the Trust......................... A-4
The Trust and Its Shares............................... A-4
Trustees and Officers.................................. A-6
Remuneration of Trustees............................... A-8
Investment Advisor..................................... A-9
Administrative Services................................ A-10
Expenses............................................... A-11
Transfer Agent and Custodian........................... A-11
Legal Matters.......................................... A-11
Reports................................................ A-12
Sub-accounting......................................... A-12
Principal Holders of Securities........................ A-12
Share Purchases and Redemptions............................. A-19
Purchases and Redemptions.............................. A-19
Redemptions by the Portfolio........................... A-19
Net Asset Value Determination.......................... A-19
Distribution Agreement................................. A-20
Distribution Plan...................................... A-20
Banking Regulations.................................... A-22
Performance Information................................ A-22
Investment Program and Restrictions......................... A-23
Investment Program..................................... A-23
Investment Policies.................................... A-24
Eligible Securities.................................... A-25
Investment Restrictions................................ A-25
Other Investment Policies.............................. A-26
Portfolio Transactions and Brokerage........................ A-26
General Brokerage Policy............................... A-26
Allocation of Portfolio Transactions................... A-27
Section 28(e) Standards................................ A-27
Dividends, Distributions and Tax Matters.................... A-28
Dividends and Distributions............................ A-28
Tax Matters............................................ A-28
Qualification as a Regulated Investment Company........ A-29
Excise Tax on Regulated Investment Companies........... A-29
Portfolio Distributions................................ A-29
Sale or Redemption of Shares........................... A-30
</TABLE>
A-2
<PAGE> 189
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Foreign Shareholders........................................ A-30
Effect of Future Legislation; Local Tax
Considerations........................................ A-31
Financial Statements........................................ FS
</TABLE>
A-3
<PAGE> 190
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
17, 1999, the Institutional Class Prospectus dated December 17, 1999, the
Personal Investment Class Prospectus dated December 17, 1999, the Private
Investment Class Prospectus dated December 17, 1999, the Reserve Class
Prospectus dated December 17, 1999 and the Resource Class Prospectus dated
December 17, 1999 (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 the Trust and 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 "Redeeming 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.
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.
All shares of the Trust have equal rights with respect to voting, except that
the holders of shares of a particular class will have the exclusive right to
vote on matters pertaining to distribution plans or shareholder service plans,
if any such plans are adopted, relating solely to 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-4
<PAGE> 191
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.
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.
Shares are fully assignable and subject to encumbrance by a shareholder. The
Board of Trustees may establish and designate and change in any manner any
portfolio or any classes or classes thereof, may fix or change the preferences,
voting rights, rights and privileges of any portfolio or classes thereof, and
may divide or combine the shares of any portfolio or classes thereof into a
greater or lesser number. The Board of Trustees also may classify or reclassify
or convert any issued shares of any portfolio, or classes thereof, into a
greater or lesser number. Any such classification or reclassification will
comply with the provisions of the Investment Company Act of 1940, as amended
(the "1940 Act").
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.
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 its respective classes 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 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-5
<PAGE> 192
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 A I M Advisors, Inc. ("AIM"), subject always to the
objective and policies of the Trust and to the general supervision of the
Trust's Board of Trustees. 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.
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 (80) 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
Executive Vice Chairman and Director, AMVESCAP PLC.
- -----------------------------------------------------------------------------------------------------------------------
BRUCE L. CROCKETT (55) 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 (75) 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. (64) Trustee Chairman of the Board of Directors, Mercantile
2 Hopkins Plaza, 8th Floor Mortgage Corp. Formerly, Vice Chairman of the Board
Suite 805 of Directors and President, Mercantile-Safe Deposit &
Baltimore, MD 21201 Trust Co., and President, Mercantile Bankshares.
- -----------------------------------------------------------------------------------------------------------------------
JACK M. FIELDS (47) 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 (62) Trustee Partner, Kramer Levin Naftalis & Frankel, LLP (law
919 Third Avenue firm). Formerly, Partner, Reid & Priest (law firm).
New York, NY 10022
- -----------------------------------------------------------------------------------------------------------------------
*ROBERT H. GRAHAM (53) 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-6
<PAGE> 193
<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 (49) 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 (57) Trustee Attorney in private practice in Houston, Texas.
6363 Woodway, Suite 825
Houston, TX 77057
- -----------------------------------------------------------------------------------------------------------------------
LOUIS S. SKLAR (60) 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
- -----------------------------------------------------------------------------------------------------------------------
GARY T. CRUM (52) Senior Vice Director and President, A I M Capital Management,
President Inc.; Director and Executive Vice President, A I M
Management Group Inc.; Director and Senior Vice
President, A I M Advisors, Inc.; and
Director, A I M Distributors, Inc. and AMVESCAP PLC.
- -----------------------------------------------------------------------------------------------------------------------
CAROL F. RELIHAN (45) Senior Vice Director, Senior Vice President, General Counsel and
President and Secretary, A I M Advisors, Inc.; Senior Vice
Secretary President, 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 (40) Vice President Vice President and Fund Controller, A I M Advisors,
and Treasurer Inc.; and Assistant Vice President and Assistant
Treasurer, Fund Management Company.
- -----------------------------------------------------------------------------------------------------------------------
MELVILLE B. COX (56) 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 (39) Vice President Senior Vice President, A I M Capital Management,
Inc.; and Vice President, A I M Advisors, Inc.
- -----------------------------------------------------------------------------------------------------------------------
J. ABBOTT SPRAGUE (44) Vice President Director and President, Fund Management Company;
Director, A I M 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
(Chairman), Fields, Frischling, Pennock, Sklar and Dr. Mathai-Davis. 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, Sklar (Chairman) and Dr. Mathai-Davis. 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.
A-7
<PAGE> 194
The members of the Nominating and Compensation Committee are Messrs. Crockett
(Chairman), Daly, Dunn, Fields, Pennock, Sklar and Dr. Mathai-Davis. 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 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.
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................................. 5,724 37,485 96,000
Owen Daly II...................................... 5,724 122,898 96,000
Edward K. Dunn, Jr................................ 5,724 0 78,889
Jack Fields....................................... 5,695 15,826 95,500
Carl Frischling(4)................................ 5,694 97,791 95,500
Robert H. Graham.................................. 0 0 0
John F. Kroeger(5)................................ 506 107,896 91,654
Prema Mathai-Davis................................ 5,344 0 32,636
Lewis F. Pennock.................................. 5,694 45,766 95,500
Ian W. Robinson(6)................................ 3,551 94,442 94,500
Louis S. Sklar.................................... 5,694 90,232 95,500
</TABLE>
- ---------------
(1) The total amount of compensation deferred by all trustees of the Trust
during the fiscal year ended August 31, 1999, including interest earned
thereon, was $36,280.
(2) During the fiscal year ended August 31, 1999, the total amount of expenses
allocated to the Trust in respect of such retirement benefits was $35,554.
Data reflects compensation for the calendar year ended December 31, 1998.
(3) Each trustee serves as a director or trustee of a total of 12 registered
investment companies advised by AIM (comprised of over 50 portfolios). Data
reflects total compensation for the calendar year ended December 31, 1998.
(4) The Trust paid the law firm of Kramer Levin Naftalis & Frankel $13,465 in
legal fees for services provided to the Portfolio during the fiscal year
ended August 31, 1999. Mr. Frischling, a trustee of the Trust, is a partner
in such firm.
(5) Mr. Kroeger was a trustee until June 11, 1998, when he resigned. On that
date, he became a consultant to the Trust. Of the amount listed above, $0
was for compensation for services as a trustee and the remainder as a
consultant. Mr. Kroeger passed away on November 26, 1998. Mr. Kroeger's
widow will receive his pension as described below under "AIM Funds
Retirement Plan for Eligible Directors/Trustees."
(6) Mr. Robinson was a trustee until March 12, 1999, when he retired.
A-8
<PAGE> 195
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, AIM Management 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 a maximum of 75% of the annual 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) and based on 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.
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 Dr. Mathai-Davis are 12, 12, 1, 2, 22, 20, 18, 11, 10 and 1
years, respectively.
ANNUAL RETAINER UPON RETIREMENT
<TABLE>
<CAPTION>
NUMBER OF YEARS OF ANNUAL RETIREMENT
SERVICE WITH COMPENSATION PAID BY ALL
APPLICABLE AIM FUNDS APPLICABLE AIM FUNDS
-------------------- ------------------------
<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, Dunn, Fields, Frischling, 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, 1999, $51,955 in trustees' fees and
expenses were allocated to the Portfolio.
INVESTMENT ADVISOR
AIM is a wholly owned subsidiary of AIM Management, a holding company that has
been engaged in the financial services business since 1976. The address of AIM
is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. AIM together with
its subsidiaries advises or manages over 125 investment portfolios encompassing
a broad range of investment objectives. 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
A-9
<PAGE> 196
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 of the Portfolio.
AIM and the Trust have adopted a Code of Ethics which requires investment
personnel (a) to pre-clear all personal securities transactions subject to the
Code of Ethics, (b) to file reports regarding such transactions, (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, and (d) to abide by certain other
provisions under the Code of Ethics. The Code of Ethics also prohibits
investment personnel and all other AIM employees from purchasing securities in
an initial public offering. Personal trading reports are reviewed periodically
by AIM, and the Board of Trustees reviews quarterly and annual reports
(including information on any substantial violations of the Code of Ethics).
Sanctions for violations of the Code of Ethics may include censure, monetary
penalties, suspension or termination of employment.
The Trust has entered into a Master Investment Advisory Agreement (the
"Advisory Agreement") with AIM. 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.
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.
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>
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, 1999, 1998 and 1997,
with respect to the Portfolio in the amounts of $3,072,316, $3,026,608 and
$2,666,379, respectively. For the fiscal years ended August 31, 1999, 1998 and
1997, AIM waived no advisory fees with respect to the Portfolio.
AIM may from time to time waive or reduce its fee. Voluntary fee waivers or
reductions may be rescinded at any time without further notice to investors.
During periods of voluntary fee waivers or reductions, AIM will retain its
ability to be reimbursed for such fee prior to the end of each fiscal year.
Contractual fee waivers or reductions set forth in the Fee Table in a Prospectus
may not be terminated or amended to the Portfolio's detriment during the period
stated in the agreement between AIM and the Trust.
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."
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").
A-10
<PAGE> 197
Under the Administrative Services Agreement, AIM performs, or arranges for the
performance of, 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.
For the fiscal years ended August 31, 1999, 1998 and 1997, 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 $179,471, $102,543 and $99,273, respectively, for fund accounting
services for the Portfolio.
EXPENSES
In addition to fees paid to AIM pursuant to the Advisory Agreement and the
expenses reimbursed to AIM under the Administrative Services Agreement, the
Trust also pays or causes to be paid all other expenses of the Trust, including,
without limitation: the charges and expenses of any registrar, any custodian or
depository appointed by the Trust for the safekeeping of its cash, portfolio
securities and other property, and any transfer, dividend or accounting agent or
agents appointed by the Trust; brokers' commissions chargeable to the Trust in
connection with portfolio securities transactions to which the Trust is a party;
all taxes, including securities issuance and transfer taxes, and fees payable by
the Trust to federal, state or other governmental agencies; the costs and
expenses of engraving or printing of certificates representing shares of the
Trust; all costs and expenses in connection with the registration and
maintenance of registration of the Trust and its shares with the SEC and various
states and other jurisdictions (including filing and legal fees and
disbursements of counsel); the costs and expenses of printing, including
typesetting, and distributing prospectuses and statements of additional
information of the Trust and supplements thereto to the Trust's shareholders;
all expenses of shareholders' and trustees' meetings and of preparing, printing
and mailing of prospectuses, proxy statements and reports to shareholders; fees
and travel expenses of trustees and trustee members of any advisory board or
committee; all expenses incident to the payment of any dividend, distribution,
withdrawal or redemption, whether in shares or in cash; charges and expenses of
any outside service used for pricing of the Trust's shares; charges and expenses
of legal counsel, including counsel to the trustees of the Trust who are not
"interested persons" (as defined in the 1940 Act) of the Trust or AIM, and of
independent accountants in connection with any matter relating to the Trust;
membership dues of industry associations; interest payable on Trust borrowings;
postage; insurance premiums on property or personnel (including officers and
trustees) of the Trust which inure to its benefit; and extraordinary expenses
(including, but not limited to, legal claims and liabilities and litigation
costs and any indemnification related thereto). 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.
TRANSFER AGENT AND CUSTODIAN
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 pursuant to a Transfer Agency and Service Agreement. 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.
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.
LEGAL MATTERS
The law firm of Ballard Spahr Andrews & Ingersoll, LLP, Philadelphia,
Pennsylvania serves as counsel to the Trust.
A-11
<PAGE> 198
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 LLP, 700 Louisiana, Houston, Texas 77002, as the
independent auditors to audit the financial statements and review the tax
returns of the Portfolio.
SUB-ACCOUNTING
The Trust and FMC have arranged for AFS or the Portfolio to offer
sub-accounting services to shareholders of the Portfolio and to maintain
information with respect to the underlying beneficial ownership of the shares of
each class of the Portfolio. Investors who purchase shares of the Portfolio for
the account of others can make arrangements through the Trust or FMC for these
sub-accounting services. In addition, shareholders utilizing certain versions of
AIM LINK--Registered Trademark-- Remote, a personal computer application
software product, may receive sub-accounting services via such software.
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 each class of the Government
& Agency Portfolio as of November 1, 1999, and the percentage of such shares
owned by such shareholders as of such date are as follows:
CASH MANAGEMENT CLASS
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- -------------- -------------
<S> <C> <C>
Fund Services Associates, Inc. ............................. 44.67% --
1875 Century Park East -- Suite 1345
Los Angeles, CA 90067
Orlando-Orange Co. 40700.................................. 31.01% --
225 Water Street, 3rd Floor
P.O. Box 44204
Jacksonville, FL 32202
Cruttendon Roth, Incorporated............................. 7.06% --
24 Corporate Plaza
Newport Beach, CA 92660
Gardnyr Michael Capital, Inc.............................. 6.68% --
2281 Lee Rd. Ste. 104
Winter Park, FL 32789
</TABLE>
INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- -------------- -------------
<S> <C> <C>
AIM Fund of Funds Account................................... 42.22%(b) --
Money Market Portfolio Admin.
11 Greenway Plaza, Ste. 100
Houston, TX
Gardnyr Michael Capital, Inc. ............................ 24.45% --
2281 Lee Rd. Ste. 104
Winter Park, FL 32789
</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> 199
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- -------------- -------------
<S> <C> <C>
Waukesha County............................................. 8.36% --
Finance Division, Dept. of Admin.
1320 Pewaukee Road, Room 310
Waukesha, WI 53188-3878
</TABLE>
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- -------------- -------------
<S> <C> <C>
Fund Services Associates, Inc............................... 78.47% --
1875 Century Park East -- Suite 1345
Los Angeles, CA 90067
Huntington Capital Corp................................... 17.21% --
41 S. High St., Ninth Floor
Columbus, OH 43287
</TABLE>
RESOURCE CLASS
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- -------------- -------------
<S> <C> <C>
Kansas City Power & Light................................... 76.73% --
P.O. Box 418679
Kansas City, MO 64106
Craigie Incorporated...................................... 12.08% --
P.O. Box 29715
Richmond, VA 23242
Hambrecht & Quist LLC..................................... 8.47% --
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.
A-13
<PAGE> 200
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 each class of the Treasury
Portfolio as of November 1, 1999 and the percentage of such shares owned by such
shareholders as of such date are as follows:
CASH MANAGEMENT CLASS
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- -------------- -------------
<S> <C> <C>
Bank Of New York............................................ 36.16% --
One Wall Street
5th Floor
Stif/Master Note
New York, NY 10286
Bank of Oklahoma.......................................... 12.46% --
P.O. Box 2180
Tulsa, OK 74101
Chase Bank of Texas....................................... 12.10% --
600 Travis St., 8th Fl
8-CBT-39
Houston, TX 77252-8009
CIBC World Markets........................................ 11.11% --
200 Liberty Street
World Financial Center
New York, NY 10281
Fund Services Associates, Inc............................. 7.91% --
1875 Century Park East - Suite 1345
Los Angeles, CA 90067
Huntington Capital Corp................................... 6.18% --
41 S. High St., Ninth Floor
Columbus, OH 43287
</TABLE>
- ---------------
(a) The Trust has no knowledge as to whether all or any portion of the shares
owned of record only are also owned beneficially.
A-14
<PAGE> 201
INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- -------------- -------------
<S> <C> <C>
City of New York Deferred Compensation Plan................. 8.23% --
40 Rector Street, 3rd Floor
New York, NY 10006
Trust Company Bank........................................ 7.22%
Center 3139
P.O. Box 105504
Atlanta, GA 30348
Weststar Bank Trust Dept.................................. 5.67% --
P.O. Box 1156
Bartlesville, OK 74005-1156
Trustmark National Bank, Trust Department................. 5.37% --
248 East Capitol
Jackson, MS 39205
Turtle & Co Sweep......................................... 5.14% --
P.O. Box 9427
Boston, MA 02209
Texas Commerce Bank National Association, as Custo........ 5.04% --
1585 Broadway
New York, NY 10036
Chase Bank of Texas, National Association................. 5.04% --
600 Travis, 9th Floor
Houston, TX 77002
</TABLE>
PERSONAL INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- -------------- -------------
<S> <C> <C>
Cullen/Frost Discount Brokers............................... 83.98% --
P.O. Box 2358
San Antonio, TX 78299
Kinco & Co c/o Rnb Securities............................. 7.50% --
1 Hanson Pl., Lower Level
Brooklyn, NY 11243
</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> 202
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- -------------- -------------
<S> <C> <C>
Bank of New York............................................ 40.73% --
One Wall Street
5th Floor
Stif/Master Note
New York, NY 10286
Huntington Capital Corp................................... 17.70% --
41 S. High St., Ninth Floor
Columbus, OH 43287
Strafe & Co............................................... 6.24% --
1111 Polaris Parkway
Columbus, OH 43271-0211
New Haven Savings Bank Trust Department................... 5.58% --
P.O. Box 302
Trust Department
New Haven, CT 06502
Zions First National Bank (NV)............................ 5.39% --
P.O. Box 30880
Salt Lake City, UT 84130
</TABLE>
RESERVE CLASS
<TABLE>
<CAPTION>
PERCENT
PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- -------------- -------------
<S> <C> <C>
Bank of New York............................................ 99.83% --
440 Mamoroneck, 5th Fl.
Harrison, NY 10286
</TABLE>
RESOURCE CLASS
<TABLE>
<CAPTION>
PERCENT
PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- -------------- -------------
<S> <C> <C>
First Union Subaccounts..................................... 65.49% --
8739 Research Drive
Capital Markets
Charlotte, NC 28262-0675
Mellon Bank NA............................................ 13.12% --
P.O. Box 710
Pittsburgh, PA 15230-0710
CIBC World Markets........................................ 10.08% --
200 Liberty Street
World Financial Center
New York, NY 10281
</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.
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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 each class of the Treasury
TaxAdvantage Portfolio as of November 1, 1999 and the percentage of such shares
owned by such shareholders as of such date are as follows:
INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- -------------- -------------
<S> <C> <C>
Frost National Bank Tx...................................... 14.43% --
Muir & Co
C/O Frost
P.O. Box 2479
San Antonio, TX 78298-2479
First Trust/Var & Co...................................... 14.36% --
Funds Control Suite 0404
180 East Fifth Street
St. Paul, MN 55101
Bank of America N.A....................................... 13.38% --
1401 Elm Street 11th Floor
P.O. Box 831000
Dallas, TX 75202-2911
Key Trust Company......................................... 12.07% --
Mail Code OH-01-49-3040
P.O. Box 94871
Cleveland, OH 44101-5971
Kanaly Trust Company...................................... 10.79% --
4550 Post Oak Place Drive
Suite 139
Houston, TX 77027
Mason-Dixon Trust Company................................. 10.27% --
45 W. Main Street
Westminster, 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.
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<PAGE> 204
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- -------------- -------------
<S> <C> <C>
Bank of New York............................................ 32.25% --
One Wall Street
5th Floor
Stif/Master Note
New York, NY 10286
Frost National Bank Tx.................................... 21.35% --
Muir & Co
C/O Frost
P.O. Box 2479
San Antonio, TX 78298-2479
Huntington Capital Corp................................... 20.65% --
41 S. High St., Ninth Floor
Columbus, OH 43287
First Union Securities, Inc............................... 19.39% --
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.
To the best of the knowledge of the Trust, as of November 1, 1999, the
trustees and officers of the Trust as a group beneficially owned less than 1% of
each class of the Trust's outstanding shares.
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SHARE PURCHASES AND REDEMPTIONS
PURCHASES AND REDEMPTIONS
A complete description of the manner by which shares of a particular class may
be purchased or redeemed appears in each Prospectus under the headings
"Purchasing Shares" and "Redeeming Shares."
Prior to the initial purchase of Portfolio shares, an investor must complete
and send an Account Application to AFS at P.O. Box 4497, Houston, Texas
77210-4497. An Account Application may be obtained from the distributor. An
investor may make changes to the information provided in the Account Application
by submitting such changes in writing to the transfer agent or by completing and
submitting to the transfer agent a new Account Application.
The Trust reserves the right to reject any purchase order and to withdraw all
or any part of the offering made by a Prospectus. 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 promptly returned to an
investor. Any request for correction to a transaction of Portfolio shares must
be submitted in writing to AFS. AFS 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.
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 Cash Management Class, Personal Investment Class, Private Investment Class,
Reserve Class or the Resource Class directly, except through reinvestment of
dividends and distributions.
Payment for redeemed shares of the Portfolio is normally made by Federal
Reserve wire to the commercial bank account designated in the shareholder's
Account Application on the day specified below, but may be remitted by check
upon request by a shareholder. 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
trust company (which may include the shareholder). Additional documentation may
be required when deemed appropriate by the Portfolio or AFS.
The Trust may postpone the right of redemption only under unusual
circumstances, as allowed by the Securities and Exchange Commission, such as
when the New York Stock Exchange restricts or suspends trading.
A "Business Day" of the Trust is any day on which member banks of the Federal
Reserve Bank of New York and The Bank of New York are open for business. If AFS
receives a redemption request on a Business Day prior to 5:00 p.m. Eastern time,
the redemption will be effected at the net asset value of the Portfolio
determined as of 5:00 p.m. Eastern time and the Trust will normally wire
redemption proceeds on that day. A redemption request received by AFS after 5:00
p.m. Eastern time 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 and proceeds
will normally be wired on the next Business Day. If proceeds are not wired on
the same day, shareholders will accrue dividends until the day the proceeds are
wired. The Trust, however, reserves the right to change the time for which
purchase and redemption orders must be submitted to and received by the transfer
agent for execution on the same day on any day when the primary government
securities dealers are either closed for business or close early, or trading in
money market securities is limited due to national holidays.
Any request for correction to a redemption transaction of Portfolio shares
must be submitted in writing to AFS.
REDEMPTIONS BY THE PORTFOLIO
If the Trust determines that you have provided incorrect information in
opening an account or in the course of conducting subsequent transactions, the
Trust may, at its discretion, redeem the account and distribute the proceeds to
you.
The Board of Trustees may redeem shares if it determines in its sole
discretion that failure to so redeem may have materially adverse consequences to
the shareholders of the Portfolio.
NET ASSET VALUE DETERMINATION
The net asset value per share of the Portfolio is determined as of 5:00 p.m.
Eastern time on each Business Day of the Trust. For the purpose of determining
the price at which all shares of the Portfolio are issued and redeemed, the net
asset value per share is calculated by: (a) valuing all securities and
instruments of the Portfolio as set forth below; (b) adding other assets of the
Portfolio, if any; (c) deducting the liabilities of the Portfolio; (d) dividing
the resulting amount by the number of shares outstanding of the Portfolio; and
(e) rounding such per share net asset value to the nearest whole cent. Among
other items, the
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Portfolio's liabilities include accrued expenses and dividends payable, and its
total assets include portfolio securities valued at their market value as well
as income accrued but not yet received.
The debt instruments held in the Portfolio are valued on the basis of
amortized cost. This method involves valuing an instrument at its cost and
thereafter assuming a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument. 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 Trust would receive if it sold the entire
portfolio.
The valuation of the portfolio instruments based upon their amortized cost and
the concomitant maintenance of the net asset value per share of $1.00 for the
Portfolio is permitted in accordance with applicable rules and regulations of
the SEC, including Rule 2a-7 under the 1940 Act, which require the 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.
FMC may, from time to time, at its expense, pay a bonus or other consideration
or incentive to dealers or institutions who sell a minimum dollar amount of the
shares of a particular 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 or 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 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 with respect to the Cash Management Class, Personal
Investment Class, Private Investment Class, Reserve Class and Resource Class.
[The Plan provides that the Trust may compensate FMC in connection with the
distribution of shares of the Portfolio. Such compensation may be expended when
and if authorized by the Board of Trustees and may be used to finance such
distribution-related services
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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 cost of administering the
Plan.]
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.
The Plan does not obligate the Trust to reimburse FMC for the actual expenses
FMC may incur in fulfilling its obligations under the Plan. Thus, 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.
FMC may from time to time waive or reduce any portion of its 12b-1 fee for
Cash Management Class, Personal Investment Class, Private Investment Class,
Reserve Class and Resource Class shares. Voluntary fee waivers or reductions may
be rescinded at any time without further notice to investors. During periods of
voluntary fee waivers or reductions, FMC will retain its ability to be
reimbursed for such fee prior to the end of each fiscal year. Contractual fee
waivers or reductions set forth in the Fee Table in a Prospectus may not be
terminated or amended to the Portfolio's detriment during the period stated in
the agreement between FMC and the Trust.
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.
For the fiscal year ended August 31, 1999, FMC received compensation pursuant
to the Plan in the amount of $783,278, or an amount equal to 0.08% of the
average daily net assets of the Cash Management Class, $1,878,076, or an amount
equal to 0.50% of the average daily net assets of the Personal Investment Class,
$1,063,328, or an amount equal to 0.30% of the average daily net assets of the
Private Investment Class, $226,595, or an amount equal to 0.80% of the average
daily net assets of the Reserve Class, $590,788 or an amount equal to 0.16% of
the average daily net assets of the Resource Class. With respect to the Cash
Management Class, $783,278 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 0.0% of the average daily net assets
of the class) was retained by FMC. With respect to the Personal Investment
Class, $1,542,523 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 $335,553 (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,
$955,018 of such amount (or an amount equal to 0.28% of the average daily net
assets of the class) was paid to dealers and financial institutions and $108,310
(or an amount equal to 0.03% of the average daily net assets of the class) was
retained by FMC. With respect to the Reserve Class, $212,433 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 $14,162 (or an amount equal to 0.05%
of the average daily net assets of the class) was retained by FMC. With respect
to the Resource Class, $590,788 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 $0 (or an amount equal to 0.0% of the average daily net assets
of the class) was retained by FMC.
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 would
benefit the Trust and the holders of shares of the applicable classes of the
Portfolio. Anticipated benefits that may result from the Plan are: (i) FMC,
brokerage firms and financial institutions will provide a shareholder with
repaid access to his account for the purpose of effecting executions of purchase
and redemption orders; (ii) FMC and shareholder service agents will provide
prompt, efficient and reliable responses to shareholder inquiries concerning
account status; (iii) a well-developed, dependable network of shareholder
service agents may help to curb sharp fluctuations in
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rates of redemptions and sales, thereby reducing the chance that an
unanticipated increase in net redemptions could adversely affect the performance
of the Portfolio; and (iv) a successful distribution effort will assist FMC in
maintaining and increasing the organizational strength needed to service the
Portfolio.
The Plan complies with the Conduct Rules of the National Association of
Securities Dealers, Inc. and provides for payment of a service fee to dealers
and other financial institutions that provide continuing personal shareholder
services to their customers who purchase and own shares of each applicable class
of the Portfolio, in amounts of up to 0.25% of the average net assets of such
class of the Portfolio attributable to the customers of such dealers or
financial institutions. Payments to dealers and other financial institutions in
excess of such amount and payment to FMC would be characterized as an
asset-based sales charge pursuant to the amended 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 each applicable class.
The Plan, unless sooner terminated in accordance with its terms, shall
continue in effect as to each applicable class from year to year as long as such
continuance is specifically approved at least annually by the Board of Trustees,
including a majority of the Qualified Trustees.
FMC is a wholly owned subsidiary of AIM, an indirect wholly owned subsidiary
of AMVESCAP PLC. Charles T. Bauer, a Trustee and Chairman of the Trust, and
Robert H. Graham, a Trustee and President of the Trust, own shares of AMVESCAP
PLC.
The Plan may be terminated as to a particular class of the Portfolio by vote
of a majority of the Qualified Trustees, or by vote of a majority of the holders
of the outstanding voting securities of such class. Any change in the Plan that
would increase materially the distribution expenses paid by an applicable 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.
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.
PERFORMANCE INFORMATION
As stated under the caption "Performance Information--Performance Table" in
each Prospectus, yield information for the shares of each class of the Portfolio
may be obtained by calling the telephone number set forth in the Prospectus for
that class. Performance will vary from time to time and past results are not
necessarily indicative of future results. Investors should understand that
performance is a function of the type and quality of the Portfolio's investments
as well as its operating expenses and market conditions. Performance information
for the shares of the Portfolio may not provide a basis for comparison with
investments which pay fixed rates of interest for a stated period of time, with
other investments or with investment companies which use a different method of
calculating performance. A shareholder's investment in the Portfolio is not
insured or guaranteed. These factors should be carefully considered by the
investor before making an investment in the Portfolio.
Calculations of yield will take into account the total income received by the
Portfolio. To the extent that different classes of shares bear different
expenses, the yields of such classes will vary. To the extent that institutions
charge fees in connection with services provided in conjunction with the Trust,
the yield will be lower for those beneficial owners paying such fees.
The current yields quoted will be the net average annualized yield for an
identified period, such as seven consecutive calendar days or a month. Yields
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 any realized gains and losses or unrealized appreciation
or depre-
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ciation 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 yields that assumes the reinvestment of dividends for a
365 day year and a return for the entire year equal to the average annualized
yields for the period, which will be computed by compounding the unannualized
current yields for the period by adding 1 to the unannualized current yields,
raising the sum to a power equal to 365 divided by the number of days in the
period, and then subtracting 1 from the results.
From time to time, AIM or its affiliates may waive all or a portion of their
fees and/or assume certain expenses of the Portfolio. Voluntary fee waivers or
reductions or commitments to assume expenses may be rescinded at any time
without further notice to investors. During periods of voluntary fee waivers or
reductions or commitments to assume expenses may be rescinded at any time
without further notice to investors. During periods of voluntary fee waivers or
reductions or commitments to assume expenses, AIM will retain its ability to be
reimbursed for such fee prior to the end of each fiscal year. Contractual fee
waivers or reductions or reimbursement of expenses set forth in the Fee Table in
a Prospectus may not be terminated or amended to the Portfolio's detriment
during the period stated in the agreement between AIM and the Trust. Fee waivers
or reductions or commitments to reduce expenses will have the effect of the
increasing the Portfolio's yield and total return.
For the seven-day period ended August 31, 1999, the current and effective
yields for the Private Investment Class were 4.80% and 4.91%, respectively. For
the seven-day period ended August 31, 1999, the current and effective yields for
the Institutional Class were 5.10% and 5.23%, respectively. For the seven-day
period ended August 31, 1999, the current and effective yields for the Cash
Management Class were 5.02% and 5.14%, respectively. For the seven-day period
ended August 31, 1999, the current and effective yields for the Personal
Investment Class were 4.60% and 4.70%, respectively. For the seven-day period
ended August 31, 1999, the current and effective yields for the Reserve Class
were 4.30% and 4.39%, respectively. For the seven-day period ended August 31,
1999, the current and effective yields for the Resource Class were 4.94% and
5.06%, respectively. These yields are quoted for illustration purposes only. The
yields for any other seven-day period may be substantially different from the
yields quoted above.
The Trust may compare the performance of a class or the performance of
securities in which it may invest to:
- IBC/Donoghue's Money Fund Averages, which are average yields of
various types of money market funds that include the effect of compounding
distributions;
- other mutual funds, especially those with similar investment
objectives. These comparisons may be based on data published by
IBC/Donoghue's Money Fund Report or by Lipper, Inc., a widely recognized
independent service, 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
Information concerning the Portfolio's investment objective and operating
policies is set forth in each Prospectus. The principal features of the
Portfolio's investment program and the primary risks associated with that
investment program are also discussed in each Prospectus. There can be no
assurance that the Portfolio will achieve its objective. The values of the
securities in which the Portfolio invests fluctuate based upon interest rates,
the financial stability of the issuer and market factors. The following is a
more detailed description of the portfolio instruments eligible for purchase by
the Portfolio, which augments the summary of the Portfolio's investment program
which appears under the heading "Investment Objective and Strategies" in each
Prospectus.
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
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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
reverse 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.
INVESTMENT POLICIES
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 judgement, 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 deliver" 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,
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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 repurchase 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 judgement 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.
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;
(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;
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(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 the 1940
Act, and rules and regulations thereunder, and, if applicable, exemptive orders
granted by the SEC. The Portfolio has obtained an exemptive order from the SEC
allowing it to invest in money market funds that have AIM or an affiliate of AIM
as an investment advisor (the "Affiliated Money Market Fund"), provided that
investments in Affiliated Money Market Funds do not exceed 25% of the total
assets of the Portfolio. If other funds advised by AIM invest in the Portfolio,
however, the Portfolio will be subject to the provisions of Section 12(d)(1) of
the 1940 Act, which limits the ability of an investment company to invest in
another investment company. With respect to the Portfolio's purchase of shares
of the Affiliated Money Market Funds, the Portfolio will indirectly pay the
advisory fees and other operating expenses of the Affiliated Money Market Funds.
The foregoing policy is non-fundamental.
PORTFOLIO TRANSACTIONS AND BROKERAGE
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 port-
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folio 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.
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 is 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.
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, in
written form or on computer software. 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.
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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.
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Dividends with respect to each class of the Portfolio are declared to
shareholders of record as of 5:00 p.m. Eastern time on the date of
declaration. Accordingly, dividends accrue on the first day that a purchase
order for shares of a particular class is effective, provided that the purchase
order has been accepted prior to 5:00 p.m. Eastern time and payment in the form
of federal funds wired has been received by AFS. Dividends do not accrue on the
day that a redemption order is effective, unless the redemption is effective
after 5:00 p.m. Eastern time on that day and redemption proceeds have not been
wired to the shareholder on the same day. Thus, if a purchase order is accepted
prior to 5:00 p.m. Eastern time, the shareholder will receive its pro rata share
of dividends beginning with those declared on that day.
Dividends and distributions are paid in cash unless the shareholder has
elected to have such dividends and distributions reinvested in the form of
additional full and fractional shares at the net asset value hereof. Such
election, or any revocation thereof, must be made in writing and sent by the
shareholder to the AFS at P.O. Box 4497, Houston, Texas 77210-4497. Such
election or revocation will be effective with dividends paid after it is
received by the transfer agent.
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.
If a shareholder redeems all the shares in his 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. 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.
The dividend accrued and paid for each class of shares of the Portfolio will
consist of: (a) interest accrued and original issue discount earned less
amortization of premiums, if any, for the portfolio to which such class relates,
allocated based upon such class' pro rata share of the total shares outstanding
which relate to such portfolio, less (b) Trust expenses accrued for the
applicable dividend period attributable to such portfolio, such as custodian
fees and accounting expenses, allocated based upon each such class' pro rata of
the net assets of such portfolio, less (c) expenses directly attributable to
each class which are accrued for the applicable dividend period, such as
distribution expenses, if any.
Should the Trust incur or anticipate any unusual expense, loss or
depreciation, which would adversely affect the net asset value per share of the
Portfolio or the net income per share of a class of the Portfolio for a
particular period, the 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 then prevailing circumstances. For example, if the net asset value per share
of the Portfolio were reduced, or were anticipated to be reduced, below $1.00,
the Board of Trustees might suspend further dividend payments on shares of the
Portfolio until the net asset returns to $1.00. Thus, such expense or loss or
depreciation might result in a shareholder receiving no dividends for the period
during which it held shares of the Portfolio and/or in its receiving upon
redemption a price per share lower than that which it paid.
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.
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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.
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.
The Portfolio may either retain or distribute to shareholders its net capital
gain, if any, for each taxable year. The Portfolio currently intends to
distribute any such amounts. If net capital gain is distributed and designated
as a capital gain dividend, it will be taxable to shareholders as long-term
capital gain, regardless of the length of time the shareholder has held his
shares or whether such gain was recognized by the Portfolio prior to the date on
which the shareholder acquired his shares.
Distributions by the Portfolio that do not constitute ordinary income
dividends or capital gain dividends will be treated as a return of capital to
the extent of (and in reduction of) the shareholder's tax basis in his shares;
any excess will be treated as gain from the sale of this shares.
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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.
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.
Foreign persons who file a United States tax return 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 transfer agent.
A-30
<PAGE> 217
EFFECT OF FUTURE LEGISLATION; LOCAL TAX CONSIDERATIONS
The foregoing general discussion of U.S. federal income tax consequences is
based on the Code and the regulations issued thereunder as in effect on November
1, 1999. 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-31
<PAGE> 218
FINANCIAL STATEMENTS
FS
<PAGE> 219
SCHEDULE OF INVESTMENTS
August 31, 1999
PAR
MATURITY (000) VALUE
U.S. TREASURY SECURITIES - 18.03%
U.S. TREASURY BILLS(a) - 2.85%
4.49% 11/04/99 $ 50,000 $ 49,600,889
- ---------------------------------------------------------------------------
4.631% 11/18/99 25,000 24,749,178
- ---------------------------------------------------------------------------
4.48% 12/09/99 50,000 49,383,312
- ---------------------------------------------------------------------------
4.615% 01/06/00 25,000 24,592,983
- ---------------------------------------------------------------------------
148,326,362
- ---------------------------------------------------------------------------
U.S. TREASURY NOTES - 15.18%
5.75% 09/30/99 75,000 75,061,771
- ---------------------------------------------------------------------------
7.125% 09/30/99 50,000 50,095,927
- ---------------------------------------------------------------------------
5.625% 10/31/99 80,000 80,113,813
- ---------------------------------------------------------------------------
7.50% 10/31/99 50,000 50,229,754
- ---------------------------------------------------------------------------
7.75% 11/30/99 55,612 56,002,337
- ---------------------------------------------------------------------------
5.625% 12/31/99 75,000 75,156,752
- ---------------------------------------------------------------------------
7.75% 12/31/99 100,000 100,822,053
- ---------------------------------------------------------------------------
6.375% 01/15/00 50,000 50,235,197
- ---------------------------------------------------------------------------
5.375% 01/31/00 25,000 25,056,803
- ---------------------------------------------------------------------------
7.75% 01/31/00 25,000 25,301,941
- ---------------------------------------------------------------------------
5.875% 02/15/00 100,000 100,380,204
- ---------------------------------------------------------------------------
8.50% 02/15/00 75,000 76,242,207
- ---------------------------------------------------------------------------
6.75% 04/30/00 25,000 25,220,193
- ---------------------------------------------------------------------------
789,918,952
- ---------------------------------------------------------------------------
Total U.S. Treasury Securities (Cost
$938,245,314) 938,245,314
- ---------------------------------------------------------------------------
Total Investments (excluding Repurchase
Agreements) 938,245,314
- ---------------------------------------------------------------------------
REPURCHASE AGREEMENTS(b) - 82.11%
BancAmerica Robertson Stephens(c)
5.43% 09/01/99 225,000 225,000,000
- ---------------------------------------------------------------------------
Barclays Capital, Inc.(d)
5.43% 09/01/99 225,000 225,000,000
- ---------------------------------------------------------------------------
Bear, Stearns & Co. Inc.(e)
5.43% -- 150,000 150,000,000
- ---------------------------------------------------------------------------
Bear, Stearns & Co. Inc.(f)
5.17% 01/24/00 200,000 200,000,000
- ---------------------------------------------------------------------------
Chase Securities Inc.(g)
5.43% 09/01/99 225,000 225,000,000
- ---------------------------------------------------------------------------
CIBC Oppenheimer Corp.(h)
5.43% 09/01/99 225,000 225,000,000
- ---------------------------------------------------------------------------
Credit Suisse First Boston Corp.(i)
5.23% 02/14/00 200,000 200,000,000
- ---------------------------------------------------------------------------
Deutsche Bank Securities, Inc.(j)
5.43% -- 800,000 800,000,000
- ---------------------------------------------------------------------------
FS-1
<PAGE> 220
PAR
MATURITY (000) VALUE
REPURCHASE AGREEMENTS - (continued)
Merrill Lynch Government Securities, Inc(k)
5.43% 09/01/99 $225,000 $ 225,000,000
- --------------------------------------------------------------------------------
Salomon Smith Barney Inc.(l)
5.43% 09/01/99 750,000 750,000,000
- --------------------------------------------------------------------------------
Societe Generale Cowen Securities Corp.(m)
5.43% 09/01/99 500,000 500,000,000
- --------------------------------------------------------------------------------
State Street Bank & Trust Co.(n)
5.43% 09/01/99 225,000 225,000,000
- --------------------------------------------------------------------------------
Warburg Dillon Read LLC(o)
5.34% 02/01/00 100,000 100,000,000
- --------------------------------------------------------------------------------
Warburg Dillon Read LLC(p)
5.42% 09/01/99 222,630 222,630,039
- --------------------------------------------------------------------------------
Total Repurchase Agreements (Cost
$4,272,630,039) 4,272,630,039
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.14% 5,210,875,353(q)
- --------------------------------------------------------------------------------
LIABILITIES LESS OTHER ASSETS - (0.14)% (7,128,247)
- --------------------------------------------------------------------------------
NET ASSETS - 100.00% $5,203,747,106
================================================================================
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) Repurchase agreement entered into 08/31/99 with a maturing value of
$225,033,938. Collateralized by $209,140,000 U.S. Treasury obligations,
4.00% to 13.75% due 02/15/00 to 02/15/07 with an aggregate market value at
08/31/99 of $229,996,602.
(d) Repurchase agreement entered into 08/31/99 with a maturing value of
$225,033,938. Collateralized by $230,079,000 U.S. Treasury obligations,
4.25% to 6.125% due 11/15/03 to 08/15/29 with an aggregate market value at
08/31/99 of $229,500,304.
(e) Open repurchase agreement entered into 08/27/97; however, either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $451,335,000 U.S. Treasury
obligations, 0% to 8.75% due 07/20/00 to 11/15/26 with an aggregate market
value at 08/31/99 of $153,430,781.
(f) Term repurchase agreement entered into 07/28/99; however, either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $153,000,000 U.S Treasury
obligations, 4.50% to 10.625% due 05/15/00 to 08/15/17 with an aggregate
market value at 08/31/99 of $204,012,877.
(g) Repurchase agreement entered into 08/31/99 with a maturing value of
$225,033,938. Collateralized by $225,851,000 U.S. Treasury obligations, 0%
to 3.875% due 09/02/99 to 04/15/29 with an aggregate market value at
08/31/99 of $229,500,787.
(h) Repurchase agreement entered into 08/31/99 with a maturing value of
$225,033,938. Collateralized by $223,219,000 U.S. Treasury obligations, 0%
to 7.25% due 09/15/99 to 08/15/26 with an aggregate market value at
08/31/99 of $229,504,040.
(i) Term repurchase agreement entered into 07/27/99; however, either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $445,674,874 U.S Treasury
obligations, 0% to 12.00% due 11/15/99 to 11/15/27 with an aggregate market
value at 08/31/99 of $206,048,641.
(j) Open repurchase agreement entered into 07/29/98; however, either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $795,187,000 U.S. Treasury
obligations, 3.375% to 8.00% due 08/31/00 to 11/15/21 with an aggregate
market value at 08/31/99 of $816,000,276.
(k) Repurchase agreement entered into 08/31/99 with a maturing value of
$225,033,938. Collateralized by $169,934,000 U.S. Treasury obligations,
6.875% to 12.50% due 08/15/14 to 08/15/25 with an aggregate market value at
08/31/99 of $229,503,106.
(l) Repurchase agreement entered into 08/31/99 with a maturing value of
$750,113,125. Collateralized by $746,935,000 U.S. Treasury obligations,
6.00% to 7.00% due 08/15/04 to 07/15/06 with an aggregate market value at
08/31/99 of $765,177,675.
(m) Repurchase agreement entered into 08/31/99 with a maturing value of
$500,075,417. Collateralized by $439,557,000 U.S. Treasury obligations,
4.50% to 12.50% due 09/30/99 to 08/15/26 with an aggregate market value at
08/31/99 of $510,297,171.
(n) Repurchase agreement entered into 08/31/99 with a maturing value of
$225,033,938. Collateralized by $230,660,000 U.S. Treasury obligations,
5.125% due 08/31/00 with a market value at 08/31/99 of $229,760,426.
(o) Term repurchase agreement entered into 08/19/99; however, either party may
terminate the agreement upon demand. Interest rates, par and collateral are
redetermined daily. Collateralized by $90,430,000 U.S Treasury obligations,
7.50% due 11/15/16 with a market value at 08/31/99 of $102,000,601.
(p) Joint repurchase agreement entered into 08/31/99 with a maturing value of
$500,075,278. Collateralized by $500,003,334 U.S. Treasury obligations,
6.50% to 9.125% due 05/15/18 to 11/15/26 with an aggregate market value at
08/31/99 of $510,003,412.
(q) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
FS-2
<PAGE> 221
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1999
ASSETS:
Investments, excluding repurchase agreements, at value
(amortized cost) $ 938,245,314
- ------------------------------------------------------------------------
Repurchase agreements 4,272,630,039
- ------------------------------------------------------------------------
Interest receivable 13,668,357
- ------------------------------------------------------------------------
Investment for deferred compensation plan 101,152
- ------------------------------------------------------------------------
Other assets 172,580
- ------------------------------------------------------------------------
Total assets 5,224,817,442
- ------------------------------------------------------------------------
LIABILITIES:
Payables for:
Dividends 20,194,469
- ------------------------------------------------------------------------
Deferred compensation 101,152
- ------------------------------------------------------------------------
Accrued administrative services fees 24,787
- ------------------------------------------------------------------------
Accrued advisory fees 247,796
- ------------------------------------------------------------------------
Accrued distribution fees 396,227
- ------------------------------------------------------------------------
Accrued transfer agent fees 2,629
- ------------------------------------------------------------------------
Accrued trustees' fees 4,200
- ------------------------------------------------------------------------
Accrued operating expenses 99,076
- ------------------------------------------------------------------------
Total liabilities 21,070,336
- ------------------------------------------------------------------------
NET ASSETS $5,203,747,106
========================================================================
NET ASSETS:
Institutional Class $3,164,199,019
========================================================================
Private Investment Class $ 415,184,467
========================================================================
Personal Investment Class $ 284,932,336
========================================================================
Cash Management Class $ 860,354,479
========================================================================
Reserve Class $ 119,976,218
========================================================================
Resource Class $ 359,100,587
========================================================================
SHARES OF BENEFICIAL INTEREST, $.01 PAR VALUE PER SHARE:
Institutional Class 3,163,983,313
========================================================================
Private Investment Class 415,165,788
========================================================================
Personal Investment Class 284,906,884
========================================================================
Cash Management Class 860,290,642
========================================================================
Reserve Class 119,973,330
========================================================================
Resource Class 359,071,030
========================================================================
NET ASSET VALUE PER SHARE:
Net asset value, offering and redemption price per share $ 1.00
========================================================================
See Notes to Financial Statements.
FS-3
<PAGE> 222
STATEMENT OF OPERATIONS
For the year ended August 31, 1999
INVESTMENT INCOME:
Interest income $261,703,046
- -------------------------------------------------------------------
EXPENSES:
Advisory fees 3,072,316
- -------------------------------------------------------------------
Custodian fees 196,425
- -------------------------------------------------------------------
Administrative services fees 179,471
- -------------------------------------------------------------------
Trustees' fees and expenses 51,955
- -------------------------------------------------------------------
Transfer agent fees 594,299
- -------------------------------------------------------------------
Distribution fees (Note 2) 6,590,154
- -------------------------------------------------------------------
Other 500,054
- -------------------------------------------------------------------
Total expenses 11,184,674
- -------------------------------------------------------------------
Less: Fee waivers (2,048,089)
- -------------------------------------------------------------------
Net expenses 9,136,585
- -------------------------------------------------------------------
Net investment income 252,566,461
- -------------------------------------------------------------------
Net realized gain on sales of investments 233,481
- -------------------------------------------------------------------
Net increase in net assets resulting from operations $252,799,942
===================================================================
STATEMENT OF CHANGES IN NET ASSETS
For the years ended ended August 31, 1999 and 1998
1999 1998
-------------- --------------
OPERATIONS:
Net investment income $ 252,566,461 $ 282,365,404
- -----------------------------------------------------------------------------
Net realized gain on sales of investments 233,481 17,887
- -----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 252,799,942 282,383,291
- -----------------------------------------------------------------------------
Distributions to shareholders from net
investment income:
Institutional Class (154,878,876) (171,162,611)
- -----------------------------------------------------------------------------
Private Investment Class (16,111,371) (20,105,302)
- -----------------------------------------------------------------------------
Personal Investment Class (16,331,172) (18,031,165)
- -----------------------------------------------------------------------------
Cash Management Class (46,789,257) (55,954,060)
- -----------------------------------------------------------------------------
Reserve Class (1,139,360) --
- -----------------------------------------------------------------------------
Resource Class (17,316,425) (17,112,266)
- -----------------------------------------------------------------------------
Distributions to shareholders from net
realized gains:
Institutional Class (432,034) --
- -----------------------------------------------------------------------------
Private Investment Class (43,761) --
- -----------------------------------------------------------------------------
Personal Investment Class (47,801) --
- -----------------------------------------------------------------------------
Cash Management Class (126,796) --
- -----------------------------------------------------------------------------
Resource Class (49,581) --
- -----------------------------------------------------------------------------
Share transactions-net (See Note 4) 59,979,434 (116,572,228)
- -----------------------------------------------------------------------------
Net increase (decrease) in net assets 59,512,942 (116,554,341)
- -----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 5,144,234,164 5,260,788,505
- -----------------------------------------------------------------------------
End of period $5,203,747,106 $5,144,234,164
=============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $5,203,390,987 $5,143,411,553
- -----------------------------------------------------------------------------
Undistributed net realized gain on sales of
investments 356,119 822,611
- -----------------------------------------------------------------------------
$5,203,747,106 $5,144,234,164
=============================================================================
See Notes to Financial Statements.
FS-4
<PAGE> 223
NOTES TO FINANCIAL STATEMENTS
August 31, 1999
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. 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 currently offers six different classes of shares: the
Institutional Class, the Private Investment Class, the Personal Investment
Class, the Cash Management Class, the Reserve 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:
Net Assets RATE
- ----------------------------------------
First $300 million 0.15%
- ----------------------------------------
Over $300 million to $1.5 billion 0.06%
- ----------------------------------------
Over $1.5 billion 0.05%
- ----------------------------------------
FS-5
<PAGE> 224
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the year ended August 31, 1999, AIM was
paid $179,471 for such services.
The Fund, 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 Fund. During the year ended August 31, 1999, AFS
was paid $477,417 for such services.
Under the terms of a master distribution agreement between Fund Management
Company ("FMC") and the Fund, FMC acts as the exclusive distributor of the
Fund's shares. The Fund has adopted a master distribution plan (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act with respect to the Private
Investment Class, the Personal Investment Class, the Cash Management Class, the
Reserve Class and the Resource Class of the Portfolio. The Plan provides that
the Private Investment Class, the Personal Investment Class, the Cash
Management Class, the Reserve Class and the Resource Class pay up to a 0.50%,
0.75%, 0.10%, 1.00%, 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, Personal Investment Class, and the Reserve 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, the Reserve 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, 1999, the Private Investment Class, the
Personal Investment Class, the Cash Management Class, the Reserve Class and the
Resource Class paid $1,063,328, $1,878,076, $783,278, $226,595 and $590,788,
respectively, as compensation under the Plan. FMC waived fees of $2,048,089 for
the same period. Certain officers and trustees of the Trust are officers of
AIM, FMC and AFS.
During the year ended August 31, 1999, the Portfolio paid legal fees of
$13,465 for services rendered by Kramer, Levin, Naftalis & Frankel LLP 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 to trustees who are 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-6
<PAGE> 225
NOTE 4-SHARE INFORMATION
Changes in shares outstanding during the years ended August 31, 1999 and 1998
were as follows:
<TABLE>
<CAPTION>
1999 1998
-------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Sold:
Institutional Class 18,697,189,201 $18,697,189,201 18,385,087,568 $18,385,087,568
- -------------------------------------------------------------------------------------------
Private Investment
Class 1,543,792,773 1,543,792,773 1,991,337,616 1,991,337,616
- -------------------------------------------------------------------------------------------
Personal Investment
Class 3,783,262,789 3,783,262,789 3,949,434,631 3,949,434,631
- -------------------------------------------------------------------------------------------
Cash Management Class 6,593,996,488 6,593,996,488 6,742,292,291 6,742,292,291
- -------------------------------------------------------------------------------------------
Reserve Class* 339,249,182 339,249,182 -- --
- -------------------------------------------------------------------------------------------
Resource Class 2,625,595,247 2,625,595,247 2,712,585,402 2,712,585,402
- -------------------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Institutional Class 35,404,120 35,404,120 34,740,376 34,740,376
- -------------------------------------------------------------------------------------------
Private Investment
Class 5,531,007 5,531,007 5,517,795 5,517,795
- -------------------------------------------------------------------------------------------
Personal Investment
Class 14,908,717 14,908,717 16,025,048 16,025,048
- -------------------------------------------------------------------------------------------
Cash Management Class 18,450,756 18,450,756 20,427,201 20,427,201
- -------------------------------------------------------------------------------------------
Reserve Class* 740,689 740,689 -- --
- -------------------------------------------------------------------------------------------
Resource Class 16,749,204 16,749,204 15,915,270 15,915,270
- -------------------------------------------------------------------------------------------
Reacquired:
Institutional Class (18,556,477,426) (18,556,477,426) (18,839,453,624) (18,839,453,624)
- -------------------------------------------------------------------------------------------
Private Investment
Class (1,494,418,811) (1,494,418,811) (2,099,963,668) (2,099,963,668)
- -------------------------------------------------------------------------------------------
Personal Investment
Class (3,919,007,542) (3,919,007,542) (3,882,639,209) (3,882,639,209)
- -------------------------------------------------------------------------------------------
Cash Management Class (6,685,798,097) (6,685,798,097) (6,658,189,744) (6,658,189,744)
- -------------------------------------------------------------------------------------------
Reserve Class* (220,016,541) (220,016,541) -- --
- -------------------------------------------------------------------------------------------
Resource Class (2,739,172,322) (2,739,172,322) (2,509,689,181) (2,509,689,181)
- -------------------------------------------------------------------------------------------
Net increase (decrease) 59,979,434 $ 59,979,434 (116,572,228) $ (116,572,228)
===========================================================================================
</TABLE>
* The Reserve Class commenced sales on January 4, 1999.
FS-7
<PAGE> 226
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
Treasury Portfolio (a series portfolio of Short-Term Investments Trust),
including the schedule of investments, as of August 31, 1999, and the related
statement of operations for the year then ended, the statement of changes in
net assets for each of the two years in the period then ended, and the
financial highlights for the period January 4, 1999 (date sales commenced for
the Reserve Class) through August 31, 1999. 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 audit.
We conducted our audit 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, 1999 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 audit provides 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
Treasury Portfolio as of August 31, 1999, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for the period January 4, 1999
(date sales commenced for the Reserve Class) through August 31, 1999, in
conformity with generally accepted accounting principles.
KPMG LLP
/s/ KPMG LLP
October 1, 1999
Houston, Texas
FS-8
<PAGE> 227
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Cash Management
Class outstanding for each of the years in the five-year period ended August
31, 1999.
1999 1998 1997 1996 1995
-------- -------- -------- -------- -------
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 0.05
- -------------------------- -------- -------- -------- -------- -------
Less distributions:
Dividends from net
investment income (0.05) (0.05) (0.05) (0.05) (0.05)
- -------------------------- -------- -------- -------- -------- -------
Net asset value, end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========================== ======== ======== ======== ======== =======
Total return 4.89% 5.56% 5.39% 5.48% 5.57%
========================== ======== ======== ======== ======== =======
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $860,354 $933,791 $829,243 $789,627 $81,219
========================== ======== ======== ======== ======== =======
Ratio of expenses to
average net assets(a) 0.17%(b) 0.17% 0.17% 0.17% 0.18%
========================== ======== ======== ======== ======== =======
Ratio of net investment
income to average net
assets(c) 4.77%(b) 5.42% 5.25% 5.25% 5.42%
========================== ======== ======== ======== ======== =======
(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%, 0.19% and 0.20% for the periods 1999-1995,
respectively.
(b) Ratios based on average net assets of $979,097,144.
(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 4.75%, 5.40%, 5.24%, 5.23% and 5.40% for the periods
1999-1995, respectively.
FS-9
<PAGE> 228
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders
Short-Term Investments Trust:
We have audited the accompanying statement of assets and liabilities of
Treasury Portfolio (a series portfolio of Short-Term Investments Trust),
including the schedule of investments, as of August 31, 1999, and the related
statement of operations for the year then ended, the statement of changes in
net assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the 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, 1999 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
Treasury Portfolio as of August 31, 1999, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period ended, and the financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting principles.
KPMG LLP
/s/ KPMP LLP
October 1, 1999
Houston, Texas
FS-10
<PAGE> 229
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Institutional Class
outstanding for each of the years in the five-year period ended August 31,
1999.
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<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 0.06
- ----------------------- ---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net
investment income (0.05) (0.05) (0.05) (0.05) (0.06)
- ----------------------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======================= ========== ========== ========== ========== ==========
Total return 4.97% 5.64% 5.47% 5.57% 5.66%
======================= ========== ========== ========== ========== ==========
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $3,164,199 $2,988,375 $3,408,010 $2,335,441 $2,669,637
======================= ========== ========== ========== ========== ==========
Ratio of expenses to
average net assets 0.09%(a) 0.08% 0.09% 0.09% 0.10%
======================= ========== ========== ========== ========== ==========
Ratio of net investment
income to average net
assets 4.85%(a) 5.50% 5.35% 5.43% 5.53%
======================= ========== ========== ========== ========== ==========
(a)Ratios based on average net assets of $3,197,910,489.
</TABLE>
- --------------------------------------------------------------------------------
FS-11
<PAGE> 230
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
Treasury Portfolio (a series portfolio of Short-Term Investments Trust),
including the schedule of investments, as of August 31, 1999, and the related
statement of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the
financial highlights for each of the three years in the 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, 1999 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
Treasury Portfolio as of August 31, 1999, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period ended and the financial highlights for each of the three years in the
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 LLP
/s/ KPMG LLP
October 1, 1999
Houston, Texas
FS-12
<PAGE> 231
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Personal Investment
Class outstanding for each of the years in the five-year period ended August
31, 1999.
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
Net asset value,
beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------- -------- -------- -------- -------- --------
Income from investment
operations:
Net investment income 0.04 0.05 0.05 0.05 0.05
- ------------------------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income (0.04) (0.05) (0.05) (0.05) (0.05)
- ------------------------- -------- -------- -------- -------- --------
Net asset value, end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========================= ======== ======== ======== ======== ========
Total return 4.45% 5.12% 4.95% 5.04% 5.13%
========================= ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $284,932 $405,801 $322,971 $192,947 $114,527
========================= ======== ======== ======== ======== ========
Ratio of expenses to
average net assets(a) 0.59%(b) 0.58% 0.60% 0.59% 0.60%
========================= ======== ======== ======== ======== ========
Ratio of net investment
income to average net
assets(c) 4.35%(b) 5.01% 4.85% 4.91% 5.03%
========================= ======== ======== ======== ======== ========
(a) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
0.84%, 0.83%, 0.86%, 0.92% and 0.90% for the periods 1999-1995,
respectively.
(b) Ratios based on average net assets of $375,615,292.
(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 4.10%, 4.76%, 4.59%, 4.58% and 4.73% for the periods
1999-1995, respectively.
FS-13
<PAGE> 232
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
Treasury Portfolio (a series portfolio of Short-Term Investments Trust),
including the schedule of investments, as of August 31, 1999, and the related
statement of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the 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, 1999 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
Treasury Portfolio as of August 31, 1999, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended, in conformity with generally accepted accounting
principles.
KPMG LLP
/s/ KPMG LLP
October 1, 1999
Houston, Texas
FS-14
<PAGE> 233
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Private Investment
Class outstanding for each of the years in the five-year period ended August
31, 1999.
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
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 0.05
- ------------------------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income (0.05) (0.05) (0.05) (0.05) (0.05)
- ------------------------- -------- -------- -------- -------- --------
Net asset value, end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========================= ======== ======== ======== ======== ========
Total return 4.66% 5.33% 5.16% 5.25% 5.34%
========================= ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $415,184 $360,307 $463,441 $352,537 $394,585
========================= ======== ======== ======== ======== ========
Ratio of expenses to
average net assets(a) 0.39%(b) 0.38% 0.39% 0.39% 0.40%
========================= ======== ======== ======== ======== ========
Ratio of net investment
income to average net
assets(c) 4.55%(b) 5.20% 5.05% 5.14% 5.23%
========================= ======== ======== ======== ======== ========
(a) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
0.59%, 0.58%, 0.59%, 0.59% and 0.60% for the periods 1999-1995,
respectively.
(b) Ratios based on average net assets of $354,442,723.
(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 4.35%, 5.00%, 4.85%, 4.94% and 5.03% for the periods
1999-1995, respectively.
FS-15
<PAGE> 234
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
Treasury Portfolio (a series portfolio of Short-Term Investments Trust),
including the schedule of investments, as of August 31, 1999, and the related
statement of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the 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, 1999 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
Treasury Portfolio as of August 31, 1999, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period ended, and the financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting principles.
KPMG LLP
/s/ KPMG LLP
October 1, 1999
Houston, Texas
FS-16
<PAGE> 235
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Reserve Class
outstanding during the period January 4, 1999 (date sales commenced) through
August 31, 1999.
1999
--------
Net asset value, beginning of period $ 1.00
- ------------------------------------------------------- --------
Income from investment operations:
Net investment income 0.03
- ------------------------------------------------------- --------
Less distributions:
Dividends from net investment income (0.03)
- ------------------------------------------------------- --------
Net asset value, end of period $ 1.00
======================================================= ========
Total return(a) 2.63%
======================================================= ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $119,976
======================================================= ========
Ratio of expenses to average net assets(b) 0.89%(c)
======================================================= ========
Ratio of net investment income to average net assets(d) 2.09%(c)
======================================================= ========
(a) Not annualized for periods less than one year.
(b) After fee waivers and/or expense reimbursements. Ratio of expenses to
average net assets prior to fee waivers and/or expense reimbursements was
1.09%.
(c) Ratios based on average net assets of $28,324,369.
(d) After fee waivers and/or expense reimbursements. Ratio of net investment
income to average net assets prior to fee waivers and/or expense
reimbursements was 1.89%.
FS-17
<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
Treasury Portfolio (a series portfolio of Short-Term Investments Trust),
including the schedule of investments, as of August 31, 1999, and the related
statement of operations for the year then ended, the statement of changes in
net assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the 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, 1999 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
Treasury Portfolio as of August 31, 1999, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period ended, and the financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting principles.
KPMG LLP
/s/ KPMG LLP
October 1, 1999
Houston, Texas
FS-18
<PAGE> 237
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Resource Class
outstanding for each of the years in the three-year period ended August 31,
1999 and the period March 12, 1996 (date sales commenced) through August 31,
1996.
1999 1998 1997 1996
-------- -------- -------- -------
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 0.03
- --------------------------------- -------- -------- -------- -------
Less distributions:
Dividends from net investment
income (0.05) (0.05) (0.05) (0.03)
================================= ======== ======== ======== =======
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
================================= ======== ======== ======== =======
Total return 4.80% 5.47% 5.30% 2.43%
================================= ======== ======== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $359,101 $455,961 $237,123 $33,339
================================= ======== ======== ======== =======
Ratio of expenses to average net
assets(a) 0.25%(b) 0.24% 0.25% 0.25%(c)
================================= ======== ======== ======== =======
Ratio of net investment income to
average net assets(d) 4.69%(b) 5.34% 5.19% 5.07%(c)
================================= ======== ======== ======== =======
(a) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursement were
0.29%, 0.28%, 0.29% and 0.29% (annualized) for the periods 1999-1996,
respectively.
(b) Ratios based on average net assets of $369,242,180.
(c) Annualized
(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 4.65%, 5.30%, 5.15% and 5.03% (annualized) for the
periods 1999-1996, respectively.
FS-19
<PAGE> 238
[AIM LOGO]
CASH MANAGEMENT CLASS
TREASURY TAXADVANTAGE PORTFOLIO
PROSPECTUS
DECEMBER 17, 1999
Treasury TaxAdvantage Portfolio seeks to maximize current income consistent with
the preservation of capital and the maintenance of liquidity.
This prospectus contains important information about the Cash Management Class
of the fund. Please read it before investing and keep it for future reference.
As with all other mutual fund securities, the Securities and Exchange Commission
has not approved or disapproved these securities or determined whether the
information in this prospectus is adequate or accurate. Anyone who tells you
otherwise is committing a crime.
There can be no assurance that the fund will be able to maintain a stable net
asset value of $1.00 per share.
1
<PAGE> 239
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES......................................................................3
PRINCIPAL RISKS OF INVESTING IN THE FUND ................................................................3
PERFORMANCE INFORMATION..................................................................................4
ANNUAL TOTAL RETURNS............................................................................4
PERFORMANCE TABLE...............................................................................5
FEE TABLE AND EXPENSE EXAMPLE............................................................................6
FEE TABLE.......................................................................................6
EXPENSE EXAMPLE.................................................................................6
FUND MANAGEMENT..........................................................................................7
THE ADVISOR.....................................................................................7
ADVISOR COMPENSATION............................................................................7
OTHER INFORMATION........................................................................................8
SUITABILITY FOR INVESTORS.......................................................................8
DIVIDENDS AND DISTRIBUTIONS.....................................................................8
SHAREHOLDER INFORMATION.................................................................................10
DISTRIBUTION AND SERVICE (12b-1) FEES..........................................................10
PURCHASING SHARES..............................................................................10
REDEEMING SHARES...............................................................................10
PRICING OF SHARES..............................................................................11
TAXES..........................................................................................11
OBTAINING ADDITIONAL INFORMATION...........................................................BACK COVER PAGE
</TABLE>
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, AIM Funds, AIM
Funds and Design, AIM Internet Connect and AIM Investor are service marks of
A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
2
<PAGE> 240
INVESTMENT OBJECTIVE AND STRATEGIES
The fund's investment objective is to maximize current income consistent with
the preservation of capital and the maintenance of liquidity.
The fund attempts to meet this objective by investing in direct obligations of
the U.S. Treasury, including bills, notes and bonds. The fund also seeks to
provide dividends that are exempt from state and local taxation in many states.
The fund will maintain a weighted average maturity of 90 days or less. The fund
invests in compliance with Rule 2a-7 under the Investment Company Act of 1940.
The portfolio managers focus on U.S. Treasury obligations they believe have
favorable prospects for current income consistent with the preservation of
capital and the maintenance of liquidity. The portfolio managers usually hold
portfolio securities to maturity, but may sell a particular security when they
deem it advisable, such as when any of the factors above materially changes.
PRINCIPAL RISKS OF INVESTING IN THE FUND
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the fund.
Additionally, the fund's yield will vary as the short-term securities in its
portfolio mature and the proceeds are reinvested in securities with different
interest rates.
The following factors could reduce the fund's income and/or share price:
o sharply rising interest rates; and
o downgrades of credit ratings or defaults of any of the fund's holdings.
The value of your shares could be adversely affected if the computer systems
used by the fund's investment advisor and the fund's other service providers are
unable to distinguish the year 2000 from the year 1900.
The fund's investment advisor and independent technology consultants are working
to avoid year 2000-related problems in its systems and to obtain assurances that
other service providers are taking similar steps. Year 2000 problems may also
affect issuers in whose securities the fund invests.
3
<PAGE> 241
PERFORMANCE INFORMATION
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
The following bar chart shows changes in the performance of the Institutional
Class shares from year to year. Neither the Cash Management Class shares nor the
Institutional Class shares are subject to sales loads.
INSTITUTIONAL INVESTMENT CLASS
[CHART]
<TABLE>
<CAPTION>
YEAR RETURN(%)
---- ---------
<S> <C> <C>
1991 5.90%
1992 3.57%
1993 2.95%
1994 3.88%
1995 5.58%
1996 5.09%
1997 5.15%
1998 5.11%
</TABLE>
The returns are those of the fund's Institutional Class shares, which are not
offered in this prospectus. Cash Management Class shares would have
substantially similar annual returns because the shares are invested in the same
portfolio of securities, but would be lower to the extent that the classes have
different expenses.
The Institutional Class shares' year-to-date total return as of September 30,
1999 was 3.34%.
During the periods shown in the bar chart, Institutional Class' highest
quarterly return was 1.63% (quarter ended March 31, 1991) and its lowest
quarterly return was 0.72% (quarter ended June 30, 1993).
4
<PAGE> 242
PERFORMANCE TABLE
The following performance table reflects the performance of Institutional Class
shares over the periods indicated.
<TABLE>
<CAPTION>
=============================================================================================================
Average Annual Total Returns
(for the periods ended December 31, 1998)
Since Inception
1 Year 5 Years 10 Years Inception Date
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Institutional Class 5.11% 4.96% -- 4.79% 08/17/90
Cash Management Class -- -- -- -- 01/04/99
=============================================================================================================
</TABLE>
For the current seven-day yield of Cash Management Class shares, call
(800)877-7745.
5
<PAGE> 243
FEE TABLE AND EXPENSE EXAMPLE
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
Cash Management Class
---------------------
<S> <C>
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price
or redemption proceeds, whichever is less) None
Annual Fund Operating Expenses (expenses that are deducted
from fund assets)(1)
Management Fees 0.20%
Distribution and/or Service (12b-1) Fees 0.10
Other Expenses 0.15
Total Annual Fund Operating Expenses 0.45
Fee Waiver and Expense Reimbursement(2) 0.17
Net Expenses(3) 0.28
</TABLE>
(1) The fees and expenses are based on estimated net assets for the current
fiscal period.
(2) The distributor has contractually agreed to waive 0.02% of the Rule 12b-1
distribution plan fee. The investment advisor has contractually agreed to
limit Total Annual Fund Operating Expenses, excluding the Rule 12b-1
distribution plan fee, interest expense, taxes and extraordinary expenses,
to 0.20%.
(3) The investment advisor has voluntarily agreed to limit Net Expenses,
excluding the Rule 12b-1 distribution plan fee, interest expense, taxes and
extraordinary expenses, to 0.11%. This limitation can be terminated at any
time. Net Expenses, net of this voluntary limitation, are 0.19%.
You should also consider the effect of any account fees charged by the financial
institution managing the account.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the Cash
Management Class of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's gross operating expenses remain the same. To the extent fees are waived
or expenses are reimbursed, the expenses will be lower. Although your actual
returns and costs may be higher or lower, based on these assumptions your costs
would be:
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
Cash Management Class $46 $146
</TABLE>
6
<PAGE> 244
FUND MANAGEMENT
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provides investment advisory services to
the fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 125
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended August 31, 1999, the advisor received compensation
of 0.04% of average daily net assets.
7
<PAGE> 245
OTHER INFORMATION
SUITABILITY FOR INVESTORS
The Cash Management Class of the fund is intended for use primarily by customers
of banks, certain broker-dealers and other institutions (institutions).
Individuals, corporations, partnerships and other businesses that maintain
qualified accounts at an institution may invest in shares of the Cash Management
Class. Each institution will render administrative support services to its
customers who are the beneficial owners of the shares of the Cash Management
Class. Such services include, among other things, establishment and maintenance
of shareholder accounts and records; assistance in processing purchase and
redemption transactions in shares of the Cash Management Class; providing
periodic statements showing a client's account balance in shares of the Cash
Management Class; distribution of fund proxy statements, annual reports and
other communications to shareholders whose accounts are serviced by the
institution; and such other services as the fund may reasonably request.
Institutions will be required to certify to the fund that they comply with
applicable state law regarding registration as broker-dealers, or that they are
exempt from such registration. Fund Management Company (the distributor) will
review each application for the purchase of shares of the Cash Management Class
and reserves the right to reject any order to purchase based upon a review of
the suitability of the investor.
The Cash Management Class is designed to be a convenient and economical way to
invest in an open-end diversified money market fund whose dividends are exempt
from state and local taxation in many states. It is anticipated that most
investors will perform their own subaccounting.
Investors in the Cash Management 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 Cash Management Class.
Because the fund 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 fund 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 fund 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.
DIVIDENDS AND DISTRIBUTIONS
Dividends
The fund generally declares dividends on each business day and pays dividends
monthly. A business day is any day on which both the Federal Reserve Bank of New
York and The Bank of New York, the fund's custodian, are open for business.
Dividends are paid on settled shares of the fund as of 3:00 p.m. Eastern time.
Generally, shareholders whose purchase orders have been received by the fund
prior to 3:00 p.m. Eastern time and shareholders whose redemption proceeds have
not been wired to them on any business day are eligible to receive dividends on
that business day. The dividend declared on any day preceding a non-business day
of the fund will include the income accrued on such non-business day. Dividends
and distributions are paid in cash unless the shareholder has elected to have
such dividends and distributions reinvested in the form of additional full and
fractional shares at net asset value.
8
<PAGE> 246
Capital Gains Distributions
The fund generally distributes net realized capital gains (including net
short-term capital gains), if any, annually. The fund does not expect to realize
any long-term capital gains and losses.
9
<PAGE> 247
SHAREHOLDER INFORMATION
The fund currently offers six classes of shares all of which share a common
investment objective and portfolio of investments. The six classes differ only
with respect to distribution arrangements for different categories of investors.
DISTRIBUTION AND SERVICE (12b-1) FEES
The fund has adopted a 12b-1 plan with respect to the Cash Management Class that
allows the fund to pay distribution fees to Fund Management Company (the
distributor) for the sale and distribution of its shares and fees for services
provided to shareholders. Because the fund pays these fees out of its assets on
an ongoing basis, over time these fees will increase the cost of your investment
and may cost you more than paying other types of sales charges.
PURCHASING SHARES
The minimum initial investment in the Cash Management Class is $1 million. No
minimum amount is required for subsequent investments in the fund, nor are
minimum balances required.
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 fund. Purchase orders
received after such time will be processed at the next day's net asset value.
You may purchase shares by submitting an Account Application to the fund's
transfer agent, A I M Fund Services, Inc. (transfer agent) at P.O. Box 4497,
Houston, Texas 77210-4497 prior to your initial purchase of shares. You must
open a fund account through an institution in accordance with procedures
established by such institution. A purchase order is considered received at the
time The Bank of New York receives federal funds (member bank deposits with a
Federal Reserve Bank) for the order, provided the transfer agent has received
notice of the order or at the time the order is placed, if the fund is assured
of payment. You may obtain an Account Application from the distributor.
Subsequent purchases of shares of the funds may also be made via
AIM LINK--Registered Trademark-- Remote, a personal computer application
software product.
If you propose to open a fund account with an institution, you should consult
with a representative of such institution to obtain a description of the rules
governing such an account. A statement with regard to your investment in the
Cash Management Class is supplied periodically, and confirmations of all
transactions for your account are provided by the institution promptly upon
request. In addition, proxies, periodic reports and other information from the
institution with regard to your shares of the Cash Management Class will be sent
to you.
You may place an order for the purchase of shares of the Cash Management Class
with the institution. The institution is responsible for the prompt transmission
of the order to the transfer agent. The fund is normally required to make
immediate settlement in federal funds for portfolio securities purchased.
Accordingly, payment for shares of the Cash Management Class purchased by
institutions on behalf of their clients must be in federal funds. If an order to
purchase shares is paid for other than in federal funds, the order may be
delayed up to two business days while the institution completes the conversion
into federal funds.
REDEEMING SHARES
You may redeem any or all of your shares at the net asset value next determined
after receipt of a redemption request in proper form by the fund. There is no
charge for redemption. Redemption requests with respect to shares of the Cash
Management Class are normally made through a customer's institution.
10
<PAGE> 248
You may request a redemption by calling the transfer agent at (800) 877-7745 or
by using AIM LINK--Registered Trademark-- Remote. Payment for redeemed shares
is normally made by Federal Reserve wire to the commercial bank account
designated in your Account Application. You may also request that payment be
made by check. We use reasonable procedures to confirm that instructions
communicated by telephone are genuine and are not liable for telephone
instructions that are reasonably believed to be genuine. Such reasonable
procedures may include recordings of telephone transactions maintained for a
reasonable period of time.
Payment for redemption orders received prior to 3:00 p.m. Eastern time will
normally be made on the same day. Payment for shares 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 fund may make payment for telephone redemptions in excess of $1,000 by
check when it is considered to be in the fund's best interest to do so.
Dividends payable up to the date of redemption on redeemed shares will normally
be paid by wire transfer on the next dividend payment date. However, if all of
the shares in your account are redeemed, you will receive dividends payable up
to the date of redemption with the proceeds of the redemption.
THE FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
o REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
o MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
o WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
PRICING OF SHARES
Determination of Net Asset Value
The price of each of the fund's shares is the fund's net asset value per share.
The fund determines the net asset value of its shares as of 3:00 p.m. Eastern
time on each day on which both the Federal Reserve Bank of New York and The Bank
of New York are open for business (business day). The fund values portfolio
securities on the basis of amortized cost, which approximates market value.
Timing of Orders
The fund prices purchase and redemption orders at the net asset value calculated
after the transfer agent receives an order in good form. If the transfer agent
receives a redemption request on a business day prior to 3:00 p.m. Eastern time,
the fund will normally wire redemption proceeds on that day. If the transfer
agent receives a redemption request after 3:00 p.m. Eastern time on a business
day of the fund, the redemption will be processed at the net asset value next
determined and the fund will normally wire proceeds on the next business day.
Shareholders will accrue dividends until the day the fund wires redemption
proceeds. The fund may postpone the right of redemption only under unusual
circumstances, as allowed by the Securities and Exchange Commission, such as
when the New York Stock Exchange restricts or suspends trading. The fund
reserves the right to change the time for which purchase and redemption orders
must be submitted to and received by the transfer agent for execution on the
same day on any day when the primary government securities dealers are either
closed for business or close early, or trading in money market securities is
limited due to national holidays.
TAXES
Dividends and distributions received are taxable as ordinary income [or
long-term capital gains] for federal income tax purposes, whether reinvested in
additional shares or taken in cash. Distributions are taxable at different rates
depending on the length of time the fund holds its assets. [Different tax rates
apply to ordinary income and long-term capital gain distributions, regardless of
how long shares are held.] Every year, information will be sent showing the
amount of dividends and distributions received from the fund during the prior
year.
11
<PAGE> 249
[Any long-term or short-term capital gains realized from redemptions of the fund
shares will be subject to federal income tax.]
The foreign, state and local tax consequences of investing in the fund may
differ materially from the federal income tax consequences described above. The
fund'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. Shareholders should
consult their tax advisor before investing.
12
<PAGE> 250
[BACK COVER PAGE]
OBTAINING ADDITIONAL INFORMATION
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds(R) or your account, or wish to obtain free copies of the fund's current
SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P. O. Box 4497
Houston, TX 77210-4497
BY TELEPHONE: (800) 877-7745
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com (prospectuses and annual and
semiannual reports only)
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
Treasury TaxAdvantage Portfolio
SEC 1940 Act file number: 811-2729
Back Cover Page
<PAGE> 251
[AIM LOGO]
INSTITUTIONAL CLASS
TREASURY TAXADVANTAGE PORTFOLIO
PROSPECTUS
DECEMBER 17, 1999
Treasury TaxAdvantage Portfolio seeks to maximize current income consistent with
the preservation of capital and the maintenance of liquidity.
This prospectus contains important information about the Institutional Class of
the fund. Please read it before investing and keep it for future reference.
As with all other mutual fund securities, the Securities and Exchange Commission
has not approved or disapproved these securities or determined whether the
information in this prospectus is adequate or accurate. Anyone who tells you
otherwise is committing a crime.
There can be no assurance that the fund will be able to maintain a stable net
asset value of $1.00 per share.
1
<PAGE> 252
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES......................................................................3
PRINCIPAL RISKS OF INVESTING IN THE FUND ................................................................3
PERFORMANCE INFORMATION..................................................................................4
ANNUAL TOTAL RETURNS............................................................................4
PERFORMANCE TABLE...............................................................................5
FEE TABLE AND EXPENSE EXAMPLE............................................................................6
FEE TABLE.......................................................................................6
EXPENSE EXAMPLE.................................................................................6
FUND MANAGEMENT..........................................................................................7
THE ADVISOR.....................................................................................7
ADVISOR COMPENSATION............................................................................7
OTHER INFORMATION........................................................................................8
SUITABILITY FOR INVESTORS.......................................................................8
DIVIDENDS AND DISTRIBUTIONS.....................................................................8
FINANCIAL HIGHLIGHTS.....................................................................................9
SHAREHOLDER INFORMATION.................................................................................10
PURCHASING SHARES..............................................................................10
REDEEMING SHARES...............................................................................10
PRICING OF SHARES..............................................................................11
TAXES..........................................................................................11
OBTAINING ADDITIONAL INFORMATION...........................................................BACK COVER PAGE
</TABLE>
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, AIM Funds, AIM
Funds and Design, AIM Internet Connect and AIM Investor are service marks of
A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
2
<PAGE> 253
INVESTMENT OBJECTIVE AND STRATEGIES
The fund's investment objective is to maximize current income consistent with
the preservation of capital and the maintenance of liquidity.
The fund attempts to meet this objective by investing in direct obligations of
the U.S. Treasury, including bills, notes and bonds. The fund also seeks to
provide dividends that are exempt from state and local taxation in many states.
The fund will maintain a weighted average maturity of 90 days or less. The fund
invests in compliance with Rule 2a-7 under the Investment Company Act of 1940.
The portfolio managers focus on U.S. Treasury obligations they believe have
favorable prospects for current income consistent with the preservation of
capital and the maintenance of liquidity. The portfolio managers usually hold
portfolio securities to maturity, but may sell a particular security when they
deem it advisable, such as when any of the factors above materially changes.
PRINCIPAL RISKS OF INVESTING IN THE FUND
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the fund.
Additionally, the fund's yield will vary as the short-term securities in its
portfolio mature and the proceeds are reinvested in securities with different
interest rates.
The following factors could reduce the fund's income and/or share price:
o sharply rising interest rates; and
o downgrades of credit ratings or defaults of any of the fund's holdings.
The value of your shares could be adversely affected if the computer systems
used by the fund's investment advisor and the fund's other service providers are
unable to distinguish the year 2000 from the year 1900.
The fund's investment advisor and independent technology consultants are working
to avoid year 2000-related problems in its systems and to obtain assurances that
other service providers are taking similar steps. Year 2000 problems may also
affect issuers in whose securities the fund invests.
3
<PAGE> 254
PERFORMANCE INFORMATION
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
The following bar chart shows changes in the performance of the Institutional
Class shares from year to year. Institutional Class shares are not subject to
sales loads.
INSTITUTIONAL INVESTMENT CLASS
[CHART]
<TABLE>
<CAPTION>
YEAR RETURN(%)
- ---- ---------
<S> <C>
1991 5.90%
1992 3.57%
1993 2.95%
1994 3.88%
1995 5.58%
1996 5.09%
1997 5.15%
1998 5.11%
</TABLE>
The Institutional Class shares' year-to-date total return as of September 30,
1999 was 3.34%.
During the periods shown in the bar chart, the highest quarterly return was
1.63% (quarter ended March 31, 1995) and the lowest quarterly return was 0.72%
(quarter ended June 30, 1993).
4
<PAGE> 255
PERFORMANCE TABLE
The following performance table reflects the performance of the Institutional
Class shares over the periods indicated.
<TABLE>
<CAPTION>
=============================================================================================================
Average Annual Total Returns
(for the periods ended December 31, 1998)
Since Inception
1 Year 5 Years 10 Years Inception Date
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Institutional Class 5.11% 4.96% -- 4.79% 08/17/90
=============================================================================================================
</TABLE>
Institutional Class shares' seven-day yield on December 31, 1998 was 4.27%. For
the current seven-day yield, call (800) 659-1005.
5
<PAGE> 256
FEE TABLE AND EXPENSE EXAMPLE
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
Institutional Class
-------------------
<S> <C>
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price
or redemption proceeds, whichever is less) None
Annual Fund Operating Expenses (expenses that are deducted from fund assets)(1)
Management Fees 0.20%
Distribution and/or Service (12b-1) Fees 0.00
Other Expenses 0.15
Total Annual Fund Operating Expenses 0.35
Expense Reimbursement(2) 0.15
Net Expenses(3) 0.20
</TABLE>
- ----------------
(1) Expenses have been restated to reflect current fees.
(2) The investment advisor has contractually agreed to limit Total Annual Fund
Operating Expenses, excluding interest expense, taxes and extraordinary
expenses, to 0.20%.
(3) The investment advisor has voluntarily agreed to limit Net Expenses,
excluding interest expense, taxes and extraordinary expenses, to 0.11%. This
limitation can be terminated at any time.
You should also consider the effect of any account fees charged by the financial
institution managing the account.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Institutional Class of the fund with the cost of investing in other mutual
funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's gross operating expenses remain the same. To the extent fees are waived
or expenses are reimbursed, the expenses will be lower. Although your actual
returns and costs may be higher or lower, based on these assumptions your costs
would be:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Institutional Class $36 $113 $197 $443
</TABLE>
6
<PAGE> 257
FUND MANAGEMENT
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provides investment advisory services to
the fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 125
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended August 31, 1999, the advisor received compensation
of 0.04% of average daily net assets.
7
<PAGE> 258
OTHER INFORMATION
SUITABILITY FOR INVESTORS
The Institutional Class of the fund is intended for use by banks and other
institutions, investing for themselves or in a fiduciary, advisory, agency,
custodial or other similar capacity. Shares of the Institutional Class may not
be purchased directly by individuals, although institutions may purchase the
Institutional Class for accounts maintained for individuals. Prospective
investors should determine if an investment in the Institutional Class is
consistent with the investment objectives of an account and with applicable
state and federal laws and regulations. Fund Management Company (the
distributor) will review each application for the purchase of shares of the
Institutional Class and reserves the right to reject any order to purchase based
upon a review of the suitability of the investor.
The Institutional Class is designed to be a convenient and economical way to
invest [short-term cash reserves] in an open-end diversified money market fund
whose dividends are exempt from state and local taxation in many states.
It is anticipated that most investors will perform their own subaccounting.
Investors in the Institutional 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 Institutional Class.
Because the fund 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 fund 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 fund 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.
DIVIDENDS AND DISTRIBUTIONS
Dividends
The fund generally declares dividends on each business day and pays dividends
monthly. A business day is any day on which both the Federal Reserve Bank of New
York and The Bank of New York, the fund's custodian, are open for business.
Dividends are paid on settled shares of the fund as of 3:00 p.m. Eastern time.
Generally, shareholders whose purchase orders have been received by the fund
prior to 3:00 p.m. Eastern time and shareholders whose redemption proceeds have
not been wired to them on any business day are eligible to receive dividends on
that business day. The dividend declared on any day preceding a non-business day
of the fund will include the income accrued on such non-business day. Dividends
and distributions are paid in cash unless the shareholder has elected to have
such dividends and distributions reinvested in the form of additional full and
fractional shares at net asset value.
Capital Gains Distributions
[The fund generally distributes net realized capital gains (including net
short-term capital gains), if any, annually. The fund does not expect to realize
any long-term capital gains and losses.]
8
<PAGE> 259
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the financial
performance of the Institutional Class. Certain information reflects financial
results for a single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
This information has been audited by KPMG LLP, whose report, along with the
fund's financial statements, is included in the fund's annual report, which is
available upon request.
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS
------------------------------------------------------------
Year Ended August 31,
1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------------
<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 0.04 0.05 0.05 0.05 0.05
- -------------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.04) (0.05) (0.05) (0.05) (0.05)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------------------------------------------------------------------------------------
Total return 4.51% 5.30% 5.13% 5.19% 5.35%
- -------------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $88,517 $113,084 $258,251 $407,218 $394,376
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (a) 0.19% (b) 0.20% 0.20% 0.20% 0.20%
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets (c) 4.42% (b) 5.05% 5.00% 5.06% 5.21%
- -------------------------------------------------------------------------------------------------------------------------------
</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
0.35%, 0.28%, 0.23%, 0.23% and 0.23% for the periods 1999-1995,
respectively.
(b) Ratios are based on average net assets of $97,373,900.
(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 4.27%, 4.97%, 4.97%, 5.04% and 5.18% for the periods
1999 - 1995, respectively.
9
<PAGE> 260
SHAREHOLDER INFORMATION
The fund currently offers six classes of shares all of which share a common
investment objective and portfolio of investments. The six classes differ only
with respect to distribution arrangements for different categories of investors.
PURCHASING SHARES
The minimum initial investment in the Institutional Class is $1 million. No
minimum amount is required for subsequent investments in the fund, nor are
minimum balances required.
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 fund. Purchase orders
received after such time will be processed at the next day's net asset value.
You may purchase shares by submitting an Account Application to the fund's
transfer agent, A I M Fund Services, Inc. (transfer agent) at P.O. Box 4497,
Houston, Texas 77210-4497 prior to your initial purchase of shares. A purchase
order is considered received at the time The Bank of New York receives federal
funds (member bank deposits with a Federal Reserve Bank) for the order, provided
the transfer agent has received notice of the order or at the time the order is
placed, if the fund is assured of payment. You may obtain an Account Application
from the distributor. Subsequent purchases of shares of the funds may also be
made via AIM LINK--Registered Trademark-- Remote, a personal computer
application software product.
We may request that an institution maintain separate master accounts in the fund
for shares held by the institution (a) for its own account, for the account of
other institutions and for accounts for which the institution acts as a
fiduciary; and (b) for accounts for which the institution acts in some other
capacity. An institution may aggregate its master accounts and subaccounts to
satisfy the minimum investment requirement.
REDEEMING SHARES
You may redeem any or all of your shares at the net asset value next determined
after receipt of a redemption request in proper form by the fund. There is no
charge for redemption.
You may request a redemption by calling the transfer agent at (800) 659-1005, or
by using AIM LINK--Registered Trademark-- Remote. Payment for redeemed shares
is normally made by Federal Reserve wire to the commercial bank account
designated in your Account Application. You may also request that payment be
made by check. We use reasonable procedures to confirm that instructions
communicated by telephone are genuine and are not liable for telephone
instructions that are reasonably believed to be genuine. Such reasonable
procedures may include recordings of telephone transactions maintained for a
reasonable period of time.
Payment for redemption orders received prior to 3:00 p.m. Eastern time will
normally be made on the same day. Payment for shares 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 fund may make payment for telephone redemptions in excess of $1,000 by
check when it is considered to be in the fund's best interest to do so.
Dividends payable up to the date of redemption on redeemed shares will normally
be paid on the next dividend payment date. However, if all of the shares in your
account are redeemed, you will receive dividends payable up to the date of
redemption with the proceeds of the redemption.
10
<PAGE> 261
THE FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
o REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
o MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
o WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
PRICING OF SHARES
Determination of Net Asset Value
The price of each of the fund's shares is the fund's net asset value per share.
The fund determines the net asset value of its shares as of 3:00 p.m. Eastern
time on each day on which both the Federal Reserve Bank of New York and The Bank
of New York are open for business (business day). The fund values portfolio
securities on the basis of amortized cost, which approximates market value.
Timing of Orders
The fund prices purchase and redemption orders at the net asset value calculated
after the transfer agent receives an order in good form. If the transfer agent
receives a redemption request on a business day prior to 3:00 p.m. Eastern time,
the fund will normally wire redemption proceeds on that day. If the transfer
agent receives a redemption request after 3:00 p.m. Eastern time on a business
day of the fund, the redemption will be processed at the net asset value next
determined and the fund will normally wire proceeds on the next business day.
Shareholders will accrue dividends until the day the fund wires redemption
proceeds. The Fund may postpone the right of redemption only under unusual
circumstances, as allowed by the Securities and Exchange Commission, such as
when the New York Stock Exchange restricts or suspends trading. The fund
reserves the right to change the time for which purchase and redemption orders
must be submitted to and received by the transfer agent for execution on the
same day on any day when the primary government securities dealers are either
closed for business or close early, or trading in money market securities is
limited due to national holidays.
TAXES
Dividends and distributions received are taxable as ordinary income [or
long-term capital gains] for federal income tax purposes, whether reinvested in
additional shares or taken in cash. Distributions are taxable at different rates
depending on the length of time the fund holds it assets. [Different tax rates
apply to ordinary income and long-term capital gain distributions, regardless of
how long shares are held.] Every year, information will be sent showing the
amount of dividends and distributions received from the fund during the prior
year.
[Any long-term or short-term capital gains realized from redemptions of the fund
shares will be subject to federal income tax.]
The foreign, state and local tax consequences of investing in the fund may
differ materially from the federal income tax consequences described above. The
fund'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. Shareholders should
consult their tax advisor before investing.
11
<PAGE> 262
[BACK COVER PAGE]
OBTAINING ADDITIONAL INFORMATION
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies
of the fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P. O. Box 4497
Houston, TX 77210-4497
BY TELEPHONE: (800) 659-1005
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com (prospectuses and
annual and semiannual reports only)
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
Treasury TaxAdvantage Portfolio
SEC 1940 Act file number: 811-2729
Back Cover Page
<PAGE> 263
[AIM LOGO]
PERSONAL INVESTMENT CLASS
TREASURY TAXADVANTAGE PORTFOLIO
PROSPECTUS
DECEMBER 17, 1999
Treasury TaxAdvantage Portfolio seeks to maximize current income consistent with
the preservation of capital and the maintenance of liquidity.
This prospectus contains important information about the Personal Investment
Class of the fund. Please read it before investing and keep it for future
reference.
As with all other mutual fund securities, the Securities and Exchange Commission
has not approved or disapproved these securities or determined whether the
information in this prospectus is adequate or accurate. Anyone who tells you
otherwise is committing a crime.
There can be no assurance that the fund will be able to maintain a stable net
asset value of $1.00 per share.
<PAGE> 264
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES...........................................3
PRINCIPAL RISKS OF INVESTING IN THE FUND .....................................3
PERFORMANCE INFORMATION.......................................................4
ANNUAL TOTAL RETURNS.................................................4
PERFORMANCE TABLE....................................................5
FEE TABLE AND EXPENSE EXAMPLE.................................................6
FEE TABLE............................................................6
EXPENSE EXAMPLE......................................................6
FUND MANAGEMENT...............................................................8
THE ADVISOR..........................................................8
ADVISOR COMPENSATION.................................................8
OTHER INFORMATION.............................................................9
SUITABILITY FOR INVESTORS............................................9
DIVIDENDS AND DISTRIBUTIONS..........................................9
SHAREHOLDER INFORMATION......................................................11
DISTRIBUTION AND SERVICE (12b-1) FEES...............................11
PURCHASING SHARES...................................................11
REDEEMING SHARES....................................................11
PRICING OF SHARES...................................................12
TAXES...............................................................12
OBTAINING ADDITIONAL INFORMATION................................BACK COVER PAGE
</TABLE>
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, AIM Funds, AIM
Funds and Design, AIM Internet Connect and AIM Investor are service marks of
A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
2
<PAGE> 265
INVESTMENT OBJECTIVE AND STRATEGIES
The fund's investment objective is to maximize current income consistent with
the preservation of capital and the maintenance of liquidity.
The fund attempts to meet this objective by investing in direct obligations of
the U.S. Treasury, including bills, notes and bonds. The fund also seeks to
provide dividends that are exempt from state and local taxation in many states.
The fund will maintain a weighted average maturity of 90 days or less. The fund
invests in compliance with Rule 2a-7 under the Investment Company Act of 1940.
The portfolio managers focus on U.S. Treasury obligations they believe have
favorable prospects for current income consistent with the preservation of
capital and the maintenance of liquidity. The portfolio managers usually hold
portfolio securities to maturity, but may sell a particular security when they
deem it advisable, such as when any of the factors above materially changes.
PRINCIPAL RISKS OF INVESTING IN THE FUND
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the fund.
Additionally, the fund's yield will vary as the short-term securities in its
portfolio mature and the proceeds are reinvested in securities with different
interest rates.
The following factors could reduce the fund's income and/or share price:
o sharply rising interest rates; and
o downgrades of credit ratings or defaults of any of the fund's holdings.
The value of your shares could be adversely affected if the computer systems
used by the fund's investment advisor and the fund's other service providers are
unable to distinguish the year 2000 from the year 1900.
The fund's investment advisor and independent technology consultants are working
to avoid year 2000-related problems in its systems and to obtain assurances that
other service providers are taking similar steps. Year 2000 problems may also
affect issuers in whose securities the fund invests.
3
<PAGE> 266
PERFORMANCE INFORMATION
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
The following bar chart shows changes in the performance of the Institutional
Class shares from year to year. Neither the Personal Investment Class shares nor
the Institutional Class shares are subject to sales loads.
INSTITUTIONAL INVESTMENT CLASS
[CHART]
<TABLE>
<CAPTION>
YEAR RETURN (%)
- ---- ----------
<S> <C>
1991 5.90%
1992 3.57%
1993 2.95%
1994 3.88%
1995 5.58%
1996 5.09%
1997 5.15%
1998 5.11%
</TABLE>
The returns are those of the fund's Institutional Class shares, which are not
offered in this prospectus. Personal Investment Class shares would have
substantially similar annual returns because the shares are invested in the same
portfolio of securities but would be lower to the extent that the classes have
different expenses.
The Institutional Class shares year-to-date total return as of September 30,
1999 was 3.34%.
During the periods shown in the bar chart, Institutional Class' highest
quarterly return was 1.63% (quarter ended March 31, 1991) and its lowest
quarterly return was 0.72% (quarter ended June 30, 1993).
4
<PAGE> 267
PERFORMANCE TABLE
The following performance table reflects the performance of Institutional Class
shares over the periods indicated.
<TABLE>
<CAPTION>
==========================================================================================================
Average Annual Total Returns
(for the periods ended December 31, 1998)
Since Inception
1 Year 5 Years 10 Years Inception Date
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Institutional Class 5.11% 4.96% -- 4.79% 08/17/90
Personal Investment Class -- -- -- -- 01/04/99
==========================================================================================================
</TABLE>
For the current seven-day yield of Personal Investment Class shares, call (800)
877-4744.
5
<PAGE> 268
FEE TABLE AND EXPENSE EXAMPLE
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
Personal Investment Class
-------------------------
<S> <C>
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price
or redemption proceeds, whichever is less) None
Annual Fund Operating Expenses (expenses that are deducted from fund assets)(1)
Management Fees 0.20%
Distribution and/or Service (12b-1) Fees 0.75
Other Expenses 0.15
Total Annual Fund Operating Expenses 1.10
Fee Waiver and Expense Reimbursement(2) 0.40
Net Expenses(3) 0.70
</TABLE>
- ---------------------------
(1) The fees and expenses are based on estimated net assets for the current
fiscal period.
(2) The distributor has contractually agreed to waive 0.25% of the Rule 12b-1
distribution plan fee. The investment advisor has contractually agreed to limit
Total Annual Fund Operating Expenses, excluding the Rule 12b-1 distribution plan
fee, interest expense, taxes and extraordinary expenses, to 0.20%.
(3) The investment advisor has voluntarily agreed to limit Net Expenses,
excluding the Rule 12b-1 distribution plan fee, interest expense, taxes and
extraordinary expenses, to 0.11%. This limitation can be terminated at any time.
Net Expenses, net of this voluntary limitation, are 0.61%.
You should also consider the effect of any account fees charged by the financial
institution managing the account.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Personal Investment Class of the fund with the cost of investing in other mutual
funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's gross operating expenses remain the same. To the extent fees are waived
or expenses are reimbursed, the expenses will be lower. Although your actual
returns and costs may be higher or lower, based on these assumptions your costs
would be:
6
<PAGE> 269
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
Personal Investment Class $112 $350
</TABLE>
7
<PAGE> 270
FUND MANAGEMENT
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provides investment advisory services to
the fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 125
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended August 31, 1999, the advisor received compensation
of 0.04% of average daily net assets.
8
<PAGE> 271
OTHER INFORMATION
SUITABILITY FOR INVESTORS
The Personal Investment Class of the fund is intended for use primarily by
customers of banks, certain broker-dealers and other institutions
(institutions). Individuals, corporations, partnerships and other businesses
that maintain qualified accounts at an institution may invest in shares of the
Personal Investment Class. Each institution will render administrative support
services to its customers who are the beneficial owners of the shares of the
Personal Investment Class. Such services include, among other things,
establishment and maintenance of shareholder accounts and records; assistance in
processing purchase and redemption transactions in shares of the Personal
Investment Class; providing periodic statements showing a client's account
balance in shares of the Personal Investment Class; distribution of fund proxy
statements, annual reports and other communications to shareholders whose
accounts are serviced by the institution; and such other services as the fund
may reasonably request. Institutions will be required to certify to the fund
that they comply with applicable state law regarding registration as
broker-dealers, or that they are exempt from such registration. Fund Management
Company (the distributor) will review each application for the purchase of
shares of the Personal Investment Class and reserves the right to reject any
order to purchase based upon a review of the suitability of the investor.
The Personal Investment Class is designed to be a convenient and economical way
to invest in an open-end diversified money market fund, whose dividends are
exempt from state and local taxation in many states. It is anticipated that most
investors will perform their own subaccounting.
Investors in the Personal Investment 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 Personal Investment Class.
Because the fund 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 fund 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 fund 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.
DIVIDENDS AND DISTRIBUTIONS
Dividends
The fund generally declares dividends on each business day and pays dividends
monthly. A business day is any day on which both the Federal Reserve Bank of New
York and The Bank of New York, the fund's custodian, are open for business.
Dividends are paid on settled shares of the fund as of 3:00 p.m. Eastern time.
Generally, shareholders whose purchase orders have been received by the fund
prior to 3:00 p.m. Eastern time and shareholders whose redemption proceeds have
not been wired to them on any business day are eligible to receive dividends on
that business day. The dividend declared on any day preceding a non-business day
of the fund will include the income accrued on such non-business day. Dividends
and distributions are paid in cash unless the shareholder has elected to have
such dividends and distributions reinvested in the form of additional full and
fractional shares at net asset value.
9
<PAGE> 272
Capital Gains Distributions
The fund generally distributes net realized capital gains (including net
short-term capital gains), if any, annually. The fund does not expect to realize
any long-term capital gains and losses.
10
<PAGE> 273
SHAREHOLDER INFORMATION
The fund currently offers six classes of shares all of which share a common
investment objective and portfolio of investments. The six classes differ only
with respect to distribution arrangements for different categories of investors.
DISTRIBUTION AND SERVICE (12b-1) FEES
The fund has adopted a 12b-1 plan with respect to the Personal Investment Class
that allows the fund to pay distribution fees to Fund Management Company
(distributor) for the sale and distribution of its shares and fees for services
provided to shareholders. Because the fund pays these fees out of its assets on
an ongoing basis, over time these fees will increase the cost of your investment
and may cost you more than paying other types of sales charges.
PURCHASING SHARES
The minimum initial investment in the Personal Investment Class is $1,000. No
minimum amount is required for subsequent investments in the fund, nor are
minimum balances required.
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 fund. Purchase orders
received after such time will be processed at the next day's net asset value.
You may purchase shares by submitting an Account Application to the fund's
transfer agent, A I M Fund Services, Inc. (transfer agent) at P.O. Box 4497,
Houston, Texas 77210-4497 prior to your initial purchase of shares. You must
open a fund account through an institution in accordance with procedures
established by such institution. A purchase order is considered received at the
time The Bank of New York receives federal funds (member bank deposits with a
Federal Reserve Bank) for the order, provided the transfer agent has received
notice of the order or at the time the order is placed, if the fund is assured
of payment. You may obtain an Account Application from the distributor.
Subsequent purchases of shares of the funds may also be made via AIM LINK
- --Registered Trademark-- Remote, a personal computer application software
product.
If you propose to open a fund account with an institution, you should consult
with a representative of such institution to obtain a description of the rules
governing such an account. A statement with regard to your investment in the
Personal Investment Class is supplied periodically, and confirmations of all
transactions for your account are provided by the institution promptly upon
request. In addition, proxies, periodic reports and other information from the
institution with regard to your shares of the Personal Investment Class will be
sent to you.
You may place an order for the purchase of shares of the Personal Investment
Class with the institution. The institution is responsible for the prompt
transmission of the order to the transfer agent. The fund is normally required
to make immediate settlement in federal funds for portfolio securities
purchased. Accordingly, payment for shares of the Personal Investment Class
purchased by institutions on behalf of their clients must be in federal funds.
If an order is paid for other than in federal funds, the order may be delayed up
to two business days while the institution completes the conversion into federal
funds.
REDEEMING SHARES
You may redeem any or all of your shares at the net asset value next determined
after receipt of a redemption request in proper form by the fund. There is no
charge for redemption. Redemption requests with respect to shares of the
Personal Investment Class are normally made through your institution.
You may request a redemption by calling the transfer agent at (800) 877-4744, or
by using AIM LINK--Registered Trademark-- Remote. Payment for redeemed shares
is normally made by Federal Reserve wire to the commercial bank account
designated
11
<PAGE> 274
in your Account Application. You may also request that payment be made by check.
We use reasonable procedures to confirm that instructions communicated by
telephone are genuine and are not liable for telephone instructions that are
reasonably believed to be genuine. Such reasonable procedures may include
recordings of telephone transactions maintained for a reasonable period of time.
Payment for redemption orders received prior to 3:00 p.m. Eastern time will
normally be made on the same day. Payment for shares 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 fund may make payment for telephone redemptions in excess of $1,000 by
check when it is considered to be in the fund's best interest to do so.
Dividends payable up to the date of redemption on redeemed shares will normally
be paid by wire transfer on the next dividend payment date. However, if all of
the shares in your account are redeemed, you will receive dividends payable up
to the date of redemption with the proceeds of the redemption.
THE FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
o REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
o MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
o WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
PRICING OF SHARES
Determination of Net Asset Value
The price of each of the fund's shares is the fund's net asset value per share.
The fund determines the net asset value of its shares as of 3:00 p.m. Eastern
time on each day on which both the Federal Reserve Bank of New York and The Bank
of New York are open for business (business day). The fund values portfolio
securities on the basis of amortized cost, which approximates market value.
Timing of Orders
The fund prices purchase and redemption orders at the net asset value calculated
after the transfer agent receives an order in good form. If the transfer agent
receives a redemption request on a business day prior to 3:00 p.m. Eastern time,
the fund will normally wire redemption proceeds on that day. If the transfer
agent receives a redemption request after 3:00 p.m. Eastern time on a business
day of the fund, the redemption will be processed at the net asset value next
determined and the fund will normally wire proceeds on the next business day.
Shareholders will accrue dividends until the day the fund wires redemption
proceeds. The Fund may postpone the right of redemption only under unusual
circumstances, as allowed by the Securities and Exchange Commission, such as
when the New York Stock Exchange restricts or suspends trading. The fund
reserves the right to change the time for which purchase and redemption orders
must be submitted to and received by the transfer agent for execution on the
same day on any day when the primary government securities dealers are either
closed for business or close early, or trading in money market securities is
limited due to national holidays.
TAXES
Dividends and distributions received are taxable as ordinary income [or
long-term capital gains] for federal income tax purposes, whether reinvested in
additional shares or taken in cash. Distributions are taxable at different rates
depending on the length of time the fund holds its assets. [Different tax rates
apply to ordinary income and long-term capital gain distributions, regardless of
how long shares are held.] Every year, information will be sent showing the
amount of dividends and distributions received from the fund during the prior
year.
12
<PAGE> 275
[Any long-term or short-term capital gains realized from redemptions of the fund
shares will be subject to federal income tax.]
The foreign, state and local tax consequences of investing in the fund may
differ materially from the federal income tax consequences described above. The
fund'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. Shareholders should
consult their tax advisor before investing.
13
<PAGE> 276
[BACK COVER PAGE]
OBTAINING ADDITIONAL INFORMATION
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies
of the fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P. O. Box 4497
Houston, TX 77210-4497
BY TELEPHONE: (800) 877-4744
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com (prospectuses and annual and
semiannual reports only)
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
Treasury TaxAdvantage Portfolio
SEC 1940 Act file number: 811-2729
Back Cover Page
<PAGE> 277
[AIM LOGO]
PRIVATE INVESTMENT CLASS
TREASURY TAXADVANTAGE PORTFOLIO
PROSPECTUS
DECEMBER 17, 1999
Treasury TaxAdvantage Portfolio seeks to maximize current income consistent with
the preservation of capital and the maintenance of liquidity.
This prospectus contains important information about the Private Investment
Class of the fund. Please read it before investing and keep it for future
reference.
As with all other mutual fund securities, the Securities and Exchange Commission
has not approved or disapproved these securities or determined whether the
information in this prospectus is adequate or accurate. Anyone who tells you
otherwise is committing a crime.
There can be no assurance that the fund will be able to maintain a stable net
asset value of $1.00 per share.
1
<PAGE> 278
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES..........................................3
PRINCIPAL RISKS OF INVESTING IN THE FUND.....................................3
PERFORMANCE INFORMATION......................................................4
ANNUAL TOTAL RETURNS................................................4
PERFORMANCE TABLE...................................................5
FEE TABLE AND EXPENSE EXAMPLE................................................6
FEE TABLE...........................................................6
EXPENSE EXAMPLE.....................................................6
FUND MANAGEMENT..............................................................8
THE ADVISOR.........................................................8
ADVISOR COMPENSATION................................................8
OTHER INFORMATION............................................................9
SUITABILITY FOR INVESTORS...........................................9
DIVIDENDS AND DISTRIBUTIONS.........................................9
FINANCIAL HIGHLIGHTS........................................................11
SHAREHOLDER INFORMATION.....................................................12
DISTRIBUTION AND SERVICE (12b-1) FEES..............................12
PURCHASING SHARES..................................................12
REDEEMING SHARES...................................................12
PRICING OF SHARES..................................................13
TAXES..............................................................13
OBTAINING ADDITIONAL INFORMATION...............................BACK COVER PAGE
</TABLE>
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, AIM Funds, AIM
Funds and Design, AIM Internet Connect and AIM Investor are service marks of
A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
2
<PAGE> 279
INVESTMENT OBJECTIVE AND STRATEGIES
The fund's investment objective is to maximize current income consistent with
the preservation of capital and the maintenance of liquidity.
The fund attempts to meet this objective by investing in direct obligations of
the U.S. Treasury, including bills, notes and bonds. The fund also seeks to
provide dividends that are exempt from state and local taxation in many states.
The fund will maintain a weighted average maturity of 90 days or less. The fund
invests in compliance with Rule 2a-7 under the Investment Company Act of 1940.
The portfolio managers focus on U.S. Treasury obligations they believe have
favorable prospects for current income consistent with the preservation of
capital and the maintenance of liquidity. The portfolio managers usually hold
portfolio securities to maturity, but may sell a particular security when they
deem it advisable, such as when any of the factors above materially changes.
PRINCIPAL RISKS OF INVESTING IN THE FUND
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the fund.
Additionally, the fund's yield will vary as the short-term securities in its
portfolio mature and the proceeds are reinvested in securities with different
interest rates.
The following factors could reduce the fund's income and/or share price:
o sharply rising interest rates; and
o downgrades of credit ratings or defaults of any of the fund's holdings.
The value of your shares could be adversely affected if the computer systems
used by the fund's investment advisor and the fund's other service providers are
unable to distinguish the year 2000 from the year 1900.
The fund's investment advisor and independent technology consultants are working
to avoid year 2000-related problems in its systems and to obtain assurances that
other service providers are taking similar steps. Year 2000 problems may also
affect issuers in whose securities the fund invests.
3
<PAGE> 280
PERFORMANCE INFORMATION
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
The following bar chart shows changes in the performance of the Private
Investment Class shares from year to year. Private Investment Class shares are
not subject to sales loads.
PRIVATE INVESTMENT CLASS
[CHART]
<TABLE>
<CAPTION>
YEAR RETURN(%)
- ---- ---------
<S> <C>
1995 5.32%
1996 4.83%
1997 4.89%
1998 4.85%
</TABLE>
The Private Investment Class shares' year-to-date total return as of September
30, 1999 was 3.15%.
During the periods shown in the bar chart, the highest quarterly return was
1.35% (quarter ended June 30, 1995) and the lowest quarterly return was 1.05%
(quarter ended December 31, 1998).
4
<PAGE> 281
PERFORMANCE TABLE
The following performance table reflects the performance of Private Investment
Class shares over the periods indicated.
<TABLE>
<CAPTION>
==========================================================================================================
Average Annual Total Returns
(for the periods ended December 31, 1998)
Since Inception
1 Year 5 Years 10 Years Inception Date
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Private Investment Class 4.85% -- -- 4.97% 12/21/94
==========================================================================================================
</TABLE>
Private Investment Class shares' seven-day yield on December 31, 1998 was 4.02%.
For the current seven-day yield, call (800) 877-7748.
5
<PAGE> 282
FEE TABLE AND EXPENSE EXAMPLE
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
Private Investment Class
------------------------
<S> <C>
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price
or redemption proceeds, whichever is less) None
Annual Fund Operating Expenses (expenses that are deducted from fund assets)(1)
Management Fees 0.20%
Distribution and/or Service (12b-1) Fees 0.50
Other Expenses 0.15
Total Annual Fund Operating Expenses 0.85
Fee Waiver and Expense Reimbursement(2) 0.40
Net Expenses(3) 0.45
</TABLE>
- -----------------------
(1) Expenses have been restated to reflect current fees.
(2) The distributor has contractually agreed to waive 0.25% of the Rule 12b-1
distribution plan fee. The investment advisor has contractually agreed to limit
Total Annual Fund Operating Expenses, excluding the Rule 12b-1 distribution plan
fee, interest expense, taxes and extraordinary expenses, to 0.20%.
(3) The investment advisor has voluntarily agreed to limit Net Expenses,
excluding the Rule 12b-1 distribution plan fee, interest expense, taxes and
extraordinary expenses, to 0.11%. This limitation can be terminated at any time.
Net Expenses, net of this voluntary limitation, are 0.36%.
You should also consider the effect of any account fees charged by the financial
institution managing the account.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Private Investment Class of the fund with the cost of investing in other mutual
funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's gross operating expenses remain the same. To the extent fees are waived
or expenses are reimbursed, the expenses will be lower. Although your actual
returns and costs may be higher or lower, based on these assumptions your costs
would be:
6
<PAGE> 283
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Private Investment Class $ 87 $ 271 $ 471 $1,049
</TABLE>
7
<PAGE> 284
FUND MANAGEMENT
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provides investment advisory services to
the fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 125
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended August 31, 1999, the advisor received compensation
of 0.04% of average daily net assets.
8
<PAGE> 285
OTHER INFORMATION
SUITABILITY FOR INVESTORS
The Private Investment Class of the fund is intended for use primarily by
customers of banks, certain broker-dealers and other institutions
(institutions). Individuals, corporations, partnerships and other businesses
that maintain qualified accounts at an institution may invest in shares of the
Private Investment Class. Each institution will render administrative support
services to its customers who are the beneficial owners of the shares of the
Private Investment Class. Such services include, among other things,
establishment and maintenance of shareholder accounts and records; assistance in
processing purchase and redemption transactions in shares of the Private
Investment Class; providing periodic statements showing a client's account
balance in shares of the Private Investment Class; distribution of fund proxy
statements, annual reports and other communications to shareholders whose
accounts are serviced by the institution; and such other services as the fund
may reasonably request. Institutions will be required to certify to the fund
that they comply with applicable state law regarding registration as
broker-dealers, or that they are exempt from such registration. Fund Management
Company (the distributor) will review each application for the purchase of
shares of the Private Investment Class and reserves the right to reject any
order to purchase based upon a review of the suitability of the investor.
The Private Investment Class is designed to be a convenient and economical way
to invest in an open-end diversified money market fund whose dividends are
exempt from state and local taxation in many states. It is anticipated that most
investors will perform their own subaccounting.
Investors in the Private Investment 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 Private Investment Class.
Because the fund 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 fund 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 fund 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.
DIVIDENDS AND DISTRIBUTIONS
Dividends
The fund generally declares dividends on each business day and pays dividends
monthly. A business day is any day on which both the Federal Reserve Bank of New
York and The Bank of New York, the fund's custodian, are open for business.
Dividends are paid to settled shares of the fund as of 3:00 p.m. Eastern time.
Generally, shareholders whose purchase orders have been received by the fund
prior to 3:00 p.m. Eastern time and shareholders whose redemption proceeds have
not been wired to them on any business day are eligible to receive dividends on
that business day. The dividend declared on any day preceding a non-business day
of the fund will include the income accrued on such non-business day. Dividends
and distributions are paid in cash unless the shareholder has elected to have
such dividends and distributions reinvested in the form of additional full and
fractional shares at the net asset value.
9
<PAGE> 286
Capital Gains Distributions
The fund generally distributes net realized capital gains (including net
short-term capital gains), if any, annually. The fund does not expect to realize
any long-term capital gains and losses.
10
<PAGE> 287
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the financial
performance of the Private Investment Class. Certain information reflects
financial results for a single fund share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the fund (assuming reinvestment of all
dividends and distributions).
This information has been audited by KPMG LLP, whose report, along with the
fund's financial statements, is included in the fund's annual report, which is
available upon request.
<TABLE>
<CAPTION>
PRIVATE INVESTMENT CLASS
------------------------------------------------------------------
For the Period
December 21, 1994
through
Year Ended August 31, August 31,
1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<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 0.04 0.05 0.05 0.05 0.04
- ---------------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income (0.04) (0.05) (0.05) (0.05) (0.04)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------------------
Total return 4.25% 5.04% 4.87% 4.93% 3.69%
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 45,377 $ 31,143 $ 39,312 $ 49,978 $ 5,423
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets (a) 0.43% (b) 0.45% 0.45% 0.45% 0.45% (c)
- ---------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets (d) 4.18% (b) 4.80% 4.75% 4.72% 5.21% (c)
- ---------------------------------------------------------------------------------------------------------------------------------
</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
0.85%, 0.78%, 0.74%, 0.85% and 1.02% (annualized) for the periods
1999-1995, respectively.
(b) Ratios based on average net assets of $50,120,851.
(c) Annualized.
(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 3.77%, 4.47%, 4.46%, 4.32% and 4.64% (annualized) for
the periods 1999 - 1995, respectively.
11
<PAGE> 288
SHAREHOLDER INFORMATION
The fund currently offers six classes of shares all of which share a common
investment objective and portfolio of investments. The six classes differ only
with respect to distribution arrangements for different categories of investors.
DISTRIBUTION AND SERVICE (12b-1) FEES
The fund has adopted a 12b-1 plan with respect to the Private Investment Class
that allows the fund to pay distribution fees to Fund Management Company
(distributor) for the sale and distribution of its shares and fees for services
provided to shareholders. Because the fund pays these fees out of its assets on
an ongoing basis, over time these fees will increase the cost of your investment
and may cost you more than paying other types of sales charges.
PURCHASING SHARES
The minimum initial investment in the Private Investment Class is $10,000. No
minimum amount is required for subsequent investments in the fund, nor are
minimum balances required.
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 fund. Purchase orders
received after such time will be processed at the next day's net asset value.
You may purchase shares by submitting an Account Application to the fund's
transfer agent, A I M Fund Services, Inc. (transfer agent) at P.O. Box 4497,
Houston, Texas 77210-4497 prior to your initial purchase of shares. You must
open a fund account through an institution in accordance with procedures
established by such institution. A purchase order is considered received at the
time The Bank of New York receives federal funds (member bank deposits with a
Federal Reserve Bank) for the order, provided the transfer agent has received
notice of the order or at the time the order is placed, if the fund is assured
of payment. You may obtain an Account Application from the distributor.
Subsequent purchases of shares of the funds may also be made via AIM
LINK--Registered Trademark-- Remote, a personal computer application software
product.
If you propose to open a fund account with an institution, you should consult
with a representative of such institution to obtain a description of the rules
governing such an account. A statement with regard to your investment in the
Private Investment Class is supplied periodically, and confirmations of all
transactions for your account are provided by the institution promptly upon
request. In addition, proxies, periodic reports and other information from the
institution with regard to your shares of the Private Investment Class will be
sent to you.
You may place an order for the purchase of shares of the Private Investment
Class with the institution. The institution is responsible for the prompt
transmission of the order to the transfer agent. The fund is normally required
to make immediate settlement in federal funds for portfolio securities
purchased. Accordingly, payment for shares of the Private Investment Class
purchased by institutions on behalf of their clients must be in federal funds.
If an order to purchase shares is paid for other than in federal funds, the
order may be delayed up to two business days while the institution completes the
conversion into federal funds.
REDEEMING SHARES
You may redeem any or all of your shares at the net asset value next determined
after receipt of a redemption request in proper form by the fund. There is no
charge for redemption. Redemption requests with respect to shares of the Private
Investment Class are normally made through your institution.
12
<PAGE> 289
You may request a redemption by calling the transfer agent at (800) 877-7748, or
by using AIM LINK--Registered Trademark-- Remote. Payment for redeemed shares
is normally made by Federal Reserve wire to the commercial bank account
designated in your Account Application. You may also request that payment be
made by check. We use reasonable procedures to confirm that instructions
communicated by telephone are genuine and are not liable for telephone
instructions that are reasonably believed to be genuine. Such reasonable
procedures may include recordings of telephone transactions maintained for a
reasonable period of time.
Payment for redemption orders received prior to 3:00 p.m. Eastern time will
normally be made on the same day. Payment for shares 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 fund may make payment for telephone redemptions in excess of $1,000 by
check when it is considered to be in the fund's best interest to do so.
Dividends payable up to the date of redemption on redeemed shares will normally
be paid by wire transfer on the next dividend payment date. However, if all of
the shares in your account are redeemed, you will receive dividends payable up
to the date of redemption with the proceeds of the redemption.
THE FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
o REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
o MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
o WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
PRICING OF SHARES
Determination of Net Asset Value
The price of each of the fund's shares is the fund's net asset value per share.
The fund determines the net asset value of its shares as of 3:00 p.m. Eastern
time on each day on which both the Federal Reserve Bank of New York and The Bank
of New York are open for business (business day). The fund values portfolio
securities on the basis of amortized cost, which approximates market value.
Timing of Orders
The fund prices purchase and redemption orders at the net asset value calculated
after the transfer agent receives an order in good form. If the transfer agent
receives a redemption request on a business day prior to 3:00 p.m. Eastern time,
the fund will normally wire redemption proceeds on that day. If the transfer
agent receives a redemption request after 3:00 p .m. Eastern time on a business
day of the fund, the redemption will be processed at the net asset value next
determined and the fund will normally wire proceeds on the next business day.
Shareholders will accrue dividends until the day the fund wires redemption
proceeds. The Fund may postpone the right of redemption only under unusual
circumstances, as allowed by the Securities and Exchange Commission, such as
when the New York Stock Exchange restricts or suspends trading. The fund
reserves the right to change the time for which purchase and redemption orders
must be submitted to and received by the transfer agent for execution on the
same day on any day when the primary government securities dealers were either
closed for business or close early, or trading in money market securities is
limited due to national holidays.
TAXES
Dividends and distributions received are taxable as ordinary income [or
long-term capital gains] for federal income tax purposes, whether reinvested in
additional shares or taken in cash. Distributions are taxable at different rates
depending on the length of time the fund holds its assets. [Different tax rates
apply to ordinary income and long-term capital gain distributions, regardless of
how long shares are held.] Every year, information will be sent showing the
amount of dividends and distributions received from the fund during the prior
year.
13
<PAGE> 290
[Any long-term or short-term capital gains realized from redemptions of the
shares will be subject to federal income tax.]
The foreign, state and local tax consequences of investing in the fund may
differ materially from the federal income tax consequences described above. The
fund'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. Shareholders should
consult their tax advisor before investing.
14
<PAGE> 291
[BACK COVER PAGE]
OBTAINING ADDITIONAL INFORMATION
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies
of the fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P. O. Box 4497
Houston, TX 77210-4497
BY TELEPHONE: (800) 877-7748
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com (prospectuses and annual and
semiannual reports only)
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
Treasury TaxAdvantage Portfolio
SEC 1940 Act file number: 811-2729
Back Cover Page
<PAGE> 292
[AIM LOGO]
RESERVE CLASS
TREASURY TAXADVANTAGE PORTFOLIO
PROSPECTUS
DECEMBER 17, 1999
Treasury TaxAdvantage Portfolio seeks to maximize current income consistent with
the preservation of capital and the maintenance of liquidity.
This prospectus contains important information about the Reserve Class of the
fund. Please read it before investing and keep it for future reference.
As with all other mutual fund securities, the Securities and Exchange Commission
has not approved or disapproved these securities or determined whether the
information in this prospectus is adequate or accurate. Anyone who tells you
otherwise is committing a crime.
There can be no assurance that the fund will be able to maintain a stable net
asset value of $1.00 per share.
<PAGE> 293
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES......................................................................3
PRINCIPAL RISKS OF INVESTING IN THE FUND ................................................................3
PERFORMANCE INFORMATION..................................................................................4
ANNUAL TOTAL RETURNS............................................................................4
PERFORMANCE TABLE...............................................................................5
FEE TABLE AND EXPENSE EXAMPLE............................................................................6
FEE TABLE.......................................................................................6
EXPENSE EXAMPLE.................................................................................6
FUND MANAGEMENT..........................................................................................8
THE ADVISOR.....................................................................................8
ADVISOR COMPENSATION............................................................................8
OTHER INFORMATION........................................................................................9
SUITABILITY FOR INVESTORS.......................................................................9
DIVIDENDS AND DISTRIBUTIONS.....................................................................9
SHAREHOLDER INFORMATION.................................................................................10
DISTRIBUTION AND SERVICE (12b-1) FEES..........................................................10
PURCHASING SHARES..............................................................................10
REDEEMING SHARES...............................................................................10
PRICING OF SHARES..............................................................................11
TAXES..........................................................................................11
OBTAINING ADDITIONAL INFORMATION...........................................................BACK COVER PAGE
</TABLE>
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, AIM Funds, AIM
Funds and Design, AIM Internet Connect and AIM Investor are service marks of
A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
2
<PAGE> 294
INVESTMENT OBJECTIVE AND STRATEGIES
The fund's investment objective is to maximize current income consistent with
the preservation of capital and the maintenance of liquidity.
The fund attempts to meet this objective by investing in direct obligations of
the U.S. Treasury, including bills, notes and bonds. The fund also seeks to
provide dividends that are exempt from state and local taxation in many states.
The fund will maintain a weighted average maturity of 90 days or less. The fund
invests in compliance with Rule 2a-7 under the Investment Company Act of 1940.
The portfolio managers focus on U.S. Treasury obligations they believe have
favorable prospects for current income consistent with the preservation of
capital and the maintenance of liquidity. The portfolio managers usually hold
portfolio securities to maturity, but may sell a particular security when they
deem it advisable, such as when any of the factors above materially changes.
PRINCIPAL RISKS OF INVESTING IN THE FUND
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the fund.
Additionally, the fund's yield will vary as the short-term securities in its
portfolio mature and the proceeds are reinvested in securities with different
interest rates.
The following factors could reduce the fund's income and/or share price:
o sharply rising interest rates; and
o downgrades of credit ratings or defaults of any of the fund's holdings.
The value of your shares could be adversely affected if the computer systems
used by the fund's investment advisor and the fund's other service providers are
unable to distinguish the year 2000 from the year 1900.
The fund's investment advisor and independent technology consultants are working
to avoid year 2000-related problems in its systems and to obtain assurances that
other service providers are taking similar steps. Year 2000 problems may also
affect issuers in whose securities the fund invests.
3
<PAGE> 295
PERFORMANCE INFORMATION
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
The following bar chart shows changes in the performance of the Institutional
Class shares from year to year. Neither the Reserve Class shares nor the
Institutional Class shares are subject to sales loads.
INSTITUTIONAL INVESTMENT CLASS
[CHART]
<TABLE>
<CAPTION>
YEAR RETURN(%)
---- ---------
<S> <C> <C>
1991 5.90%
1992 3.57%
1993 2.95%
1994 3.88%
1995 5.58%
1996 5.09%
1997 5.15%
1998 5.11%
</TABLE>
The returns are those of the fund's Institutional Class shares, which are not
offered in this prospectus. Reserve Class shares would have substantially
similar annual returns because the shares are invested in the same portfolio of
securities but would be lower to the extent that the classes have different
expenses.
The Institutional Class shares' year-to-date total return as of September 30,
1999 was 3.34%.
During the periods shown in the bar chart, Institutional Class' highest
quarterly return was 1.63% (quarter ended March 31, 1991) and its lowest
quarterly return was 0.72% (quarter ended June 30, 1993).
4
<PAGE> 296
PERFORMANCE TABLE
The following performance table reflects the performance of Institutional Class
shares over the periods indicated.
<TABLE>
<CAPTION>
============================================================================================================
Average Annual Total Returns
(for the periods ended December 31, 1998)
Since Inception
1 Year 5 Years 10 Years Inception Date
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Institutional Class 5.11% 4.96% -- 4.79% 08/17/90
- ------------------------------------------------------------------------------------------------------------
Reserve Class -- -- -- -- 01/04/99
============================================================================================================
</TABLE>
For the current seven-day yield of Reserve Class shares, call (800) 417-8837.
5
<PAGE> 297
FEE TABLE AND EXPENSE EXAMPLE
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
Reserve Class
-------------
<S> <C>
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price
or redemption proceeds, whichever is less) None
Annual Fund Operating Expenses (expenses that are deducted from fund assets)(1)
Management Fees 0.20
Distribution and/or Service (12b-1) Fees 1.00
Other Expenses 0.15
Total Annual Fund Operating Expenses 1.35
Fee Waiver and Expense Reimbursement(2) 0.35
Net Expenses(3) 1.00
</TABLE>
- -------------------
(1) The fees and expenses are based on estimated net assets for the current
fiscal period.
(2) The distributor has contractually agreed to waive 0.20% of the Rule 12b-1
distribution plan fee. The investment advisor has contractually agreed to
limit Total Annual Fund Operating Expenses, excluding the Rule 12b-1
distribution plan fee, interest expense, taxes and extraordinary expenses,
to 0.20%.
(3) The investment advisor has voluntarily agreed to limit Net Expenses,
excluding the Rule 12b-1 distribution plan fee, interest expense, taxes and
extraordinary expenses, to 0.11%. This limitation can be terminated at any
time. Net Expenses, net of this voluntary limitation, are 0.91%.
You should also consider the effect of any account fees charged by the financial
institution managing the account.
As a result of 12b-1 fees, long-term shareholders in the fund may pay more than
the maximum permitted initial sales charge.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Reserve Class of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's gross operating expenses remain the same. To the extent fees are waived
or expenses are reimbursed, the expenses will be lower. Although your actual
returns and costs may be higher or lower, based on these assumptions your costs
would be:
6
<PAGE> 298
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
Reserve Class $137 $428
</TABLE>
7
<PAGE> 299
FUND MANAGEMENT
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provides investment advisory services to
the fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 125
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended August 31, 1999, the advisor received compensation
of 0.04% of average daily net assets.
8
<PAGE> 300
OTHER INFORMATION
SUITABILITY FOR INVESTORS
The Reserve Class of the fund is intended for use primarily by customers of
banks, certain broker-dealers and other institutions (institutions).
Individuals, corporations, partnerships and other businesses that maintain
qualified accounts at an institution may invest in shares of the Reserve Class.
Each institution will render administrative support services to its customers
who are the beneficial owners of the shares of the Reserve Class. Such services
include, among other things, establishment and maintenance of shareholder
accounts and records; assistance in processing purchase and redemption
transactions in shares of the Reserve Class; providing periodic statements
showing a client's account balance in shares of the Reserve Class; distribution
of fund proxy statements, annual reports and other communications to
shareholders whose accounts are serviced by the institution; and such other
services as the fund may reasonably request. Institutions will be required to
certify to the fund that they comply with applicable state law regarding
registration as broker-dealers, or that they are exempt from such registration.
Fund Management Company (the distributor) will review each application for the
purchase shares of the Reserve Class and reserves the right to reject any order
to purchase based upon a review of the suitability of the investor.
The Reserve Class is designed to be a convenient and economical way to invest in
an open-end diversified money market fund, whose dividends are exempt from state
and local taxation in many states. It is anticipated that most investors will
perform their own subaccounting.
Investors in the Reserve 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 Reserve Class.
Because the fund 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 fund 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 fund 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.
DIVIDENDS AND DISTRIBUTIONS
Dividends
The fund generally declares dividends on each business day and pays dividends
monthly. A business day is any day on which both the Federal Reserve Bank of New
York and The Bank of New York, the fund's custodian, are open for business.
Dividends are paid on settled shares of the fund as of 3:00 p.m. Eastern time.
Generally, shareholders whose purchase orders have been received by the fund
prior to 3:00 p.m. Eastern time and shareholders whose redemption proceeds have
not been wired to them on any business day are eligible to receive dividends on
that business day. The dividend declared on any day preceding a non-business day
of the fund will include the income accrued on such non-business day. Dividends
and distributions are paid in cash unless the shareholder has elected to have
such dividends and distributions reinvested in the form of additional full and
fractional shares at the net asset value.
Capital Gains Distributions
The fund generally distributes net realized capital gains (including net
short-term capital gains), if any, annually. The fund does not expect to realize
any long-term capital gains and losses.
9
<PAGE> 301
SHAREHOLDER INFORMATION
The fund currently offers six classes of shares all of which share a common
investment objective and portfolio of investments. The six classes differ only
with respect to distribution arrangements for different categories of investors.
DISTRIBUTION AND SERVICE (12b-1) FEES
The fund has adopted a 12b-1 plan with respect to the Reserve Class that allows
the fund to pay distribution fees to Fund Management Company (distributor) for
the sale and distribution of its shares and fees for services provided to
shareholders. Because the fund pays these fees out of its assets on an ongoing
basis, over time these fees will increase the cost of your investment and may
cost you more than paying other types of sales charges.
PURCHASING SHARES
The minimum initial investment in the Reserve Class is $1,000. No minimum amount
is required for subsequent investments in the fund, nor are minimum balances
required.
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 fund. Purchase orders
received after such time will be processed at the next day's net asset value.
You may purchase shares by submitting an Account Application to the fund's
transfer agent, A I M Fund Services, Inc. (transfer agent) at P.O. Box 4497,
Houston, Texas 77210-4497 prior to your initial purchase of shares. You must
open a fund account through an institution in accordance with procedures
established by such institution. A purchase order is considered received at the
time The Bank of New York receives federal funds (member bank deposits with a
Federal Reserve Bank) for the order, provided the transfer agent has received
notice of the order or at the time the order is placed, if the fund is assured
of payment. You may obtain an Account Application from the distributor.
Subsequent purchases of shares of the funds may also be made via AIM
LINK--Registered Trademark-- Remote, a personal computer application software
product.
If you propose to open a fund account with an institution should consult with a
representative of such institution to obtain a description of the rules
governing such an account. A statement with regard to your investment in the
Reserve Class is supplied periodically, and confirmations of all transactions
for your account are provided by the institution promptly upon request. In
addition, proxies, periodic reports and other information from the institution
with regard to shares of the Reserve Class will be sent to you.
You may place an order for the purchase of shares of the Reserve Class with the
institution. The institution is responsible for the prompt transmission of the
order to the transfer agent. The fund is normally required to make immediate
settlement in federal funds for portfolio securities purchased. Accordingly,
payment for shares of the Reserve Class purchased by institutions on behalf of
their clients must be in federal funds. If an order to purchase shares is paid
for other than in federal funds, the order may be delayed up to two business
days while the institution completes the conversion into federal funds.
REDEEMING SHARES
You may redeem any or all of your shares at the net asset value next determined
after receipt of a redemption request in proper form by the fund. There is no
charge for redemption. Redemption requests with respect to shares of the Reserve
Class are normally made through your institution.
You may request a redemption by calling the transfer agent at (800) 417-8837, or
by using AIM LINK--Registered Trademark-- Remote. Payment for redeemed shares is
normally made by Federal Reserve wire to the commercial bank account designated
10
<PAGE> 302
in your Account Application. You may also request that payment be made by check.
We use reasonable procedures to confirm that instructions communicated by
telephone are genuine and are not liable for telephone instructions that are
reasonably believed to be genuine. Such reasonable procedures may include
recordings of telephone transactions maintained for a reasonable period of time.
Payment for redemption orders received prior to 3:00 p.m. Eastern time will
normally be made on the same day. Payment for shares 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 fund may make payment for telephone redemptions in excess of $1,000 by
check when it is considered to be in the fund's best interest to do so.
Dividends payable up to the date of redemption on redeemed shares will normally
be paid by wire transfer on the next dividend payment date. However, if all of
the shares in your account are redeemed, you will receive dividends payable up
to the date of redemption with the proceeds of the redemption.
THE FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
o REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
o MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
o WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
PRICING OF SHARES
Determination of Net Asset Value
The price of each of the fund's shares is the fund's net asset value per share.
The fund determines the net asset value of its shares as of 3:00 p.m. Eastern
time on each day on which both the Federal Reserve Bank of New York and The Bank
of New York are open for business (business day). The fund values portfolio
securities on the basis of amortized cost, which approximates market value.
Timing of Orders
The fund prices purchase and redemption orders at the net asset value calculated
after the transfer agent receives an order in good form. If the transfer agent
receives a redemption request on a business day prior to 3:00 p.m. Eastern time,
the fund will normally wire redemption proceeds on that day. If the transfer
agent receives a redemption request after 3:00 p.m. Eastern time on a business
day of the fund, the redemption will be processed at the net asset value next
determined and the fund will normally wire proceeds on the next business day.
Shareholders will accrue dividends until the day the fund wires redemption
proceeds. The Fund may postpone the right of redemption only under unusual
circumstances, as allowed by the Securities and Exchange Commission, such as
when the New York Stock Exchange restricts or suspends trading. The fund
reserves the right to change the time for which purchase and redemption orders
must be submitted to and received by the transfer agent for execution on the
same day on any day when the primary government securities dealers are either
closed for business or close early, or trading in money market securities is
limited due to national holidays.
TAXES
Dividends and distributions received are taxable as ordinary income [or
long-term capital gains] for federal income tax purposes, whether reinvested in
additional shares or taken in cash. Distributions are taxable at different rates
depending on the length of time the fund holds its assets. [Different tax rates
apply to ordinary income and long-term capital gain distributions, regardless of
how long shares are held.] Every year, information will be sent showing the
amount of dividends and distributions received from the fund during the prior
year.
[Any long-term or short-term capital gains realized from redemptions of the fund
shares will be subject to federal income tax.]
11
<PAGE> 303
The foreign, state and local tax consequences of investing in the fund may
differ materially from the federal income tax consequences described above. The
fund'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. Shareholders should
consult their tax advisor before investing.
12
<PAGE> 304
[BACK COVER PAGE]
OBTAINING ADDITIONAL INFORMATION
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies of
the fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P. O. Box 4497
Houston, TX 77210-4497
BY TELEPHONE: (800) 417-8837
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com (prospectuses and annual and
semiannual reports only)
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
Treasury TaxAdvantage Portfolio
SEC 1940 Act file number: 811-2729
Back Cover Page
<PAGE> 305
[AIM LOGO]
RESOURCE CLASS
TREASURY TAXADVANTAGE PORTFOLIO
PROSPECTUS
DECEMBER 17, 1999
Treasury TaxAdvantage Portfolio seeks to maximize current income consistent with
the preservation of capital and the maintenance of liquidity.
This prospectus contains important information about the Resource Class of the
fund. Please read it before investing and keep it for future reference.
As with all other mutual fund securities, the Securities and Exchange Commission
has not approved or disapproved these securities or determined whether the
information in this prospectus is adequate or accurate. Anyone who tells you
otherwise is committing a crime.
There can be no assurance that the fund will be able to maintain a stable net
asset value of $1.00 per share.
1
<PAGE> 306
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES............................................3
PRINCIPAL RISKS OF INVESTING IN THE FUND ......................................3
PERFORMANCE INFORMATION........................................................4
ANNUAL TOTAL RETURNS..................................................4
PERFORMANCE TABLE.....................................................5
FEE TABLE AND EXPENSE EXAMPLE..................................................6
FEE TABLE.............................................................6
EXPENSE EXAMPLE.......................................................6
FUND MANAGEMENT................................................................7
THE ADVISOR...........................................................7
ADVISOR COMPENSATION..................................................7
OTHER INFORMATION..............................................................8
SUITABILITY FOR INVESTORS.............................................8
DIVIDENDS AND DISTRIBUTIONS...........................................8
SHAREHOLDER INFORMATION.......................................................10
DISTRIBUTION AND SERVICE (12b-1) FEES................................10
PURCHASING SHARES....................................................10
REDEEMING SHARES.....................................................10
PRICING OF SHARES....................................................11
TAXES................................................................11
OBTAINING ADDITIONAL INFORMATION.................................BACK COVER PAGE
</TABLE>
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, AIM Funds, AIM
Funds and Design, AIM Internet Connect and AIM Investor are service marks of
A I M Management Group Inc.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and you should not rely on such other information or
representations.
2
<PAGE> 307
INVESTMENT OBJECTIVE AND STRATEGIES
The fund's investment objective is to maximize current income consistent with
the preservation of capital and the maintenance of liquidity.
The fund attempts to meet this objective by investing in direct obligations of
the U.S. Treasury, including bills, notes and bonds. The fund also seeks to
provide dividends that are exempt from state and local taxation in many states.
The fund will maintain a weighted average maturity of 90 days or less. The fund
invests in compliance with Rule 2a-7 under the Investment Company Act of 1940.
The portfolio managers focus on U.S. Treasury obligations they believe have
favorable prospects for current income consistent with the preservation of
capital and the maintenance of liquidity. The portfolio managers usually hold
portfolio securities to maturity, but may sell a particular security when they
deem it advisable, such as when any of the factors above materially changes.
PRINCIPAL RISKS OF INVESTING IN THE FUND
An investment in the fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the fund.
Additionally, the fund's yield will vary as the short-term securities in its
portfolio mature and the proceeds are reinvested in securities with different
interest rates.
The following factors could reduce the fund's income and/or share price:
o sharply rising interest rates; and
o downgrades of credit ratings or defaults of any of the fund's holdings.
The value of your shares could be adversely affected if the computer systems
used by the fund's investment advisor and the fund's other service providers are
unable to distinguish the year 2000 from the year 1900.
The fund's investment advisor and independent technology consultants are working
to avoid year 2000-related problems in its systems and to obtain assurances
that other service providers are taking similar steps. Year 2000 problems may
also affect issuers in whose securities the fund invests.
3
<PAGE> 308
PERFORMANCE INFORMATION
The bar chart and table shown below provide an indication of the risks of
investing in the fund. The fund's past performance is not necessarily an
indication of its future performance.
ANNUAL TOTAL RETURNS
The following bar chart shows changes in the performance of the Institutional
Class shares from year to year. Neither the Resource Class shares nor the
Institutional Class shares are subject to sales loads.
INSTITUTIONAL INVESTMENT CLASS
[CHART]
<TABLE>
<CAPTION>
YEAR RETURN(%)
- ---- ---------
<S> <C>
1991 5.90%
1992 3.57%
1993 2.95%
1994 3.88%
1995 5.58%
1996 5.09%
1997 5.15%
1998 5.11%
</TABLE>
The returns are those of the fund's Institutional Class shares, which are not
offered in this prospectus. Resource Class shares would have substantially
similar annual returns because the shares are invested in the same portfolio of
securities, but would be lower to the extent that the classes have different
expenses.
The Institutional Class shares' year-to-date total return as of September 30,
1999 was 3.34%.
During the periods shown in the bar chart, Institutional Class' highest
quarterly return was 1.63% (quarter ended March 31, 1991) and its lowest
quarterly return was 0.72% (quarter ended June 30, 1993).
4
<PAGE> 309
PERFORMANCE TABLE
The following performance table reflects the performance of Institutional Class
shares over the periods indicated.
<TABLE>
<CAPTION>
==========================================================================================================
Average Annual Total Returns
(for the periods ended December 31, 1998)
Since Inception
1 Year 5 Years 10 Years Inception Date
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Institutional Class 5.11% 4.96% -- 4.79% 08/17/90
- ----------------------------------------------------------------------------------------------------------
Resource Class -- -- -- -- 01/04/99
==========================================================================================================
</TABLE>
For the current seven-day yield of Resource Class shares, call (800) 825-6858.
5
<PAGE> 310
FEE TABLE AND EXPENSE EXAMPLE
FEE TABLE
This table describes the fees and expenses that you may pay if you buy and hold
shares of the fund:
<TABLE>
<CAPTION>
Resource Class
--------------
<S> <C>
Shareholder Fees (fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load)
(as a percentage of original purchase price
or redemption proceeds, whichever is less) None
Annual Fund Operating Expenses (expenses that are deducted from fund assets)(1)
Management Fees 0.20%
Distribution and/or Service (12b-1) Fees 0.20
Other Expenses 0.15
Total Annual Fund Operating Expenses 0.55
Fee Waiver and Expense Reimbursement(2) 0.19
Net Expenses(3) 0.36
</TABLE>
- ----------------------
(1) The fees and expenses are based on estimated net assets for the current
fiscal period.
(2) The distributor has contractually agreed to waive 0.04% of the Rule 12b-1
distribution plan fee. The investment advisor has contractually agreed to
limit Total Annual Fund Operating Expenses, excluding the Rule 12b-1
distribution plan fee, interest expense, taxes and extraordinary expenses,
to 0.20%.
(3) The investment advisor has voluntarily agreed to limit Net Expenses,
excluding the Rule 12b-1 distribution plan fee, interest expense, taxes and
extraordinary expenses, to 0.11%. This limitation can be terminated at any
time. Net Expenses, net of this voluntary limitation, are 0.27%.
You should also consider the effect of any account fees charged by the financial
institution managing the account.
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Resource Class of the fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's gross operating expenses remain the same. To the extent fees are waived
or expenses are reimbursed, the expenses will be lower. Although your actual
returns and costs may be higher or lower, based on these assumptions your costs
would be:
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
Resource Class $ 56 $176
</TABLE>
6
<PAGE> 311
FUND MANAGEMENT
THE ADVISOR
A I M Advisors, Inc. (the advisor) serves as the fund's investment advisor and
is responsible for its day-to-day management. The advisor is located at 11
Greenway Plaza, Suite 100, Houston, Texas 77046-1173. The advisor supervises all
aspects of the fund's operations and provides investment advisory services to
the fund, including obtaining and evaluating economic, statistical and financial
information to formulate and implement investment programs for the fund.
The advisor has acted as an investment advisor since its organization in 1976.
Today, the advisor, together with its subsidiaries, advises or manages over 125
investment portfolios, including the fund, encompassing a broad range of
investment objectives.
ADVISOR COMPENSATION
During the fiscal year ended August 31, 1999, the advisor received compensation
of 0.04% of average daily net assets.
7
<PAGE> 312
OTHER INFORMATION
SUITABILITY FOR INVESTORS
The Resource Class of the fund is intended for use primarily by customers of
banks, certain broker-dealers and other institutions (institutions).
Individuals, corporations, partnerships and other businesses that maintain
qualified accounts at an institution may invest in shares of the Resource Class.
Each institution will render administrative support services to its customers
who are the beneficial owners of the shares of the Resource Class. Such services
include, among other things, establishment and maintenance of shareholder
accounts and records; assistance in processing purchase and redemption
transactions in shares of the Resource Class; providing periodic statements
showing a client's account balance in shares of the Resource Class; distribution
of fund proxy statements, annual reports and other communications to
shareholders whose accounts are serviced by the institution; and such other
services as the fund may reasonably request. Institutions will be required to
certify to the fund that they comply with applicable state law regarding
registration as broker-dealers, or that they are exempt from such registration.
Fund Management Company (the distributor) will review each application for
purchase of the Resource Class and reserves the right to reject any order to
purchase based upon a review of the suitability of the investor.
The Resource Class is designed to be a convenient and economical way to invest
in an open-end diversified money market fund, whose dividends are exempt from
state and local taxation in many states. It is anticipated that most investors
will perform their own subaccounting.
Investors in the Resource 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 Resource Class.
Because the fund 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 fund 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 fund 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.
DIVIDENDS AND DISTRIBUTIONS
Dividends
The fund generally declares dividends on each business day and pays dividends
monthly. A business day is any day on which both the Federal Reserve Bank of New
York and The Bank of New York, the fund's custodian, are open for business.
Dividends are paid to settled shares of the fund as of 3:00 p.m. Eastern time.
Generally, shareholders whose purchase orders have been received by the fund
prior to 3:00 p.m. Eastern time and shareholders whose redemption proceeds have
not been wired to them on any business day are eligible to receive dividends on
that business day. The dividend declared on any day preceding a non-business day
of the fund will include the income accrued on such non-business day. Dividends
and distributions are paid in cash unless the shareholder has elected to have
such dividends and distributions reinvested in the form of additional full and
fractional shares at the net asset value.
8
<PAGE> 313
Capital Gains Distributions
The fund generally distributes net realized capital gains (including net
short-term capital gains), if any, annually. The fund does not expect to realize
any long-term capital gains and losses.
9
<PAGE> 314
SHAREHOLDER INFORMATION
The fund currently offers six classes of shares all of which share a common
investment objective and portfolio of investments. The six classes differ only
with respect to distribution arrangements for different categories of investors.
DISTRIBUTION AND SERVICE (12b-1) FEES
The fund has adopted a 12b-1 plan with respect to the Resource Class that allows
the fund to pay distribution fees to Fund Management Company (distributor) for
the sale and distribution of its shares and fees for services provided to
shareholders. Because the fund pays these fees out of its assets on an ongoing
basis, over time these fees will increase the cost of your investment and may
cost you more than paying other types of sales charges.
PURCHASING SHARES
The minimum initial investment in the Resource Class is $10,000. No minimum
amount is required for subsequent investments in the fund, nor are minimum
balances required.
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 fund. Purchase orders
received after such time will be processed at the next day's net asset value.
You may purchase shares by submitting an Account Application to the fund's
transfer agent, A I M Fund Services, Inc. (transfer agent) at P.O. Box 4497,
Houston, Texas 77210-4497 prior to your initial purchase of shares. You must
open a fund account through an institution in accordance with procedures
established by such institution. A purchase order is considered received at the
time The Bank of New York receives federal funds (member bank deposits with a
Federal Reserve Bank) for the order, provided the transfer agent has received
notice of the order or at the time the order is placed, if the fund is assured
of payment. You may obtain an Account Application from the distributor.
Subsequent purchases of shares of the funds may also be made via AIM
LINK--Registered Trademark-- Remote, a personal computer application software
product.
If you propose to open a fund account with an institution, you should consult
with a representative of such institution to obtain a description of the rules
governing such an account. A statement with regard to your investment in the
Resource Class is supplied periodically, and confirmations of all transactions
for your account are provided by the institution promptly upon request. In
addition, proxies, periodic reports and other information from the institution
with regard to your shares of the Resource Class will be sent to you.
You may place an order for the purchase of shares of the Resource Class with the
institution. The institution is responsible for the prompt transmission of the
order to the transfer agent. The fund is normally required to make immediate
settlement in federal funds for portfolio securities purchased. Accordingly,
payment for shares of the Resource Class purchased by institutions on behalf of
their clients must be in federal funds. If an order to purchase shares is paid
for other than in federal funds, the order may be delayed up to two business
days while the institution completes the conversion into federal funds.
REDEEMING SHARES
You may redeem any or all of your shares at the net asset value next determined
after receipt of a redemption request in proper form by the fund. There is no
charge for redemption. Redemption requests with respect to shares of the
Resource Class are normally made through your institution.
10
<PAGE> 315
You may request a redemption by calling the transfer agent at (800) 825-6858, or
by using AIM LINK--Registered Trademark-- Remote. Payment for redeemed shares is
normally made by Federal Reserve wire to the commercial bank account designated
in your Account Application. You may also request that payment be made by check.
We use reasonable procedures to confirm that instructions communicated by
telephone are genuine and are not liable for telephone instructions that are
reasonably believed to be genuine. Such reasonable procedures may include
recordings of telephone transactions maintained for a reasonable period of time.
Payment for redemption orders received prior to 3:00 p.m. Eastern time will
normally be made on the same day. Payment for shares 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 fund may make payment for telephone redemptions in excess of $1,000 by
check when it is considered to be in the fund's best interest to do so.
Dividends payable up to the date of redemption on redeemed shares will normally
be paid by wire transfer on the next dividend payment date. However, if all of
the shares in your account are redeemed, you will receive dividends payable up
to the date of redemption with the proceeds of the redemption.
THE FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
o REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
o MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
o WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
PRICING OF SHARES
Determination of Net Asset Value
The price of each of the fund's shares is the fund's net asset value per share.
The fund determines the net asset value of its shares as of 3:00 p.m. Eastern
time on each day on which both the Federal Reserve Bank of New York and The Bank
of New York are open for business (business day). The fund values portfolio
securities on the basis of amortized cost, which approximates market value.
Timing of Orders
The fund prices purchase and redemption orders at the net asset value calculated
after the transfer agent receives an order in good form. If the transfer agent
receives a redemption request on a business day prior to 3:00 p.m. Eastern time,
the fund will normally wire redemption proceeds on that day. If the transfer
agent receives a redemption request after 3:00 p.m. Eastern time on a business
day of the fund, the redemption will be processed at the net asset value next
determined and the fund will normally wire proceeds on the next business day.
Shareholders will accrue dividends until the day the fund wires redemption
proceeds. The Fund may postpone the right of redemption only under unusual
circumstances, as allowed by the Securities and Exchange Commission, such as
when the New York Stock Exchange restricts or suspends trading. The fund
reserves the right to change the time for which purchase and redemption orders
must be submitted to and received by the transfer agent for execution on the
same day on any day when the primary government securities dealers are either
closed for business or close early, or trading in money market securities is
limited due to national holidays.
TAXES
Dividends and distributions received are taxable as ordinary income [or
long-term capital gains] for federal income tax purposes, whether reinvested in
additional shares or taken in cash. Distributions are taxable at different rates
depending on the length of time the fund holds its assets. [Different tax rates
apply to ordinary income and long-term capital gain distributions, regardless of
how long shares are held.] Every year, information will be sent showing the
amount of dividends and distributions received from the fund during the prior
year.
11
<PAGE> 316
[Any long-term or short-term capital gains realized from redemptions of the
shares will be subject to federal income tax.]
The foreign, state and local tax consequences of investing in the fund may
differ materially from the federal income tax consequences described above. The
fund'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. Shareholders should
consult their tax advisor before investing.
12
<PAGE> 317
[BACK COVER PAGE]
OBTAINING ADDITIONAL INFORMATION
More information may be obtained free of charge upon request. The Statement of
Additional Information (SAI), a current version of which is on file with the
Securities and Exchange Commission (SEC), contains more details about the fund
and is incorporated by reference into the prospectus (is legally a part of this
prospectus). Annual and semiannual reports to shareholders contain additional
information about the fund's investments. The fund's annual report also
discusses the market conditions and investment strategies that significantly
affected the fund's performance during its last fiscal year.
If you have questions about this fund, another fund in The AIM Family of
Funds--Registered Trademark-- or your account, or wish to obtain free copies of
the fund's current SAI or annual or semiannual reports, please contact us
BY MAIL: A I M Fund Services, Inc.
P. O. Box 4497
Houston, TX 77210-4497
BY TELEPHONE: (800) 825-6858
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com (prospectuses and annual and
semiannual reports only)
You also can review and obtain copies of the fund's SAI, reports and other
information at the SEC's Public Reference Room in Washington, DC; on the EDGAR
database on the SEC's Internet website (http://www.sec.gov); or, after paying a
duplication fee, by sending a letter to the SEC's Public Reference Section,
Washington, DC 20549-0102 or by sending an electronic mail request to
[email protected]. Please call the SEC at 1-202-942-8090 for information about
the Public Reference Room.
Treasury TaxAdvantage Portfolio
SEC 1940 Act file number: 811-2729
Back Cover Page
<PAGE> 318
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 17, 1999
RELATING TO THE PROSPECTUS OF EACH OF THE FOLLOWING CLASSES OF THE
TREASURY TAXADVANTAGE PORTFOLIO:
CASH MANAGEMENT CLASS PROSPECTUS DATED DECEMBER 17, 1999,
INSTITUTIONAL CLASS PROSPECTUS DATED DECEMBER 17, 1999,
PERSONAL INVESTMENT CLASS PROSPECTUS DATED DECEMBER 17, 1999,
PRIVATE INVESTMENT CLASS PROSPECTUS DATED DECEMBER 17, 1999,
RESERVE CLASS PROSPECTUS DATED DECEMBER 17, 1999 AND
RESOURCE CLASS PROSPECTUS DATED DECEMBER 17, 1999
A-1
<PAGE> 319
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
Trustees and Officers.................................. A-5
Remuneration of Trustees............................... A-7
Investment Advisor..................................... A-9
Administrative Services................................ A-10
Expenses............................................... A-10
Transfer Agent and Custodian........................... A-10
Legal Matters.......................................... A-11
Reports................................................ A-11
Sub-accounting......................................... A-11
Principal Holders of Securities........................ A-11
Share Purchases and Redemptions............................. A-17
Purchases and Redemption............................... A-17
Redemptions by the Portfolio........................... A-18
Net Asset Value Determination.......................... A-18
Distribution Agreement................................. A-19
Distribution Plan...................................... A-19
Banking Regulations.................................... A-20
Performance Information................................ A-21
Investment Program and Restrictions......................... A-22
Investment Program..................................... A-22
Investment Policies.................................... A-22
Eligible Securities.................................... A-23
Investment Restrictions................................ A-23
Other Investment Policies.............................. A-23
Portfolio Transactions and Brokerage........................ A-24
General Brokerage Policy............................... A-24
Allocation of Portfolio Transactions................... A-25
Section 28(e) Standards................................ A-25
Dividends, Distributions and Tax Matters.................... A-26
Dividends and Distributions............................ A-26
Tax Matters............................................ A-26
Qualifications as a Regulated Investment Company....... A-26
Excise Tax on Regulated Investment Companies........... A-27
Portfolio Distributions................................ A-27
Sale or Redemption of Shares........................... A-28
Foreign Shareholders................................... A-28
Effect of Future Legislation; State and Local Tax
Considerations........................................ A-28
Financial Statements........................................ FS
</TABLE>
A-2
<PAGE> 320
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 17, 1999, the Institutional Class Prospectus dated December 17,
1999, the Personal Investment Class Prospectus dated December 17, 1999, the
Private Investment Class Prospectus dated December 17, 1999, the Reserve Class
Prospectus dated December 17, 1999 and the Resource Class Prospectus dated
December 17, 1999 (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 the Trust and 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 each Prospectus under the caption "Redeeming 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 classes of
the Government & Agency Portfolio are offered pursuant to separate prospectuses
and separate statements of additional information.
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.
All shares of the Trust have equal rights with respect to voting, except that
the holders of shares of a particular class will have the exclusive right to
vote on matters pertaining to distribution plans or shareholder service plans,
if any such plans are adopted, relating solely to such class.
A-3
<PAGE> 321
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.
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.
Shares are fully assignable and subject to encumbrance by a shareholder. The
Board of Trustees may establish and designate and change in any manner any
portfolio or any classes or classes thereof, may fix or change the preferences,
voting rights, rights and privileges of any portfolio or classes thereof, and
may divide or combine the shares of any portfolio or classes thereof into a
greater or lesser number. The Board of Trustees also may classify or reclassify
or convert any issued shares of any portfolio, or classes thereof, into a
greater or lesser number. Any such classification or reclassification will
comply with the provisions of the Investment Company Act of 1940, as amended
(the "1940 Act").
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.
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 its respective classes 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 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.
A-4
<PAGE> 322
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.
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 A I M Advisors, Inc. ("AIM"), subject always to the
objective and policies of the Trust and to the general supervision of the
Trust's Board of Trustees. 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.
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 (80) 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
Executive Vice Chairman and Director, AMVESCAP PLC.
- --------------------------------------------------------------------------------------------------------------------------
BRUCE L. CROCKETT (55) 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. (64) Trustee Chairman of the Board of Directors, Mercantile
2 Hopkins Plaza, 8th Floor Mortgage Corp. Formerly, Vice Chairman of the Board
Suite 805 of Directors and President, Mercantile-Safe Deposit
Baltimore, MD 21201 & Trust Co.; and President, Mercantile Bankshares.
- --------------------------------------------------------------------------------------------------------------------------
JACK M. FIELDS (47) 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 (62) Trustee Partner, Kramer Levin Naftalis & Frankel, LLP (law
919 Third Avenue firm). Formerly, Partner, Reid & Priest (law firm).
New York, NY 10022
- --------------------------------------------------------------------------------------------------------------------------
*ROBERT H. GRAHAM (53) 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> 323
<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 (49) 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 (57) Trustee Attorney in private practice in Houston, Texas.
6363 Woodway, Suite 825
Houston, TX 77057
- --------------------------------------------------------------------------------------------------------------------------
LOUIS S. SKLAR (60) 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
- --------------------------------------------------------------------------------------------------------------------------
GARY T. CRUM (52) Senior Vice Director and President, A I M Capital Management,
President Inc.; Director and Executive Vice President, A I M
Management Group Inc.; Director and Senior Vice
President, A I M Advisors, Inc.; and Director, A I M
Distributors, Inc. and AMVESCAP PLC.
- --------------------------------------------------------------------------------------------------------------------------
CAROL F. RELIHAN (45) Senior Vice Director, Senior Vice President, General Counsel and
President and Secretary, A I M Advisors, Inc.; Senior Vice
Secretary President, 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 (40) Vice President Vice President and Fund Controller, A I M Advisors,
and Treasurer Inc.; and Assistant Vice President and Assistant
Treasurer, Fund Management Company.
- --------------------------------------------------------------------------------------------------------------------------
MELVILLE B. COX (56) 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 (39) Vice President Senior Vice President, A I M Capital Management, Inc.
and Vice President, A I M Advisors, Inc.
- --------------------------------------------------------------------------------------------------------------------------
J. ABBOTT SPRAGUE (44) Vice President Director and President, Fund Management Company;
Director, A I M Fund Services, Inc.; and Senior Vice
President, A I M Advisors, Inc. and A I M Management
Group Inc.
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-6
<PAGE> 324
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
(Chairman), Fields, Frischling, Pennock and Sklar and Dr. Mathai-Davis. 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 and Sklar (Chairman) and Dr. Mathai-Davis. 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 and Sklar and Dr. Mathai-Davis. 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 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.
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............................... 5,724 37,485 96,000
Owen Daly II.................................... 5,724 122,898 96,000
Edward K. Dunn, Jr. ............................ 5,724 -0- 78,889
Jack Fields..................................... 5,695 15,826 95,500
Carl Frischling(4).............................. 5,694 97,791 95,500
Robert H. Graham................................ -0- -0- -0-
John F. Kroeger(5).............................. 506 107,896 91,654
Prema Mathai-Davis.............................. 5,344 -0- 32,636
Lewis F. Pennock................................ 5,694 45,766 95,500
Ian W. Robinson(6).............................. 3,551 94,442 94,500
Louis S. Sklar.................................. 5,694 90,232 95,500
</TABLE>
- ---------------
(1) The total amount of compensation deferred by all trustees of the Trust
during the fiscal year ended August 31, 1999, including interest earned
thereon, was $36,280.
(2) During the fiscal year ended August 31, 1999, the total amount of expenses
allocated to the Trust in respect of such retirement benefits was $35,554.
Data reflects compensation for the calendar year ended December 31, 1998.
(3) Each trustee serves as a director or trustee of a total of 12 registered
investment companies advised by AIM (comprised of over 50 portfolios). Data
reflects total compensation for the calendar year ended December 31, 1998.
A-7
<PAGE> 325
(4) The Trust paid the law firm of Kramer Levin Naftalis & Frankel $3,815 in
legal fees for services provided to the Portfolio during the fiscal year
ended August 31, 1999. Mr. Frischling, a trustee of the Trust, is a partner
in such firm.
(5) Mr. Kroeger was as a trustee until June 11, 1998, when he resigned. On that
date he became a consultant to the Trust. Of the amount listed above, $0 was
for compensation for services as a trustee and the remainder as a
consultant. Mr. Kroeger passed away on November 26, 1998. Mr. Kroeger's
widow will receive his pension as described below under "AIM Funds
Retirement Plan for Eligible Directors/Trustees."
(6) Mr. Robinson was a trustee until March 12, 1999, when he retired.
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, AIM Management 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 a maximum of 75% of the annual 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
separate agreement between the Applicable AIM Funds and the trustee) and based
on 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.
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 Dr. Mathai-Davis are 12, 12, 1, 2, 22, 20, 18, 11, 10 and 1
years, respectively.
ESTIMATED ANNUAL BENEFITS UPON RETIREMENT
<TABLE>
<CAPTION>
NUMBER OF YEARS ANNUAL RETIREMENT COMPENSATION
OF SERVICE WITH PAID BY ALL
APPLICABLE AIM FUNDS APPLICABLE AIM FUNDS
-------------------- ------------------------------
<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, Dunn, Fields, Frischling, 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, 1999, $8,986 in trustees' fees and
expenses were allocated to the Portfolio.
A-8
<PAGE> 326
INVESTMENT ADVISOR
AIM is a wholly owned subsidiary of AIM Management, a holding company that has
been engaged in the financial services business since 1976. The address of AIM
is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. AIM, together with
its subsidiaries advises or manages over 125 investment portfolios encompassing
a broad range of investment objectives. 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.
AIM and the Trust have adopted a Code of Ethics which requires investment
personnel (a) to pre-clear all personal securities transactions subject to the
Code of Ethics, (b) to file reports regarding such transactions, (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 and (d) to abide by certain other
provisions under the Code of Ethics. The Code of Ethics also prohibits
investment personnel and all other AIM employees from purchasing securities in
an initial public offering. Personal trading reports are reviewed periodically
by AIM, and the Board of Trustees reviews quarterly and annual reports
(including information on any substantial violations of the Code of Ethics).
Sanctions for violations of the Code of Ethics may include censure, monetary
penalties, suspension or termination of employment.
The Trust has entered into a Master Investment Advisory Agreement (the
"Advisory Agreement") with AIM. 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.
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.
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>
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, 1999, 1998 and 1997, with respect to the Portfolio in the amounts of
$50,808, $244,988 and $581,929, respectively. For the fiscal years ended August
31, 1999, 1998 and 1997, AIM waived fees with respect to the Portfolio in the
amounts of $244,182, $167,622 and $123,468, respectively.
AIM may from time to time waive or reduce its fee. Voluntary fee waivers or
reductions may be rescinded at any time without further notice to investors.
During periods of voluntary fee waivers or reductions, AIM will retain its
ability to be reimbursed for such fee prior to the end of each fiscal year.
Contractual fee waivers or reductions set forth in the Fee Table in a Prospectus
may not be terminated or amended to the Portfolio's detriment during the period
stated in the agreement between AIM and the Trust.
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
A-9
<PAGE> 327
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."
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, or arranges for the
performance of, 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.
For the fiscal years ended August 31, 1999, 1998 and 1997, 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 in the amounts of $51,944, $46,759 and $56,844, respectively, for
fund accounting services for the Portfolio.
EXPENSES
In addition to fees paid to AIM pursuant to the Advisory Agreement and the
expenses reimbursed to AIM under the Administrative Services Agreement, the
Trust also pays or causes to be paid all other expenses of the Trust, including,
without limitation: the charges and expenses of any registrar, any custodian or
depository appointed by the Trust for the safekeeping of its cash, portfolio
securities and other property, and any transfer, dividend or accounting agent or
agents appointed by the Trust; brokers' commissions chargeable to the Trust in
connection with portfolio securities transactions to which the Trust is a party;
all taxes, including securities issuance and transfer taxes, and fees payable by
the Trust to federal, state or other governmental agencies; the costs and
expenses of engraving or printing of certificates representing shares of the
Trust; all costs and expenses in connection with the registration and
maintenance of registration of the Trust and its shares with the SEC and various
states and other jurisdictions (including filing and legal fees and
disbursements of counsel); the costs and expenses of printing, including
typesetting, and distributing prospectuses and statements of additional
information of the Trust and supplements thereto to the Trust's shareholders;
all expenses of shareholders' and trustees' meetings and of preparing, printing
and mailing of prospectuses, proxy statements and reports to shareholders; fees
and travel expenses of trustees and trustee members of any advisory board or
committee; all expenses incident to the payment of any dividend, distribution,
withdrawal or redemption, whether in shares or in cash; charges and expenses of
any outside service used for pricing of the Trust's shares; charges and expenses
of legal counsel, including counsel to the trustees of the Trust who are not
"interested persons" (as defined in the 1940 Act) of the Trust or AIM, and of
independent accountants in connection with any matter relating to the Trust;
membership dues of industry associations; interest payable on Trust borrowings;
postage; insurance premiums on property or personnel (including officers and
trustees) of the Trust which inure to its benefit; and extraordinary expenses
(including, but not limited to, legal claims and liabilities and litigation
costs and any indemnification related thereto). 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.
TRANSFER AGENT AND CUSTODIAN
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 pursuant to a Transfer Agency and Service Agreement.
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.
A-10
<PAGE> 328
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.
LEGAL MATTERS
The law firm of Ballard Spahr Andrews & Ingersoll, LLP, Philadelphia,
Pennsylvania serves as counsel to the Trust.
REPORTS
The Trust furnishes shareholders with semi-annual reports containing
information about the Trust and its operations, including a schedule of
investments held in the Portfolio and its financial statements. The annual
financial statements are audited by the Trust's independent auditors. The Board
of Trustees has selected KPMG LLP, 700 Louisiana, Houston, Texas 77002, as the
independent auditors to audit the financial statements and review the tax
returns of the Portfolio.
SUB-ACCOUNTING
The Trust and FMC have arranged for AFS or the Portfolio to offer
sub-accounting services to shareholders of the Portfolio and to maintain
information with respect to the underlying beneficial ownership of the shares of
each class of the Portfolio. Investors who purchase shares of the Portfolio for
the account of others can make arrangements through the Trust, or FMC for these
sub-accounting services. In addition, shareholders utilizing certain versions of
AIM LINK--Registered Trademark-- Remote, a personal computer application
software product, may receive sub-accounting services via such software.
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 each class of the Government
& Agency Portfolio as of November 1, 1999, and the percentage of such shares
owned by such shareholders as of such date are as follows:
CASH MANAGEMENT CLASS
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- -------------- -------------
<S> <C> <C>
Fund Services Associates, Inc............................... 44.67% --
1875 Century Park East -- Suite 1345
Los Angeles, CA 90067
Orlando-Orange Co. 40700.................................. 31.01% --
225 Water Street, 3rd Floor
P.O. Box 44204
Jacksonville, FL 32202
Cruttendon Roth, Incorporated............................. 7.06% --
24 Corporate Plaza
Newport Beach, CA 92660
Gardnyr Michael Capital, Inc.............................. 6.68% --
2281 Lee Rd. Ste. 104
Winter Park, FL 32789
</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-11
<PAGE> 329
INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- --------------- -------------
<S> <C> <C>
AIM Fund of Funds Account................................... 42.22%(b) --
Money Market Portfolio Admin.
11 Greenway Plaza, Ste. 100
Houston, TX 77046
Gardnyr Michael Capital, Inc.............................. 24.45% --
2281 Lee Rd., Ste. 104
Winter Park, FL 32789
Waukesha County........................................... 8.36% --
Finance Division, Dept. of Admin.
1320 Pewaukee Road, Room 310
Waukesha, WI 53188-3878
</TABLE>
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- --------------- -------------
<S> <C> <C>
Fund Services Associates, Inc............................... 78.47% --
1875 Century Park East -- Suite 1345
Los Angeles, CA 90067
Huntington Capital Corp................................... 17.21% --
41 S. High St., Ninth Floor
Columbus, OH 43287
</TABLE>
RESOURCE CLASS
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- --------------- -------------
<S> <C> <C>
Kansas City Power & Light................................... 76.73% --
P.O. Box 418679
Kansas City, MO 64106
Craigie Incorporated...................................... 12.08% --
P.O. Box 29715
Richmond, VA 23242
Hambrecht & Quist LLC..................................... 8.47% --
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> 330
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 each class of the Treasury
Portfolio as of November 1, 1999 and the percentage of such shares owned by such
shareholders as of such date are as follows:
CASH MANAGEMENT CLASS
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- -------------- -------------
<S> <C> <C>
Bank of New York............................................ 36.16% --
One Wall Street
5th Floor
Stif/Master Note
New York, NY 10286
Bank of Oklahoma.......................................... 12.46% --
P.O. Box 2180
Tulsa, OK 74101
Chase Bank of Texas....................................... 12.10% --
600 Travis St., 8th Fl
8-CBT-39
Houston, TX 77252-8009
CIBC World Markets........................................ 11.11% --
200 Liberty Street
World Financial Center
New York, NY 10281
Fund Services Associates, Inc............................. 7.91% --
1875 Century Park East -- Suite 1345
Los Angeles, CA 90067
Huntington Capital Corp................................... 6.18% --
41 S. High St., Ninth Floor
Columbus, OH 43287
</TABLE>
- ---------------
(a) The Trust has no knowledge as to whether all or any portion of the shares
owned of record only are also owned beneficially.
A-13
<PAGE> 331
INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- -------------- -------------
<S> <C> <C>
City of New York Deferred Compensation Plan................. 8.23% --
40 Rector Street 3rd Floor
New York, NY 10006
Trust Company Bank........................................ 7.22% --
Center 3139
P.O. Box 105504
Atlanta, GA 30348
Weststar Bank Trust Dept.................................. 5.67% --
P.O. Box 1156
Bartlesville, OK 74005-1156
Trustmark National Bank, Trust Department................. 5.37% --
248 East Capitol
Jackson, MS 39205
Turtle & Co. Sweep........................................ 5.14% --
P.O. Box 9427
Boston, MA 02209
Texas Commerce Bank National Association, as Custo........ 5.04% --
1585 Broadway
New York, NY 10036
Chase Bank of Texas, National Association................. 5.04% --
600 Travis, 9th Floor
Houston, TX 77002
</TABLE>
PERSONAL INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- -------------- -------------
<S> <C> <C>
Cullen/Frost Discount Brokers............................... 83.98% --
P.O. Box 2358
San Antonio, TX 78299
Kinco & Co. c/o Rnb Securities............................ 7.50% --
1 Hanson Pl., Lower Level
Brooklyn, NY 11243
</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> 332
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- -------------- -------------
<S> <C> <C>
Bank of New York............................................ 40.73% --
One Wall Street
5th Floor
Stif/Master Note
New York, NY 10286
Huntington Capital Corp................................... 17.70% --
41 S. High St., Ninth Floor
Columbus, OH 43287
Strafe & Co............................................... 6.24% --
1111 Polaris Parkway
Columbus, OH 43271-0211
New Haven Savings Bank Trust Department................... 5.58% --
P.O. Box 302
Trust Department
New Haven, CT 06502
Zions First National Bank (NV)............................ 5.39% --
P.O. Box 30880
Salt Lake City, UT 84130
</TABLE>
RESERVE CLASS
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- -------------- -------------
<S> <C> <C>
Bank of New York............................................ 99.83% --
440 Mamoroneck, 5th Fl.
Harrison, NY 10286
</TABLE>
RESOURCE CLASS
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- -------------- -------------
<S> <C> <C>
First Union Subaccounts..................................... 65.49% --
8739 Research Drive
Capital Markets
Charlotte, NC 28262-0675
Mellon Bank NA............................................ 13.12% --
P.O. Box 710
Pittsburgh, PA 15230-0710
CIBC World Markets........................................ 10.08% --
200 Liberty Street
World Financial Center
New York, NY 10281
</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> 333
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 each class of the Treasury
TaxAdvantage Portfolio as of November 1, 1999 and the percentage of such shares
owned by such shareholders as of such date are as follows:
INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- --------------- -------------
<S> <C> <C>
Frost National Bank TX...................................... 14.43% --
Muir & Co
C/O Frost
P.O. Box 2479
San Antonio, TX 78298-2479
First Trust/Var & Co...................................... 14.36% --
Funds Control Suite 0404
180 East Fifth Street
St. Paul, MN 55101
Bank of America N.A....................................... 13.38% --
1401 Elm Street 11th Floor
P.O. Box 831000
Dallas, TX 75202-2911
Key Trust Company......................................... 12.07% --
Mail Code OH-01-49-3040
P.O. Box 94871
Cleveland, OH 44101-5971
Kanaly Trust Company...................................... 10.79% --
4550 Post Oak Place Drive
Suite 139
Houston, TX 77027
Mason-Dixon Trust Company................................. 10.27% --
45 W. Main Street
Westminster, 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> 334
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT PERCENT OWNED
NAME AND ADDRESS OWNED OF OF RECORD AND
OF RECORD OWNER RECORD ONLY(a) BENEFICIALLY
---------------- -------------- -------------
<S> <C> <C>
Bank Of New York............................................ 32.25% --
One Wall Street
5th Floor
Stif/Master Note
New York, NY 10286
Frost National Bank TX.................................... 21.35% --
Muir & Co
C/O Frost
P.O. Box 2479
San Antonio, TX 78298-2479
Huntington Capital Corp. ................................. 20.65% --
41 S. High St., Ninth Floor
Columbus, OH 43287
First Union Securities, Inc............................... 19.39% --
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.
To the best of the knowledge of the Trust, as of November 1, 1999, the
trustees and officers of the Trust as a group beneficially owned less than 1% of
each class of the Trust's outstanding shares.
SHARE PURCHASES AND REDEMPTIONS
PURCHASES AND REDEMPTIONS
A complete description of the manner by which shares of a particular class may
be purchased or redeemed appears in each Prospectus under the headings
"Purchasing Shares" and "Redeeming Shares."
Prior to the initial purchase of Portfolio shares, an investor must complete
and send an Account Application to AFS at P.O. Box 4497, Houston, Texas
77210-4497. An Account Application may be obtained from the distributor. An
investor may make changes to the information provided in the Account Application
by submitting such changes in writing to the transfer agent or by completing and
submitting to the transfer agent a new Account Application.
The Trust reserves the right to reject any purchase order and to withdraw all
or any part of the offering made by a Prospectus. 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 promptly returned to an
investor. Any request for correction to a transaction of Portfolio shares must
be submitted in writing to AFS. AFS 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.
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 Cash Management Class, Personal Investment Class, Private Investment Class,
Reserve Class or the Resource Class directly, except through reinvestment of
dividends and distributions.
Payment for redeemed shares of the Portfolio is normally made by Federal
Reserve wire to the commercial bank account designated in the shareholder's
Account Application on the day specified below, but may be remitted by check
upon request by a
A-17
<PAGE> 335
shareholder. 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 trust company (which may
include the shareholder). Additional documentation may be required when deemed
appropriate by the Portfolio or AFS.
The Trust may postpone the right of redemption only under unusual
circumstances, as allowed by the Securities and Exchange Commission, such as
when the New York Stock Exchange restricts or suspends trading.
A "Business Day" of the Trust is any day on which member banks of the Federal
Reserve Bank of New York and The Bank of New York are open for business. If AFS
receives a redemption request on a Business Day prior to 3:00 p.m. Eastern time,
the redemption will be effected at the net asset value of the Portfolio
determined as of 3:00 p.m. Eastern time and the Trust will normally wire
redemption proceeds on that day. A redemption request received by AFS after 3:00
p.m. Eastern time 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 and proceeds
will normally be wired on the next Business Day. If proceeds are not wired on
the same day, shareholders will accrue dividends until the day the proceeds are
wired. The Trust, however, reserves the right to change the time for which
purchase and redemption orders must be submitted to and received by the transfer
agent for execution on the same day on any day when the primary government
securities dealers are either closed for business or close early, or trading in
money market securities is limited due to national holidays.
Any request for correction to a redemption transaction of Portfolio shares
must be submitted in writing to AFS.
REDEMPTIONS BY THE PORTFOLIO
If the Trust determines that you have provided incorrect information in
opening an account or in the course of conducting subsequent transactions, the
Trust may, at its discretion, redeem the account and distribute the proceeds to
you.
The Board of Trustees may redeem shares if it determines in its sole
discretion that failure to so redeem may have materially adverse consequences to
the shareholders of the Portfolio.
NET ASSET VALUE DETERMINATION
The net asset value per share of the Portfolio is determined as of 3:00 p.m.
Eastern time on each Business Day of the Trust. For the purpose of determining
the price at which all shares of the Portfolio are issued and redeemed, the net
asset value per share is calculated by: (a) valuing all securities and
instruments of the Portfolio as set forth below; (b) adding other assets of the
Portfolio, if any; (c) deducting the liabilities of the Portfolio; (d) dividing
the resulting amount by the number of shares outstanding of the Portfolio; and
(e) rounding such per share net asset value to the nearest whole cent. Among
other items, the Portfolio's liabilities include accrued expenses and dividends
payable and its total assets include portfolio securities valued at their market
value as well as income accrued but not yet received.
The debt instruments held in the Portfolio are valued on the basis of
amortized cost. This method involves valuing an instrument at its cost and
thereafter assuming a constant amortization to maturity of any discount or
premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument. 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 Trust would receive if it sold the entire
portfolio.
The valuation of the portfolio instruments based upon their amortized cost and
the concomitant maintenance of the net asset value per share of $1.00 for the
Portfolio is permitted in accordance with applicable rules and regulations of
the SEC, including Rule 2a-7 under the 1940 Act, which require the 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.
A-18
<PAGE> 336
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.
FMC may, from time to time, at its expense, pay a bonus or other consideration
or incentive to dealers or institutions who sell a minimum dollar amount of the
shares of a particular 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 or 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 or the amount received as proceeds from such sales. Dealers
or institutions may not use sales of the shares 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 with respect to the Cash Management Class, Personal
Investment Class, Private Investment Class, Reserve Class and Resource Class.
The Plan provides that the Trust may compensate FMC in connection with the
distribution of shares of the Portfolio. Such compensation 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.
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.
The Plan does not obligate the Trust to reimburse FMC for the actual expenses
FMC may incur in fulfilling its obligations under the Plan. Thus, 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.
FMC may from time to time waive or reduce any portion of its 12b-1 fee for
Cash Management Class, Personal Investment Class, Private Investment Class,
Reserve Class and Resource Class shares. Voluntary fee waivers or reductions may
be rescinded at any time without further notice to investors. During periods of
voluntary fee waivers or reductions FMC will retain its ability
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to be reimbursed for such fee prior to the end of each fiscal year. Contractual
fee waivers or reductions set forth in the Fee Table in a Prospectus may not be
terminated or amended to the Portfolio's detriment during the period stated in
the agreement between FMC and the Trust.
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.
With respect to the [Private Investment Class,] the amount paid to dealers and
financial institutions pursuant to the Plan for the fiscal year ended August 31,
1999 was $125,302 (or an amount equal to [0.25%] of the average daily net assets
of [Private Investment Class.]). With respect to the [Private Investment Class,]
FMC received no compensation pursuant to the Plan for the fiscal year ended
August 31, 1999.
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
agreement 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 would
benefit the Trust and the holders of shares of the applicable classes of the
Portfolio. Anticipated benefits that may result from the Plan are; (i) FMC,
brokerage firms and financial institutions will provide a shareholder with rapid
access to his account for the purpose of effecting executions of purchase and
redemption orders; (ii) FMC and shareholder service agents will provide prompt,
efficient and reliable responses to shareholder inquiries concerning account
status; (iii) a well-developed, dependable network of shareholder service agents
may help to curb sharp fluctuations in rates of redemptions and sales, thereby
reducing the chance that an unanticipated increase in net redemptions could
adversely affect the performance of the Portfolio; and (iv) a successful
distribution effort will assist FMC in maintaining and increasing the
organizational strength needed to service the Portfolio.
The Plan complies with the Conduct Rules of the National Association of
Securities Dealers, Inc. and provides for payment of a service fee to dealers
and other financial institutions that provide continuing personal shareholder
services to their customers who purchase and own shares of each applicable class
of the Portfolio, in amounts of up to 0.25% of the average net assets of such
class of the Portfolio attributable to the customers of such dealers or
financial institutions. Payments to dealers and other financial institutions in
excess of such amount and payments to FMC would be characterized as an
asset-based sales charge pursuant to the amended 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 each applicable class.
The Plan, unless sooner terminated in accordance with its terms, shall
continue in effect as to each applicable class from year to year as long as such
continuance is a specifically approved at least annually by the Board of
Trustees, including a majority of the Qualified Trustees.
FMC is a wholly owned subsidiary of AIM, an indirect wholly owned subsidiary
of AMVESCAP PLC. Charles T. Bauer, a Trustee and Chairman of the Trust and
Robert H. Graham, Trustee and President of the Trust, own shares of AMVESCAP,
PLC.
The Plan may be terminated as to a particular class of the Portfolio by vote
of a majority of the Qualified Trustees, or by vote of a majority of the holders
of the outstanding voting securities of such class. Any change in the Plan that
would increase materially the distribution expenses paid by an applicable 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.
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,
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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.
PERFORMANCE INFORMATION
As stated under the caption "Performance Information -- Performance Table" in
each Prospectus, yield information for the shares of each class of the Portfolio
may be obtained by calling the telephone number set forth in the Prospectus for
that class. Performance will vary from time to time and past results are not
necessarily indicative of future results. Investors should understand that
performance is a function of the type and quality of the Portfolio's investments
as well as its operating expenses and market conditions. Performance information
for the shares of the Portfolio may not provide a basis for comparison with
investments which pay fixed rates of interest for a stated period of time, with
other investments or with investment companies which use a different method of
calculating performance. A shareholder's investment in the Portfolio is not
insured or guaranteed. These factors should be carefully considered by the
investor before making an investment in the Portfolio.
Calculations of yield will take into account the total income received by the
Portfolio. To the extent that different classes of shares bear different
expenses, the yields of such classes will vary. To the extent that institutions
charge fees in connection with services provided in conjunction with the Trust,
the yield will be lower for those beneficial owners paying such fees.
The current yields quoted will be the net average annualized yield for an
identified period, such as seven consecutive calendar days or a month. Yields
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 any 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 yields that assumes the reinvestment of
dividends for a 365 day year and a return for the entire year equal to the
average annualized yields for the period, which will be computed by compounding
the unannualized current yields for the period by adding 1 to the unannualized
current yields, 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.
From time to time, AIM or its affiliates may waive all or a portion of their
fees and/or assume certain expenses of the Portfolio. Voluntary fee waivers or
reductions or commitments to assume expenses may be rescinded at any time
without further notice to investors. During periods of voluntary fee waivers or
reductions or commitments to assume expenses, AIM will retain its ability to be
reimbursed for such fee prior to the end of each fiscal year. Contractual fee
waivers or reductions or reimbursement of expenses set forth in the Fee Table in
a Prospectus may not be terminated or amended to the Portfolio's detriment
during the period stated in the agreement between AIM and the Trust. Fee waivers
or reductions or commitments to reduce expenses will have the effect of
increasing the Portfolio's yield and total return.
For the seven-day period ended August 31, 1999, the current and effective
yields for the Private Investment Class were 4.35% and 4.44%, respectively. For
the seven-day period ended August 31, 1999, the current and effective yields for
the Institutional Class were 4.60% and 4.70%, respectively. For the seven-day
period ended August 31, 1999, the current and effective yields for the Cash
Management Class were 4.52% and 4.62%, respectively. For the seven-day period
ended August 31, 1999, the current and effective yields for the Personal
Investment Class were 4.10% and 4.18%, respectively. For the seven-day period
ended August 31, 1999, the current and effect yields for the Reserve Class were
3.80% and 3.87%, respectively. For the seven-day period ended August 31, 1999,
the current and effective yields for the Resource Class were 4.44% and 4.54%,
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 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 or by Lipper Inc., a widely recognized
independent service, 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).
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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
Information concerning the Portfolio's investment objective and operating
policies is set forth in each Prospectus. The principal features of the
Portfolio's investment program and the primary risks associated with that
investment program are also discussed in each Prospectus. There can be no
assurance that the Portfolio will achieve its objective. The values of the
securities in which the Portfolio invests fluctuate based upon interest rates,
the financial stability of the issuer and market factors. The following is a
more detailed description of the portfolio instruments eligible for purchase by
the Portfolio, which augments the summary of the Portfolio's investment program
which appears under the heading "Investment Objective and Strategies" in each
Prospectus.
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.
INVESTMENT POLICIES
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.
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
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of prior to maturity if an earlier disposition is deemed desirable by AIM to
meet redemption requests. The Portfolio's policy of investing in securities with
maturities of 397 days or less will result in high portfolio turnover. Since
brokerage commissions are not normally paid on investments of the type made by
the Portfolio, however, the high turnover rate should not adversely affect the
Portfolio's net income.
The investment policies described above may be changed by the Board of
Trustees without the affirmative vote of a majority of the outstanding shares of
beneficial interest of the Trust.
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 the 1940
Act, and rules and regulations thereunder, and if applicable, exemptive orders
granted by the SEC. 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
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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 AND BROKERAGE
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.
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
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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 is 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.
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, in
written form or on computer software. 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
A-25
<PAGE> 343
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.
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
Dividends with respect to each class of the Portfolio are declared to
shareholders of record as of 3:00 p.m. Eastern time on the date of declaration.
Accordingly, dividends accrue on the first day that a purchase order for shares
of a particular class is effective, provided that the purchase order has been
accepted prior to 3:00 p.m. Eastern time and payment in the form of federal
funds wired has been received by AFS. Dividends do not accrue on the day that a
redemption order is effective, unless the redemption is effective after 3:00
p.m. Eastern time on that day and redemption proceeds have not been wired to the
shareholder on the same day. Thus, if a purchase order is accepted prior to 3:00
p.m. Eastern time, the shareholder will receive its pro rata share of dividends
beginning with those declared on that day.
Dividends and distributions are paid in cash unless the shareholder has
elected to have such dividends and distributions reinvested in the form of
additional full and fractional shares at the net asset value hereof. Such
election, or any revocation thereof, must be made in writing and sent by the
shareholder to the AFS at P.O. Box 4497, Houston, Texas 77210-4497. Such
election or revocation will be effective with dividends paid after it is
received by the transfer agent.
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.
If a shareholder redeems all the shares in his 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. 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.
The dividends accrued and paid for each class of shares of the Portfolio will
consist of: (a) interest accrued and original issue discount earned less
amortization of premiums, if any, for the portfolio to which such class relates,
allocated based upon such class's pro rata share of the total shares outstanding
which relate to such portfolio, less (b) Trust expenses accrued for the
applicable dividend period attributable to such portfolio, such as custodian
fees and accounting expenses, allocated based upon such class' pro rata of the
net assets of such portfolio, less (c) expenses directly attributable to each
class which are accrued for the applicable dividend period, such as distribution
expenses, if any.
Should the Trust incur or anticipate any unusual expense loss or depreciation,
which would adversely affect the net asset value per share of the Portfolio or
the net income per share of a class of the Portfolio for a particular period,
the 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 then
prevailing circumstances. For example, if the net value per share of the
Portfolio were reduced, or were anticipated to be reduced, below $1.00, the
Board of Trustees might suspend further dividend payments on shares of the
Portfolio until the net asset value returns to $1.00. Thus, such expense or loss
or depreciation might result in a shareholder receiving no dividends for the
period during which it held shares of the Portfolio and/or its receiving upon
redemption a price per share lower than that which it paid.
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,
A-26
<PAGE> 344
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.
The Portfolio may either retain or distribute to shareholders its net capital
gain, if any, for each taxable year. The Portfolio currently intends to
distribute any such amounts. If net capital gain is distributed and designated
as a capital gain dividend, it will be taxable to shareholders as long-term
capital gain, regardless of the length of time the shareholder has held his
shares or whether such gain was recognized by the Portfolio prior to the date on
which the shareholder acquired his shares.
Distributions by the Portfolio that do not constitute ordinary income
dividends or capital gain dividends will be treated as a return to capital to
the extent of (and in reduction of) the shareholder's tax basis in his shares;
any excess will be treated as gain from the sale of his shares.
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
A-27
<PAGE> 345
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.
Foreign persons who file a United States tax return 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 transfer agent.
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 November
1, 1999. 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-28
<PAGE> 346
FINANCIAL STATEMENTS
FS
<PAGE> 347
SCHEDULE OF INVESTMENTS
August 31, 1999
PAR
MATURITY (000) VALUE
U.S. TREASURY SECURITIES - 98.58%
U.S. TREASURY BILLS(a) - 51.37%
4.50% 09/02/99 $ 3,000 $ 2,999,625
- ------------------------------------------------------------------------
4.55% 09/09/99 9,000 8,990,900
- ------------------------------------------------------------------------
4.15% 09/09/99 9,000 8,991,700
- ------------------------------------------------------------------------
4.17% 09/15/99 4,000 3,991,958
- ------------------------------------------------------------------------
4.28% 09/16/99 8,000 7,985,733
- ------------------------------------------------------------------------
4.18% 09/16/99 9,000 8,984,325
- ------------------------------------------------------------------------
4.70% 09/30/99 5,000 4,981,069
- ------------------------------------------------------------------------
4.63% 10/14/99 5,000 4,972,349
- ------------------------------------------------------------------------
4.45% 10/14/99 4,000 3,978,739
- ------------------------------------------------------------------------
4.65% 10/21/99 2,000 1,987,097
- ------------------------------------------------------------------------
4.67% 10/21/99 4,000 3,974,056
- ------------------------------------------------------------------------
4.64% 11/04/99 7,000 6,942,258
- ------------------------------------------------------------------------
68,779,809
- ------------------------------------------------------------------------
U.S. TREASURY NOTES - 47.21%
5.75% 09/30/99 15,000 15,010,422
- ------------------------------------------------------------------------
7.50% 10/31/99 21,000 21,080,122
- ------------------------------------------------------------------------
5.88% 11/15/99 12,000 12,022,021
- ------------------------------------------------------------------------
7.75% 11/30/99 15,000 15,099,001
- ------------------------------------------------------------------------
63,211,566
- ------------------------------------------------------------------------
Total U.S. Treasury Securities (Cost
$131,991,375) 131,991,375
- ------------------------------------------------------------------------
TOTAL INVESTMENTS -- 98.58% 131,991,375(b)
- ------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES -- 1.42% 1,901,915
- ------------------------------------------------------------------------
NET ASSETS -- 100.00% $133,893,290
========================================================================
(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-1
<PAGE> 348
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1999
ASSETS:
Investments, at value (amortized cost) $131,991,375
- ----------------------------------------------------------------------
Cash 1,030,187
- ----------------------------------------------------------------------
Interest receivable 1,396,912
- ----------------------------------------------------------------------
Investment for deferred compensation plan 30,090
- ----------------------------------------------------------------------
Other assets 84,606
- ----------------------------------------------------------------------
Total assets 134,533,170
- ----------------------------------------------------------------------
LIABILITIES:
Payables for:
Dividends 552,841
- ----------------------------------------------------------------------
Deferred compensation 30,090
- ----------------------------------------------------------------------
Accrued administrative services fees 4,384
- ----------------------------------------------------------------------
Accrued distribution fees 11,502
- ----------------------------------------------------------------------
Accrued transfer agent fees 4,100
- ----------------------------------------------------------------------
Accrued trustees' fees 1,600
- ----------------------------------------------------------------------
Accrued operating expenses 35,363
- ----------------------------------------------------------------------
Total liabilities 639,880
- ----------------------------------------------------------------------
NET ASSETS $133,893,290
======================================================================
NET ASSETS:
Institutional Class $ 88,516,516
======================================================================
Private Investment Class $ 45,376,774
======================================================================
SHARES OF BENEFICIAL INTEREST, $.01 PAR VALUE PER SHARE:
Institutional Class 88,495,591
======================================================================
Private Investment Class 45,365,668
======================================================================
NET ASSET VALUE PER SHARE:
Net asset value, offering and redemption price per share $ 1.00
======================================================================
See Notes to Financial Statements.
FS-2
<PAGE> 349
STATEMENT OF OPERATIONS
For the year ended August 31, 1999
INVESTMENT INCOME:
Interest income $6,803,219
- -----------------------------------------------------------------
EXPENSES:
Advisory fees 294,990
- -----------------------------------------------------------------
Custodian fees 9,209
- -----------------------------------------------------------------
Administrative services fees 51,944
- -----------------------------------------------------------------
Trustees' fees and expenses 8,986
- -----------------------------------------------------------------
Transfer agent fees 29,395
- -----------------------------------------------------------------
Distribution fees (Note 2) 250,604
- -----------------------------------------------------------------
Other 124,760
- -----------------------------------------------------------------
Total expenses 769,888
- -----------------------------------------------------------------
Less: Fee waivers (369,484)
- -----------------------------------------------------------------
Net expenses 400,404
- -----------------------------------------------------------------
Net investment income 6,402,815
- -----------------------------------------------------------------
Net realized gain (loss) on sales of investments (10,840)
- -----------------------------------------------------------------
Net increase in net assets resulting from operations $6,391,975
=================================================================
See Notes to Financial Statements.
FS-3
<PAGE> 350
STATEMENT OF CHANGES IN NET ASSETS
For the years ended August 31, 1999 and 1998
1999 1998
------------ ------------
OPERATIONS:
Net investment income $ 6,402,815 $ 10,328,429
- ------------------------------------------------------------------------------
Net realized gain (loss) on sales of investments (10,840) 42,871
- ------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 6,391,975 10,371,300
- ------------------------------------------------------------------------------
Distributions to shareholders from net investment
income:
Institutional Class (4,317,947) (8,586,021)
- ------------------------------------------------------------------------------
Private Class (2,084,868) (1,742,408)
- ------------------------------------------------------------------------------
Distributions to shareholders from capital gains:
Institutional Class -- (154,304)
- ------------------------------------------------------------------------------
Private Class -- (47,000)
- ------------------------------------------------------------------------------
Share transactions-net (See Note 4) (10,323,072) (153,177,145)
- ------------------------------------------------------------------------------
Net increase (decrease) in net assets (10,333,912) (153,335,578)
- ------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 144,227,202 297,562,780
- ------------------------------------------------------------------------------
End of period $133,893,290 $144,227,202
==============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $133,861,259 $144,184,331
- ------------------------------------------------------------------------------
Undistributed net realized gain on sales of
investments 32,031 42,871
- ------------------------------------------------------------------------------
$133,893,290 $144,227,202
==============================================================================
See Notes to Financial Statements.
FS-4
<PAGE> 351
NOTES TO FINANCIAL STATEMENTS
August 31, 1999
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. 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 currently offers six different classes
of shares: the Institutional Class, the Private Investment Class, Personal
Investment Class, the Cash Management Class, the Reserve Class and the Resource
Class. Sales of the Personal Investment Class, the Cash Management Class, the
Reserve Class and the Resource Class have not yet commenced. 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:
Net Assets RATE
- ----------------------------------------
First $250 million 0.20%
- ----------------------------------------
Over $250 million to $500 million 0.15%
- ----------------------------------------
Over $500 million 0.10%
- ----------------------------------------
During the year ended August 31, 1999, AIM waived advisory fees of $244,182.
The Fund, pursuant to a master administrative services agreement with AIM, has
agreed to pay AIM for certain administrative costs incurred in providing
accounting services to the Fund. During the year ended August 31, 1999, AIM was
paid $51,944 for such services.
FS-5
<PAGE> 352
The Fund, 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 Fund. During the year ended August 31, 1999, AFS
was paid $14,110 for such services.
Under the terms of a master distribution agreement between Fund Management
Company ("FMC") and the Fund, FMC acts as the exclusive distributor of the
Fund's shares. The Fund has adopted a master distribution plan (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act with respect to the Private
Investment Class, the Personal Investment Class, the Cash Management Class, the
Reserve Class, and the Resource Class of the Portfolio. The Plan provides that
the Private Investment Class, the Personal Investment Class, the Cash
Management Class, the Reserve Class, and the Resource Class pay up to a 0.50%,
0.75%, 0.10%, 1.00%, 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, Personal Investment Class, and the Reserve 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, the Reserve 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, 1999, the Private Investment Class paid
$125,302 as compensation under the Plan. FMC waived fees of $125,302 for the
same period. Certain officers and trustees of the Trust are officers of AIM,
FMC and AFS.
During the year ended August 31, 1999, the Fund paid legal fees of $3,815 for
services rendered by Kramer, Levin, Naftalis & Frankel LLP 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 to trustees who are 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, 1999 and 1998
were as follows:
<TABLE>
<CAPTION>
1999 1998
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Sold:
Institutional Class 606,748,092 $ 606,748,092 758,084,286 $ 758,084,286
- --------------------------------------------------------------------------------
Private Investment
Class 605,044,466 605,044,466 314,695,955 314,695,955
- --------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Institutional Class 477,705 477,705 368,100 368,100
- --------------------------------------------------------------------------------
Private Investment
Class 1,198,839 1,198,839 774,188 774,188
- --------------------------------------------------------------------------------
Reacquired:
Institutional Class (631,780,898) (631,780,898) (903,477,854) (903,477,854)
- --------------------------------------------------------------------------------
Private Investment
Class (592,011,276) (592,011,276) (323,621,820) (323,621,820)
- --------------------------------------------------------------------------------
Net increase
(decrease) (10,323,072) $ (10,323,072) (153,177,145) $(153,177,145)
=================================================================================
</TABLE>
FS-6
<PAGE> 353
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
Treasury TaxAdvantage Portfolio (a series portfolio of Short-Term Investments
Trust), including the schedule of investments, as of August 31, 1999, and the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the five years in the 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, 1999, 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
Treasury TaxAdvantage Portfolio as of August 31, 1999, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period ended, and the financial highlights for each of the
five years in the period then ended, in conformity with generally accepted
accounting principles.
KPMG LLP
/s/ KPMG LLP
October 1, 1999
Houston, Texas
FS-7
<PAGE> 354
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Institutional Class
outstanding for each of the years in the five-year period ended August 31,
1999.
1999 1998 1997 1996 1995
------- -------- -------- -------- --------
Net asset value, beginning
of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------- ------- -------- -------- -------- --------
Income from investment
operations:
Net investment income 0.04 0.05 0.05 0.05 0.05
- -------------------------- ------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income (0.04) (0.05) (0.05) (0.05) (0.05)
- -------------------------- ------- -------- -------- -------- --------
Net asset value, end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========================== ======= ======== ======== ======== ========
Total return 4.51% 5.30% 5.13% 5.19% 5.35%
========================== ======= ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $88,517 $113,084 $258,251 $407,218 $394,376
========================== ======= ======== ======== ======== ========
Ratio of expenses to
average net assets(a) 0.19%(b) 0.20% 0.20% 0.20% 0.20%
========================== ======= ======== ======== ======== ========
Ratio of net investment
income to average net
assets(c) 4.42%(b) 5.05% 5.00% 5.06% 5.21%
========================== ======= ======== ======== ======== ========
(a) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
0.35%, 0.28%, 0.23%, 0.23% and 0.23% for the periods 1999-1995,
respectively.
(b) Ratios based on average net assets of $97,373,900.
(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 4.25%, 4.97%, 4.97%, 5.04% and 5.18% for the periods
1999-1995, respectively.
FS-8
<PAGE> 355
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
Treasury TaxAdvantage Portfolio (a series portfolio of Short-Term Investments
Trust), including the schedule of investments, as of August 31, 1999, and the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the five years in the 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, 1999, 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
Treasury TaxAdvantage Portfolio as of August 31, 1999, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period ended, and the financial highlights for each of the
five years in the period then ended, in conformity with generally accepted
accounting principles.
KPMG LLP
/s/ KPMG LLP
October 1, 1999
Houston, Texas
FS-9
<PAGE> 356
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Private Investment
Class outstanding for each of the years in the four-year period ended August
31, 1999 and the period December 21, 1994 (date sales commenced) through
August 31, 1995.
1999 1998 1997 1996 1995
------- ------- ------- ------- ------
Net asset value, beginning
of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------- ------- ------- ------- ------- ------
Income from investment
operations:
Net investment income 0.04 0.05 0.05 0.05 0.04
- ---------------------------- ------- ------- ------- ------- ------
Less distributions:
Dividends from net
investment income (0.04) (0.05) (0.05) (0.05) (0.04)
- ---------------------------- ------- ------- ------- ------- ------
Net asset value, end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
============================ ======= ======= ======= ======= ======
Total return 4.25% 5.04% 4.87% 4.93% 3.69%
============================ ======= ======= ======= ======= ======
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $45,377 $31,143 $39,312 $49,978 $5,423
============================ ======= ======= ======= ======= ======
Ratio of expenses to average
net assets(a) 0.43%(b) 0.45% 0.45% 0.45% 0.45%(c)
============================ ======= ======= ======= ======= ======
Ratio of net investment
income to average net
assets(d) 4.18%(b) 4.80% 4.75% 4.72% 5.21%(c)
============================ ======= ======= ======= ======= ======
(a) After fee waivers and/or expense reimbursements. Ratios of expenses to
average net assets prior to fee waivers and/or expense reimbursements were
0.85%, 0.78%, 0.74%, 0.85% and 1.02% (annualized) for the periods 1999-
1995, respectively.
(b) Ratios based on average net assets of $50,120,851.
(c) Annualized.
(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 3.77%, 4.47%, 4.46%, 4.32% and 4.64% (annualized) for
the periods 1999-1995, respectively.
FS-10
<PAGE> 357
PART C
OTHER INFORMATION
Item 23 Exhibits
a(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, was filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 32 on November 25,
1998, and is incorporated herein by reference.
(2) - (a) 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.
- (b) 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.
- (c) 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.
- (d) 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.
- (e) 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.
- (f) 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.
- (g) Amended and Restated Agreement and Declaration of Trust of
Registrant dated November 5, 1998, was filed electronically as an
Exhibit to Registrant's Post-Effective Amendment No. 32 on
November 25, 1998, and is hereby incorporated by reference.
b(1) - (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 Registrant's Post-Effective
Amendment No. 29 on December 18, 1996.
C-1
<PAGE> 358
(2) - 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.
(3) - (a) Amended and Restated By-Laws of Registrant dated November
5, 1998, was filed electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 32 on November 25, 1998, and is
hereby incorporated by reference.
- (b) First Amendment, dated June 9, 1999, to the Amended and
Restated Bylaws of Registrant, dated November 5, 1998, is filed
herewith electronically.
c - Instruments Defining Rights of Security Holders - None.
d(1) - 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.
(2) - (a) 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.
- (b) 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, was filed electronically as an
Exhibit to Registrant's Post-Effective Amendment No. 32 on
November 25, 1998, and is hereby incorporated by reference.
e(1) - (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.
(2) - (a) 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.
- (b) 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
C-2
<PAGE> 359
Government & Agency Portfolio, was filed electronically as an
exhibit to Registrant's Post-Effective Amendment No. 32 on
November 25, 1998, and is hereby incorporated by reference.
- (c) Amendment No. 2, dated December 18, 1998, to the Master
Distribution Agreement, dated February 28, 1997, between
Registrant and Fund Management Company with respect to the
Treasury, Treasury TaxAdvantage and Government & Agency
Portfolios is filed herewith electronically.
f(1) - Retirement Plan for Eligible Directors/Trustees, effective
March 8, 1994, as restated September 18, 1995, is filed herewith
electronically.
(2) - 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.
g(1) - (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.
h(1) - (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.
(2) - (a) 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.
- (b) Amendment No. 1, dated January 1, 1999, to the Transfer
Agency and Service Agreement, dated December 29, 1997, between
A I M Fund Services, Inc. and Registrant is filed herewith
electronically.
- (c) Amendment No. 2, dated July 1, 1999, to the Transfer Agency
and Service Agreement, dated December 29, 1997, between A I M
Fund Services, Inc. and Registrant is filed herewith
electronically.
C-3
<PAGE> 360
(3) - (a) 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.
- (b) 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.
(4) - (a) 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.
- (b) 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, was filed electronically as an
Exhibit to Registrant's Post-Effective Amendment No. 32 on
November 25, 1998, and is hereby incorporated by reference.
(5) - (a) Form of Memorandum of Agreement, between Registrant and
Fund Management Company is filed herewith electronically.
- (b) Form of Memorandum of Agreement, between Registrant and A I M
Advisors, Inc. is filed herewith electronically.
i - Opinion and Consent of Ballard Spahr Andrews & Ingersoll, LLP
was filed electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 32 on November 25, 1998.
j(1) - Consent of Ballard Spahr Andrews & Ingersoll, LLP is filed
herewith electronically.
(2) - Consent of KPMG LLP is filed herewith electronically.
k - Financial Statements - None.
l - Agreement Concerning Initial Capitalization - None.
m(1) - 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.
(2) - (a) 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.
- (b) Amendment No. 1, dated September 1, 1998, to the Amended and
Restated Master Distribution Plan pursuant to Rule 12b-1 was
filed electronically as an Exhibit to Registrant's Post-Effective
Amendment No. 32 on November 25, 1998, and is hereby incorporated
by reference.
C-4
<PAGE> 361
- (c) Amendment No. 2, dated December 18, 1998, to the Amended and
Restated Master Distribution Plan pursuant to Rule 12b-1 is filed
herewith electronically.
(3) - Form of Shareholder Service Agreement to be used in
connection with Registrant's Amended and Restated Master
Distribution Plan, as amended, was filed electronically as an
Exhibit to Registrant's Post-Effective Amendment No. 32 on
November 25, 1998, and is hereby incorporated by reference.
n(1) - Multiple Class (Rule 18f-3) Plan was filed as an Exhibit to
Post-Effective Amendment No. 29 on December 18, 1996.
(2) - 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.
(3) - 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.
(4) - Third Amended and Restated Multiple Class (Rule 18f-3) Plan is
filed herewith electronically.
o(1) - The A I M Management Group Code of Ethics, as amended August
17, 1999, relating to A I M Management Group Inc. and A I M
Advisors, Inc. is filed herewith electronically.
o(2) - Code of Ethics of Short-Term Investments Trust, effective as of
May 5, 1993, is filed herewith electronically.
Item 24. Persons Controlled by or under Common Control with Registrant
Provide a list or diagram of all persons directly or indirectly
controlled by or under common control with the Registrant. For any person
controlled by another person, disclose the percentage of voting securities owned
by the immediately controlling person or other basis of that person's control.
For each company, also provide the state or other sovereign power under the laws
of which the company is organized.
None
Item 25. 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 against any liability which may be incurred in their
official 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
C-5
<PAGE> 362
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 $35,000,000 limit of liability.
Item 26. Business and Other Connections of Investment Advisor
Describe any other business, profession, vocation or employment of a
substantial nature that each investment advisor, and each director, officer or
partner of the advisor, is or has been, engaged within the last two fiscal
years, for his or her own account or in the capacity of director, officer,
employee, partner, or trustee.
The only employment of a substantial nature of the Advisor's directors
and officers is with the Advisor and its affiliated companies.
Reference is also made to the caption "Fund Management -- The Advisor"
of the Prospectus which comprises Part A of the Registration Statement,
and to the caption "Management" of the Statement of Additional
Information which comprises Part B of the Registration Statement, and
to Item 27(b) of this Part C.
Item 27. Principal Underwriters
(a) State the name of each investment company (other than the
Registrant) for which each principal underwriter currently
distributing the Registrant's securities also acts as a principal
underwriter, depositor, or investment advisor.
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 (Institutional Class)
Short Term Investments Co.
Tax-Free Investments Co.
(b) Provide the information required by the following tables for each
director, officer or partner of each principal underwriter named in
response to Item 20.
Fund Management Company:
C-6
<PAGE> 363
<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
Carol F. Relihan Vice President, Director Senior Vice President &
& General Counsel Secretary
Mark D. Santero Senior Vice President None
William J. Wendel Senior Vice President None
Melville B. Cox Vice President & Chief Vice President
Compliance Officer
Dawn M. Hawley Vice President & Treasurer None
Lisa A. Moss Vice President, Assistant General Assistant Secretary
Counsel & Assistant Secretary
Stephen I. Winer Vice President, Assistant Secretary
Assistant General Counsel &
Assistant Secretary
James R. Anderson Vice President None
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
Rebecca Starling-Klatt Assistant Vice President None
Dana R. Sutton Assistant Vice President& Vice President & Treasurer
Nicholas D. White Assistant Vice President None
</TABLE>
- ----------------------------------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
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<PAGE> 364
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ------------------ -------------------------- --------------------
<S> <C> <C>
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
P. Michelle Grace Assistant Secretary Assistant Secretary
</TABLE>
- --------------------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
(c) Provide the information required by the following table for all
commissions and other compensation received, directly or indirectly, from the
Registrant during the last fiscal year by each principal underwriter who is not
an affiliated person of the Registrant or any affiliated person of an affiliated
person:
None
Item 28. Location of Accounts and Records
State the name and address of each person maintaining physical
possession of each account, book, or other document required to be maintained by
section 31(a) [15 U.S.C. 80a-30(a)] and the rules under that section.
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.
Item 29. Management Services
Provide a summary of the substantive provisions of any
management-related service contract not discussed in Part A or B, disclosing the
parties to the contract and the total amount paid and by whom for the
Registrant's last three fiscal years.
None.
Item 30. Undertakings
Not applicable.
C-8
<PAGE> 365
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,
thereunto duly authorized, in the city of Houston, Texas on the 8th day of
November, 1999.
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:
SIGNATURES TITLE DATE
---------- ----- ----
/s/ CHARLES T. BAUER
------------------------- Chairman & Trustee November 8, 1999
(Charles T. Bauer)
/s/ ROBERT H. GRAHAM Trustee & President November 8, 1999
------------------------- (Principal Executive Officer)
(Robert H. Graham)
/s/ BRUCE L. CROCKETT Trustee November 8, 1999
-------------------------
(Bruce L. Crockett)
/s/ OWEN DALY II Trustee November 8, 1999
-------------------------
(Owen Daly II)
/s/ EDWARD K. DUNN, JR. Trustee November 8, 1999
-------------------------
(Edward K. Dunn, Jr.)
/s/ JACK FIELDS Trustee November 8, 1999
-------------------------
(Jack Fields)
/s/ CARL FRISCHLING Trustee November 8, 1999
-------------------------
(Carl Frischling)
/s/ PREMA MATHAI-DAVIS Trustee November 8, 1999
-------------------------
(Prema Mathai-Davis)
/s/ LEWIS F. PENNOCK Trustee November 8, 1999
-------------------------
(Lewis F. Pennock)
/s/ LOUIS S. SKLAR Trustee November 8, 1999
-------------------------
(Louis S. Sklar)
/s/ DANA R. SUTTON Vice President &
------------------------- Treasurer (Principal Financial November 8, 1999
(Dana R. Sutton) and Accounting Officer)
<PAGE> 366
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
b(3)(b) First Amendment, dated June 9, 1999, to the Amended and Restated Bylaws of Registrant dated
November 5, 1998
e(2)(c) Amendment No. 2, dated December 18, 1998, to the Master Distribution Agreement, dated
February 28, 1997, between Registrant and Fund Management Company
f(1) Retirement Plan for Eligible Directors/Trustees, effective March 8, 1994, as restated
September 18, 1995
h(2)(b) Amendment No. 1, dated January 1, 1999, to the Transfer Agency and Service Agreement, dated
December 29, 1997, between A I M Fund Services, Inc. and Registrant
h(2)(c) Amendment No. 2, dated July 1, 1999, to the Transfer Agency and Service Agreement, dated
December 29, 1997, between A I M Fund Services, Inc. as Registrant
h(5)(a) Form of Memorandum of Agreement between Registrant and Fund Management Company
h(5)(b) Form of Memorandum of Agreement between Registrant and A I M Advisors, Inc.
j(1) Consent of Ballard Spahr Andrews & Ingersoll, LLP
j(2) Consent of KPMG LLP
m(2)(c) Amendment No. 2, dated December 18, 1998, to the Amended and Restated Master Distribution Plan pursuant
to Rule 12b-1
n(4) Third Amended and Restated Multiple Class (Rule 18f-3) Plan
o(1) The A I M Management Group Code of Ethics, as amended August 17, 1999, relating to A I M Management
Group Inc. and A I M Advisors, Inc.
o(2) Code of Ethics of Short-Term Investments Trust, effective as of May 5, 1993
</TABLE>
<PAGE> 1
EXHIBIT b(3)(b)
FIRST AMENDMENT TO AMENDED AND RESTATED
BYLAWS OF SHORT-TERM INVESTMENT TRUST
(A DELAWARE BUSINESS TRUST)
ADOPTED JUNE 9, 1999
The Bylaws of Short-Term Investment Trust are hereby amended as
follows:
WHEREAS, the Board of Trustees of the Fund desires to modify the manner
in which a chairman is appointed to preside at each shareholder
meeting;
NOW THEREFORE BE IT RESOLVED, that paragraph (a) of Article IV, Section
9 of each Fund's Bylaws be, and it hereby is, amended by deleting
paragraph (a) of Article IV, Section 9 in its entirety and replacing it
with the following:
Section 9. Organization of Meetings.
(a) The meetings of the shareholders shall
be presided over by the Chairman of the Board, or if the
Chairman shall not be present or if there is no Chairman, by
the President, or if the President shall not be present, by a
Vice President, or if no Vice President is present, by a
chairman appointed for such purpose by the Board of Trustees
or, if not so appointed, by a chairman appointed for such
purpose by the officers and Trustees present 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.
<PAGE> 1
EXHIBIT e(2)(c)
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: December 18, 1998
--------------
SHORT-TERM INVESTMENTS TRUST
Attest: /s/ LISA A. MOSS By: /s/ ROBERT H. GRAHAM
----------------------- ----------------------------
Name: Lisa A. Moss Name: Robert H. Graham
Title: Assistant Secretary Title: President
(SEAL)
FUND MANAGEMENT COMPANY
Attest: /s/ LISA A. MOSS By: /s/ J. ABBOTT SPRAGUE
----------------------- ----------------------------
Name: Lisa A. Moss Name: J. Abbott Sprague
Title: Assistant Secretary Title: President
(SEAL)
<PAGE> 1
EXHIBIT f(1)
AIM FUNDS
RETIREMENT PLAN FOR ELIGIBLE
DIRECTORS/TRUSTEES
Effective as of March 8, 1994
As Restated September 18, 1995
<PAGE> 2
AIM FUNDS
RETIREMENT PLAN FOR ELIGIBLE
DIRECTORS/TRUSTEES
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITION OF TERMS AND CONSTRUCTION . . . . . . . . . 1
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 1
(a) Accrued Benefit . . . . . . . . . . . . . . . . . . . 1
(b) Actuary . . . . . . . . . . . . . . . . . . . . . . . 1
(c) Administrator . . . . . . . . . . . . . . . . . . . . 1
(d) AIM Funds . . . . . . . . . . . . . . . . . . . . . . 1
(e) Board of Directors . . . . . . . . . . . . . . . . . 1
(f) Code . . . . . . . . . . . . . . . . . . . . . . . . 2
(g) Compensation . . . . . . . . . . . . . . . . . . . . 2
(h) Deferred Retirement Date . . . . . . . . . . . . . . 2
(i) Director . . . . . . . . . . . . . . . . . . . . . . 2
(j) Disability . . . . . . . . . . . . . . . . . . . . . 2
(k) Effective Date . . . . . . . . . . . . . . . . . . . 2
(l) Fund . . . . . . . . . . . . . . . . . . . . . . . . 2
(m) Normal Retirement Date . . . . . . . . . . . . . . . 2
(n) Participant . . . . . . . . . . . . . . . . . . . . . 2
(o) Plan . . . . . . . . . . . . . . . . . . . . . . . . 2
(p) Plan Year . . . . . . . . . . . . . . . . . . . . . . 2
(q) Retirement . . . . . . . . . . . . . . . . . . . . . 2
(r) Retirement Benefit . . . . . . . . . . . . . . . . . 3
(s) Service . . . . . . . . . . . . . . . . . . . . . . . 3
(t) Year of Service . . . . . . . . . . . . . . . . . . . 3
1.2 Plurals and Gender . . . . . . . . . . . . . . . . . . . . . . 3
1.3 Directors/Trustees . . . . . . . . . . . . . . . . . . . . . . 3
1.4 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II PARTICIPATION . . . . . . . . . . . . . . . . . . . . . 4
2.1 Commencement of Participation . . . . . . . . . . . . . . . . 4
2.2 Termination of Participation . . . . . . . . . . . . . . . . . 4
2.3 Resumption of Participation . . . . . . . . . . . . . . . . . 4
2.4 Determination of Eligibility . . . . . . . . . . . . . . . . . 4
-i-
<PAGE> 3
Page
----
ARTICLE III BENEFITS UPON RETIREMENT AND OTHER
TERMINATION OF SERVICE. . . . . . . . . . . . . . . . . 4
3.1 Retirement. . .. . . . . . . . . . . . . . . . . . . . . . . . 4
3.2 Termination of Service Before Retirement . . . . . . . . . . . 5
3.3 Termination of Service by Reason of Death. . . . . . . . . . . 5
3.4 Benefits Calculated in the Aggregate for all of the AIM Funds. 5
ARTICLE IV DEATH BENEFITS. . . . . . . . . . . . . . . . . . . . . 5
4.1 Death Prior to Commencement of Benefits . . . . . . . . . . . 5
4.2 Death Subsequent to Commencement of Benefits . . . . . . . . 5
4.3 Death of Spouse . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE V SUSPENSION OF BENEFITS, ETC. . . . . . . . . . . . . . 6
5.1 Suspension of Benefits Upon Resumption of Service . . . . . . 6
5.2 Payments Due Missing Persons . . . . . . . . . . . . . . . . . 6
ARTICLE VI ADMINISTRATOR . . . . . . . . . . . . . . . . . . . . 7
6.1 Appointment of Administrator . . . . . . . . . . . . . . . . . 7
6.2 Powers and Duties of Administrator . . . . . . . . . . . . . . 7
6.3 Action by Administrator . . . . . . . . . . . . . . . . . . . 8
6.4 Participation by Administrators . . . . . . . . . . . . . . . 8
6.5 Agents and Expenses. . . . . . . . . . . . . . . . . . . . . . 8
6.6 Allocation of Duties . . . . . . . . . . . . . . . . . . . . . 8
6.7 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . 9
6.8 Administrator's Action Conclusive . . . . . . . . . . . . . . 9
6.9 Records and Reports . . . . . . . . . . . . . . . . . . . . . 9
6.10 Information from the AIM Funds . . . . . . . . . . . . . . . . 9
6.11 Reservation of Rights by Boards of Directors . . . . . . . . . 9
6.12 Liability and Indemnification. . . . . . . . . . . . . . . . . 9
ARTICLE VII AMENDMENTS AND TERMINATION . . . . . . . . . . . . . . 10
7.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.2 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 10
8.1 Rights of Creditors . . . . . . . . . . . . . . . . . . . . . 10
8.2 Liability Limited. . . . . . . . . . . . . . . . . . . . . . . 11
8.3 Incapacity . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.4 Cooperation of Parties . . . . . . . . . . . . . . . . . . . . 11
8.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 11
8.6 Nonguarantee of Directorship . . . . . . . . . . . . . . . . . 12
8.7 Counsel . . . . . . . . . . . . . . . .. . . . . . . . . . . . 12
8.8 Spendthrift Provision . . . . . . . . . . . . . . . . . . . . 12
8.9 Forfeiture for Cause . . . . . . . . . . . . . . . . . . . . . 12
-ii-
<PAGE> 4
Page
----
ARTICLE IX CLAIMS PROCEDURE . . . . . . . . . . . . . . . . . . . . . 12
9.1 Notice of Denial . . . . . . . . . . . . . . . . . . . . . . . 12
9.2 Right to Reconsideration . . . . . . . . . . . . . . . . . . . 13
9.3 Review of Documents. . . . . . . . . . . . . . . . . . . . . . 13
9.4 Decision by Administrator. . . . . . . . . . . . . . . . . . . 13
9.5 Notice by Administrator. . . . . . . . . . . . . . . . . . . . 13
-iii-
<PAGE> 5
AIM FUNDS
RETIREMENT PLAN FOR ELIGIBLE
DIRECTORS/TRUSTEES
PREAMBLE
Effective as of March 8, 1994, the regulated investment
companies managed, administered and/or distributed by AIM Advisors, Inc. or its
affiliates (the "AIM Funds") have adopted THE AIM FUNDS RETIREMENT PLAN FOR
ELIGIBLE DIRECTORS/TRUSTEES (the "Plan") for the benefit of each of the
directors and trustees of each of the AIM Funds who is not an employee of any
of the AIM Funds, A I M Management Group Inc. or any of their affiliates. As
the Plan does not benefit any employees of the AIM Funds, it is not intended to
be classified as an employee benefit plan within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
ARTICLE I
DEFINITION OF TERMS AND CONSTRUCTION
------------------------------------
1.1 Definitions.
------------
Unless a different meaning is plainly implied by the context,
the following terms as used in this Plan shall have the following meanings:
(a) "Accrued Benefit" shall mean, as of any date prior to
a Participant's Normal Retirement Date, his Retirement Benefit commencing on
his Normal Retirement Date, but based upon his Compensation and Years of
Service computed as of such date of determination.
(b) "Actuary" shall mean the independent actuary selected
by the Administrator.
(c) "Administrator" shall mean the administrative
committee provided for in Article VI.
(d) "AIM Funds" shall mean the regulated investment
companies managed, administered or distributed by A I M Advisors, Inc. or its
affiliates.
(e) "Board of Directors" shall mean the Board of
Directors of each of the AIM Funds.
<PAGE> 6
(f) "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time, or any successor statute.
(g) "Compensation" shall mean, for any Director, the
amount of the retainer paid or accrued by the AIM Funds for such Director
during the twelve month period immediately preceding the Director's Retirement,
including amounts deferred under a separate agreement between the AIM Funds and
the Director. The amount of such retainer Compensation shall be as determined
by the Administrator.
(h) "Deferred Retirement Date" shall mean the first day
of the month coincident with or next following the date on which a Participant
terminated Service after his Normal Retirement Date.
(i) "Director" shall mean an individual who is a director
or trustee of one or more of the AIM Funds which have adopted the Plan but who
is not an employee of any of the AIM Funds, A I M Management Group Inc. or any
of their affiliates.
(j) "Disability" shall mean the inability of the
Participant to participate in meetings of the Board of Directors, either in
person or by telephone, for a period of at least nine (9) months.
(k) "Effective Date" shall mean March 8, 1994.
(l) "Fund" shall mean an AIM Fund which has adopted this
Plan.
(m) "Normal Retirement Date" shall mean, the date on
which a Participant has both attained age 65 (or at least age 55 in the event
of the Director's termination of Service by reason of death or Disability) and
has completed at least five continuous and non-forfeited Years of Service (and
thirty months of Service with one or more of the AIM Funds).
(n) "Participant" shall mean a Director who has met all
of the eligibility requirements of the Plan and who is currently included in
the Plan as provided in Article II hereof.
(o) "Plan" shall mean the "AIM Funds Retirement Plan for
Eligible Directors/Trustees" as described herein or as hereafter amended from
time to time.
(p) "Plan Year" shall mean the calendar year.
(q) "Retirement" shall mean a Director's termination of
his active Service with the AIM Funds on or after his Normal Retirement Date,
due to his death, Disability, or voluntary or involuntary termination of his
Service.
(r) "Retirement Benefit" shall mean the benefit described
under Section 3.1 hereof.
-2-
<PAGE> 7
(s) "Service" shall mean an individual's serving as a
Director of one or more of the AIM Funds. Furthermore, any unbroken service
provided by a Participant (i) to an AIM Fund immediately prior to its being
managed or administered by A I M Advisors, Inc. (or any of its affiliates) or
(ii) to a predecessor of an AIM Fund immediately prior to its being merged into
such AIM Fund, will be taken into account in determining such Participant's
Years of Service, subject to all restrictions and other forfeiture provisions
contained herein.
(t) "Year of Service" shall mean a twelve consecutive
month period of Service. For all purposes in this Plan, if a Participant's
Service terminates prior to his Retirement, he shall forfeit credit for all
Years of Service completed prior to such termination unless (a) he again
becomes a Director and (b) the number of Years of Service he accumulated prior
to such termination exceeded the number of years in which he did not serve as a
Director.
1.2 Plurals and Gender.
Where appearing in the Plan, the masculine gender shall
include the feminine and neuter genders, and the singular shall include the
plural, and vice versa, unless the context clearly indicates a different
meaning.
1.3 Directors/Trustees.
Where appropriate, the term "director" shall refer to
"trustee", "directorship" shall refer to "trusteeship" and "Board of Directors"
shall refer to "Board of Trustees."
1.4 Headings.
The headings and sub-headings in this Plan are inserted for
the convenience of reference only and are to be ignored in any construction of
the provisions hereof.
1.5 Severability.
In case any provision of this Plan shall be held illegal or
void, such illegality or invalidity shall not affect the remaining provisions
of this Plan, but shall be fully severable, and the Plan shall be construed and
enforced as if said illegal or invalid provisions had never been inserted
herein.
-3-
<PAGE> 8
ARTICLE II
PARTICIPATION
-------------
2.1 Commencement of Participation.
------------------------------
Each Director shall become a Participant hereunder on the date
his directorship of one or more of the AIM Funds commences.
2.2 Termination of Participation.
-----------------------------
After commencement or resumption of his participation, a
Director shall remain a Participant until the earliest of the following dates:
(a) His actual Retirement date;
(b) His date of death;
(c) The date on which he otherwise incurs a termination
of Service; or
(d) The effective date of the termination of the Plan.
2.3 Resumption of Participation.
----------------------------
Any Participant whose Service terminates and who thereafter
again becomes a Director shall resume participation immediately upon again
becoming a Director except that, as provided in Section 1.1(t) hereof, if his
Service is terminated prior to his Normal Retirement Date, for all purposes of
this Plan he shall forfeit credit for all Years of Service completed prior to
such termination of his Service.
2.4 Determination of Eligibility.
-----------------------------
The Administrator shall determine the eligibility of Directors
in accordance with the provisions of this Article.
ARTICLE III
BENEFITS UPON
-------------
RETIREMENT AND OTHER TERMINATION OF SERVICE
-------------------------------------------
3.1 Retirement.
-----------
Upon Retirement a Participant shall be entitled to receive an
annual benefit from the AIM Funds commencing on the first day of the calendar
quarter coincident with or next following his date of Retirement, payable in
quarterly installments for a period of no more than
-4-
<PAGE> 9
ten (10) years (or, if less, the number of his Years of Service) equal
to seventy-five percent (75%) of his Compensation.
3.2 Termination of Service Before Retirement.
-----------------------------------------
In the event that a Participant's Service terminates by reason
of death, Disability or removal by the Board for cause (as defined in Section
8.9) prior to his Normal Retirement Date, he shall not be entitled to receive
any benefits hereunder. If a Participant's Service terminates for any other
reason and he has accumulated at least five (5) continuous and non-forfeited
Years of Service, he shall be entitled to receive his Accrued Benefit
determined as of such date of termination.
3.3 Termination of Service by Reason of Death.
------------------------------------------
No benefits will be paid under this Plan with respect to a
Participant after his death other than as provided in Article IV.
3.4 Benefits Calculated in the Aggregate for all of the AIM Funds.
--------------------------------------------------------------
With respect to each Participant, the benefits payable
hereunder shall be based on the aggregate Compensation paid by the AIM Funds
and on the Participant's non-forfeited Years of Service. Each Fund's share of
the obligation to provide such benefits shall be determined by use of
accounting methods adopted by the Administrator.
ARTICLE IV
DEATH BENEFITS
--------------
4.1 Death Prior to Commencement of Benefits.
----------------------------------------
In the event of a Participant's death subsequent to his Normal
Retirement Date, but prior to the commencement of his Retirement Benefits under
Article III hereof, the surviving spouse (if any) of such Participant shall be
entitled to receive a quarterly survivor's benefit for a period of no more than
ten (10) years (or, if less, the number of the Participant's Years of Service)
beginning on the first day of the calendar quarter next following the date of
the Participant's death equal to fifty percent (50%) of the amount of the
quarterly installments of Retirement Benefits that would have been paid to the
Participant under Sections 3.1 or 3.2 hereof had his Retirement occurred on his
date of death.
4.2 Death Subsequent to Commencement of Benefits.
---------------------------------------------
In the event a Participant dies after the commencement of his
Retirement Benefit under Article III, but prior to the cessation of the payment
of such Retirement Benefits, the surviving spouse (if any) of such Participant
shall be entitled to receive survivor's benefits equal to fifty percent (50%)
of the amount of the annual Retirement Benefit payable to the Participant
-5-
<PAGE> 10
under Article III hereunder, paid at such times, and for such period, as such
Retirement Benefit would have continued to have been paid to the Participant
had he not died.
4.3 Death of Spouse.
----------------
(a) In the event a Participant is not survived by a
spouse, no benefits will be paid hereunder upon the Participant's death.
(b) If a deceased Participant's surviving spouse dies
while receiving survivor's benefits hereunder, any installments not paid at the
time of the surviving spouse's death shall be forfeited.
ARTICLE V
SUSPENSION OF BENEFITS, ETC.
----------------------------
5.1 Suspension of Benefits Upon Resumption of Service.
--------------------------------------------------
In the case of a Participant who, at a time when he is
receiving Retirement Benefits under Article III of this Plan, resumes Service
with any AIM Fund, such Retirement Benefits shall be suspended until his
subsequent Retirement, termination of Service or death. Subject to the Years
of Service limitations of Section 3.1 hereof, in the event of his Retirement
or termination of Service following such a suspension, the quarterly amount of
his remaining Retirement Benefits shall thereafter be adjusted, if
appropriate, to reflect any additional Years of Service completed by, or a
higher rate of Compensation received by, such Participant.
5.2 Payments Due Missing Persons.
-----------------------------
The Administrator shall make a reasonable effort to locate all
persons entitled to benefits (including Retirement Benefits and survivor's
benefits for spouses) under the Plan; however, notwithstanding any provisions
of this Plan to the contrary, if, after a period of 5 years from the date any
of such benefits first become due, any such persons entitled to benefits have
not been located, their rights under the Plan shall stand suspended. Before
this provision becomes operative, the Administrator shall send a certified
letter to all such persons (if any) at their last known address advising them
that their benefits under the Plan shall be suspended. Any such suspended
amounts shall be held by the AIM Funds for a period of 3 additional years (or a
total of 8 years from the time the benefits first became payable) and
thereafter such amounts shall be forfeited.
-6-
<PAGE> 11
ARTICLE VI
ADMINISTRATOR
-------------
6.1 Appointment of Administrator.
-----------------------------
This Plan shall be administered by the Nominating and
Compensation Committees of the Boards of Directors of the AIM Funds. The
members of such committees are not "interested persons" (within the meaning of
Section 2(a)(19) of the Investment Company Act of 1940) of any of the AIM
Funds. The term "Administrator" as used in this Plan shall refer to the
members of such committees, either individually or collectively, as
appropriate.
6.2 Powers and Duties of Administrator.
-----------------------------------
Except as provided below, the Administrator shall have the
following duties and responsibilities in connection with the administration of
this Plan:
(a) To promulgate and enforce such rules, regulations and
procedures as shall be proper for the efficient administration of the Plan;
(b) To determine all questions arising in the
administration, interpretation and application of the Plan, including questions
of eligibility and of the status and rights of Participants and any other
persons hereunder;
(c) To decide any dispute arising hereunder; provided,
however, that no Administrator shall participate in any matter involving any
questions relating solely to his own participation or benefits under this Plan;
(d) To advise the Boards of Directors of the AIM Funds
regarding the known future need for funds to be available for distribution;
(e) To correct defects, supply omissions and reconcile
inconsistencies to the extent necessary to effectuate the Plan;
(f) To compute the amount of benefits and other payments
which shall be payable to any Participant or surviving spouse in accordance
with the provisions of the Plan and to determine the person or persons to whom
such benefits shall be paid;
(g) To make recommendations to the Boards of Directors of
the AIM Funds with respect to proposed amendments to the Plan;
(h) To file all reports with government agencies,
Participants and other parties as may be required by law, whether such reports
are initially the obligation of the AIM Funds, or the Plan;
-7-
<PAGE> 12
(i) To engage the Actuary of the Plan and to cause the
liabilities of the Plan to be evaluated by the Actuary; and
(j) To have all such other powers as may be necessary to
discharge its duties hereunder.
6.3 Action by Administrator.
------------------------
The Administrator may elect a Chairman and Secretary from
among its members and may adopt rules for the conduct of its business. A
majority of the members then serving shall constitute a quorum for the
transacting of business. All resolutions or other action taken by the
Administrator shall be by vote of a majority of those present at such meeting
and entitled to vote. Resolutions may be adopted or other action taken without
a meeting upon written consent signed by at least a majority of the members.
All documents, instruments, orders, requests, directions, instructions and
other papers shall be executed on behalf of the Administrator by either the
Chairman or the Secretary of the Administrator, if any, or by any member or
agent of the Administrator duly authorized to act on the Administrator's
behalf.
6.4 Participation by Administrators.
--------------------------------
No Administrator shall be precluded from becoming a
Participant in the Plan if he would be otherwise eligible, but he shall not be
entitled to vote or act upon matters or to sign any documents relating
specifically to his own participation under the Plan, except when such matters
or documents relate to benefits generally. If this disqualification results in
the lack of a quorum, then the Boards of Directors, by majority vote of the
members of a majority of such Boards of Directors (a "Majority Vote"), shall
appoint a sufficient number of temporary Administrators, who shall serve for
the sole purpose of determining such a question.
6.5 Agents and Expenses.
--------------------
The Administrator may employ agents and provide for such
clerical, legal, actuarial, accounting, medical, advisory or other services as
it deems necessary to perform its duties under this Plan. The cost of such
services and all other expenses incurred by the Administrator in connection
with the administration of the Plan shall be allocated to each Fund pursuant to
the method utilized under Section 3.4 hereof with respect to costs related to
benefit accruals. For purposes of the preceding sentence, if an individual
serves as a Director for more than one Fund, he shall be deemed to be a
separate Director for each such Fund in determining the aggregate number of
Directors of the AIM Funds.
6.6 Allocation of Duties.
---------------------
The duties, powers and responsibilities reserved to the
Administrator may be allocated among its members so long as such allocation is
pursuant to written procedures adopted by the Administrator, in which case no
Administrator shall have any liability, with respect to any duties, powers or
responsibilities not allocated to him, for the acts or omissions of any other
Administrator.
-8-
<PAGE> 13
6.7 Delegation of Duties.
---------------------
The Administrator may delegate any of its duties to employees
of A I M Advisors, Inc. or any of its affiliates or to any other person or
firm, provided that the Administrator shall prudently choose such agents and
rely in good faith on their actions.
6.8 Administrator's Action Conclusive.
----------------------------------
Any action on matters within the discretion of the
Administrator shall be final and conclusive.
6.9 Records and Reports.
--------------------
The Administrator shall maintain adequate records of its
actions and proceedings in administering this Plan and shall file all reports
and take all other actions as it deems appropriate in order to comply with any
federal or state law.
6.10 Information from the AIM Funds.
-------------------------------
The AIM Funds shall promptly furnish all necessary information
to the Administrator to permit it to perform its duties under this Plan. The
Administrator shall be entitled to rely upon the accuracy and completeness of
all information furnished to it by the AIM Funds, unless it knows or should
have known that such information is erroneous.
6.11 Reservation of Rights by Boards of Directors.
---------------------------------------------
When rights are reserved in this plan to the Boards of
Directors, such rights shall be exercised only by Majority Vote of the Boards
of Directors, except where the Boards of Directors, by unanimous written
resolution, delegate any such rights to one or more persons or to the
Administrator. Subject to the rights reserved to the Boards of Directors as
set forth in this Plan, no member of the Boards of Directors shall have any
duties or responsibilities under this Plan, except to the extent he shall be
acting in the capacity of an Administrator.
6.12 Liability and Indemnification.
------------------------------
(a) The Administrator shall perform all duties required
of it under this Plan in a prudent manner. The Administrator shall not be
responsible in any way for any action or omission of the AIM Funds or their
employees in the performance of their duties and obligations as set forth in
this Plan. The Administrator also shall not be responsible for any act or
omission of any of its agents provided that such agents were prudently chosen
by the Administrator and that the Administrator relied in good faith upon the
action of such agents.
(b) Except for its own gross negligence, willful
misconduct or willful breach of the terms of this Plan, the Administrator shall
be indemnified and held harmless by the AIM Funds against any and all
liability, loss, damages, cost and expense which may arise, occur by reason of,
or be based upon, any matter connected with or related to this Plan or its
-9-
<PAGE> 14
administration (including, but not limited to, any and all expenses whatsoever
reasonably incurred in investigating, preparing or defending any litigation,
commenced or threatened, or in settlement of any such claim).
ARTICLE VII
AMENDMENTS AND TERMINATION
--------------------------
7.1 Amendments.
-----------
The Boards of Directors reserve the right at any time and from
time to time, and retroactively if deemed necessary or appropriate by them, to
amend in whole or in part by Majority Vote any or all of the provisions of this
Plan, provided that:
(a) No amendment shall make it possible for any part of a
Participant's or former Participant's Retirement Benefit to be used for, or
diverted to, purposes other than for the exclusive benefit of such Participant
or surviving spouse, except to the extent otherwise provided in this Plan;
(b) No amendment may reduce any Participant's or former
Participant's Retirement Benefit as of the effective date of the amendment;
Amendments may be made in the form of Board of Directors'
resolutions or separate written document.
7.2 Termination.
------------
Except as provided below, the Boards of Directors reserve the
right to terminate this Plan at any time by Majority Vote by giving to the
Administrator notice in writing of such desire to terminate. The Plan shall
terminate upon the date of receipt of such notice and the rights of all
Participants to their Retirement Benefits (determined as of the date the Plan
is terminated) shall become payable upon the effective date of the termination
of the Plan in quarterly installments or in an actuarially equivalent lump sum
as determined by the Administrator.
ARTICLE VIII
MISCELLANEOUS
-------------
8.1 Rights of Creditors.
--------------------
(a) The Plan is unfunded. Neither the Participants nor
any other persons shall have any interest in any fund or in any specific asset
or assets of any of the AIM Funds by
-10-
<PAGE> 15
reason of any Accrued or Retirement Benefit hereunder, nor any rights to
receive distribution of any Retirement Benefit except and as to the extent
expressly provided hereunder.
(b) The Accrued and Retirement Benefits of each
Participant are unsecured and shall be subject to the claims of the general
creditors of the AIM Funds.
8.2 Liability Limited.
------------------
Neither the AIM Funds, the Administrator, nor any agents,
employees, officers, directors or shareholders of any of them, nor any other
person shall have any liability or responsibility with respect to this Plan,
except as expressly provided herein.
8.3 Incapacity.
-----------
If the Administrator shall receive evidence satisfactory to it
that a Participant or surviving spouse entitled to receive any benefit under
the Plan is, at the time when such benefit becomes payable, physically or
mentally incompetent to receive such benefit and to give a valid release
therefor, and that another person or an institution is then maintaining or has
custody of such Participant or surviving spouse and that no guardian, committee
or other representative of the estate of such Participant or surviving spouse
shall have been duly appointed, the Administrator may make payment of such
benefit otherwise payable to such Participant or surviving spouse to such other
person or institution, and the release of such other person or institution
shall be a valid and complete discharge for the payment of such benefit.
8.4 Cooperation of Parties.
-----------------------
All parties to this Plan and any person claiming any interest
hereunder agree to perform any and all acts and execute any and all documents
and papers which are necessary or desirable for carrying out this Plan or any
of its provisions.
8.5 Governing Law.
--------------
All rights under the Plan shall be governed by and construed
in accordance with rules of Federal law applicable to such plans and, to the
extent not preempted, by the laws of the State of Texas without regard to
principles of conflicts of law. No action shall be brought by or on behalf of
any Participant for or with respect to benefits due under this Plan unless the
person bringing such action has timely exhausted the Plan's claim review
procedure. Any such action must be commenced within three years. This
three-year period shall be computed from the earlier of (a) the date a final
determination denying such benefit, in whole or in part, is issued under the
Plan's claim review procedure or (b) the date such individual's cause of action
first accrued. Any dispute, controversy or claim arising out of or in
connection with this Plan (including the applicability of this arbitration
provision) and not resolved pursuant to the Plan's claim review procedure shall
be determined and settled by arbitration conducted by the American Arbitration
Association ("AAA") in the County and State of the Funds' principal place of
business and in accordance with the then existing rules, regulations, practices
and procedures of the AAA. Any award in such arbitration shall be final,
conclusive and binding upon the
-11-
<PAGE> 16
parties to the arbitration and may be enforced by either party in any court of
competent jurisdiction. Each party to the arbitration will bear its own costs
and fees (including attorney's fees).
8.6 Nonguarantee of Directorship.
-----------------------------
Nothing contained in this Plan shall be construed as a
guaranty or right of any Participant to be continued as a Director of one or
more of the AIM Funds (or of a right of a Director to any specific level of
Compensation) or as a limitation of the right of the AIM Funds to remove any of
its directors.
8.7 Counsel.
--------
The Administrator may consult with legal counsel, who may be
counsel for one or more of the Boards of Directors of the AIM Funds and for the
Administrator, with respect to the meaning or construction of this Plan, its
obligations or duties hereunder or with respect to any action or proceeding or
any question of law, and they shall be fully protected with respect to any
action taken or omitted by them in good faith pursuant to the advice of legal
counsel.
8.8 Spendthrift Provision.
----------------------
A Participant's interest in his Accrued Benefit or Retirement
Benefit may not be transferred, alienated, assigned nor become subject to
execution, garnishment or attachment, and any attempt to do so will render
benefits hereunder immediately forfeitable.
8.9 Forfeiture for Cause.
---------------------
Notwithstanding any other provision of this Plan to the
contrary, any benefits to which a Participant (or his surviving spouse) may
otherwise be entitled hereunder will be forfeited in the event the
Administrator, in its sole discretion, determines that a Participant's
termination of Service is due to such Participant's willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Director.
ARTICLE IX
CLAIMS PROCEDURE
----------------
9.1 Notice of Denial.
-----------------
If a Participant is denied any Retirement Benefit (or a
surviving spouse is denied a survivor's benefit) under this Plan, either in
total or in an amount less than the full Retirement Benefit to which he would
normally be entitled, the Administrator shall advise the Participant (or
surviving spouse) in writing of the amount of his Retirement Benefit (or
survivor's benefit), if any, and the specific reasons for the denial. The
Administrator shall also furnish the Participant (or surviving spouse) at that
time with a written notice containing:
-12-
<PAGE> 17
(a) A specific reference to pertinent Plan provisions.
(b) A description of any additional material or
information necessary for the Participant (or surviving spouse) to perfect his
claim, if possible, and an explanation of why such material or information is
needed.
(c) An explanation of the Plan's claim review procedure.
9.2 Right to Reconsideration.
-------------------------
Within 60 days of receipt of the information stated in Section
9.1 above, the Participant (or surviving spouse) shall, if he desires further
review, file a written request for reconsideration with the Administrator.
9.3 Review of Documents.
--------------------
So long as the Participant's (or surviving spouse's) request
for review is pending (including the 60 day period in 9.2 above), the
Participant (or surviving spouse) or his duly authorized representative may
review pertinent Plan documents and may submit issues and comments in writing
to the Administrator.
9.4 Decision by Administrator.
--------------------------
A final and binding decision shall be made by the
Administrator within 60 days of the filing by the Participant (or surviving
spouse) of his request for reconsideration, provided, however, that if the
Administrator, in its discretion, feels that a hearing with the Participant (or
surviving spouse) or his representative present is necessary or desirable, this
period shall be extended an additional 60 days.
9.5 Notice by Administrator.
------------------------
The Administrator's decision shall be conveyed to the
Participant (or surviving spouse) in writing and shall include specific reasons
for the provisions on which the decision is based.
-13-
<PAGE> 1
EXHIBIT h(2)(b)
AMENDMENT NUMBER 1 TO THE TRANSFER AGENCY
AND SERVICE AGREEMENT
This Amendment, dated as of January 1, 1999 is made to the Transfer Agency and
Service Agreement dated December 29, 1997 (the "Agreement") between Short-Term
Investments Trust (the "Fund") and A I M Fund Services, Inc. ("AFS") pursuant
to Article 11 of the Agreement.
A fee calculated by multiplying the number of shareholder accounts in the Fund
by $.20 shall be paid by the Fund to AFS concurrently with the fees payable by
the Fund to AFS under Article 2 of the Agreement.
Upon a vote of the Board of Trustees of the Fund terminating this Amendment,
this Amendment shall cease to apply, and the Transfer Agency and Service
Agreement shall be complete without reference hereto.
SHORT-TERM INVESTMENTS TRUST
By: /s/ ROBERT H. GRAHAM
----------------------------
President
ATTEST:
/s/ KATHLEEN J. PFLUEGER
- ------------------------------
Assistant Secretary
A I M FUND SERVICES, INC.
By: /s/ JOHN CALDWELL
----------------------------
President
ATTEST:
/s/ LISA A. MOSS
- ------------------------------
Assistant Secretary
<PAGE> 1
EXHIBIT h(2)(c)
AMENDMENT NUMBER 2 TO THE TRANSFER AGENCY
AND SERVICE AGREEMENT
This Amendment, dated as of July 1, 1999, is made to the Transfer Agency and
Service Agreement dated December 29, 1997 (the "Agreement") between Short-Term
Investments Trust (the "Fund") and A I M Fund Services, Inc. ("AFS") pursuant to
Article 11 of the Agreement.
Section 2.01 of the Agreement is hereby deleted in its entirety and replaced
with the following:
"2.01 For performance by the Transfer Agent pursuant to this Agreement,
the Fund agrees on behalf of each of the Portfolios to pay the Transfer Agent an
annual fee in the amount of .0125% of average daily net assets, payable monthly.
Such fee and out-of-pocket expenses and advances identified under Section 2.03
below may be changed from time to time subject to mutual written agreement
between the Fund and the Transfer Agent."
All other terms and provisions of the Agreement not amended herein
shall remain in full force and effect.
SHORT-TERM INVESTMENTS TRUST
By: /s/ ROBERT H. GRAHAM
------------------------------
President
ATTEST:
/s/ LISA A. MOSS
- ----------------------------
Assistant Secretary
A I M FUND SERVICES, INC.
By: /s/ JOHN CALDWELL
------------------------------
President
ATTEST:
/s/ LISA A. MOSS
- ----------------------------
Assistant Secretary
<PAGE> 1
EXHIBIT h(5)(a)
MEMORANDUM OF AGREEMENT
This Memorandum of Agreement is entered into as of this 17th day of
December, 1999 between Short-Term Investments Trust (the "Company"), on behalf
of the funds listed on Exhibit "A" to this Memorandum of Agreement (the
"Funds"), and Fund Management Company ("FMC").
For and in consideration of the mutual terms and agreements set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and FMC agree as
follows:
The Company and FMC agree until the date set forth on the attached
Exhibit "A" that FMC will limit Rule 12b-1 distribution plan payments at the
rates set forth on Exhibit "A" of the average daily net assets allocable to
such class. Neither the Company nor FMC may remove or amend the limits to the
Company's detriment prior to the date set forth on Exhibit "A." FMC will not
have any right to reimbursement of any amount so limited.
The Company and FMC agree to review the then-current limits for each
class of each Fund listed on Exhibit "A" on a date prior to the date listed on
that Exhibit to determine whether such limits should be amended, continued or
terminated. Unless the Company, by vote of its Board of Trustees, or FMC
terminates the limits, or the Company and FMC are unable to reach an agreement
on the amount of the limits to which the Company and FMC desire to be bound,
the limits will continue for additional one-year terms at the rate to which the
Company and FMC mutually agree. Exhibit "A" will be amended to reflect that
rate and the new date through which the Company and FMC agree to be bound.
It is expressly agreed that the obligations of the Company hereunder
shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Company personally, but shall only bind
the assets and property of the Fund, as provided in the Company's Agreement and
Declaration of Trust. The execution and delivery of this Memorandum of
Agreement have been authorized by the Trustees of the Company, and this
Memorandum of Agreement has been executed and delivered by an authorized
officer of the Company acting as such; neither such authorization by such
Trustees nor such execution and delivery by such officer shall be deemed to
have been made by any of them individually or to impose any liability on any of
them personally, but shall bind only the assets and property of the Fund, as
provided in the Company's Agreement and Declaration of Trust.
IN WITNESS WHEREOF, the Company and FMC have entered into this
Memorandum of Agreement as of the date first above written.
Short-Term Investments Trust,
on behalf of each Fund listed in Exhibit "A"
to this Memorandum of Agreement
By:
-----------------------------------------
Title:
--------------------------------------
Fund Management Company
By:
-----------------------------------------
Title:
--------------------------------------
<PAGE> 2
EXHIBIT "A"
SHORT-TERM INVESTMENTS TRUST
FUND LIMITATION COMMITTED UNTIL
- ---- ---------- ---------------
Treasury Portfolio
Cash Management 0.08% June 30, 2000
Class
Resource Class 0.16% June 30, 2000
Private Investment 0.30% June 30, 2000
Class
Personal Investment 0.50% June 30, 2000
Class
Reserve Class 0.80% June 30, 2000
Treasury-Tax Advantage
Portfolio
Cash Management 0.08% June 30, 2000
Class
Resource Class 0.16% June 30, 2000
Private Investment Class 0.25% June 30, 2000
Personal Investment 0.50% June 30, 2000
Class
Reserve Class 0.80% June 30, 2000
Government & Agency
Portfolio
Cash Management 0.08% June 30, 2000
Class
Resource Class 0.16% June 30, 2000
Private Investment 0.30% June 30, 2000
Class
Personal Investment 0.50% June 30, 2000
Class
Reserve Class 0.80% June 30, 2000
<PAGE> 1
EXHIBIT h(5)(b)
MEMORANDUM OF AGREEMENT
This Memorandum of Agreement is entered into as of this 17th day of
December, 1999 between Short-Term Investments Trust (the "Company"), on behalf
of the funds listed on Exhibit "A" to this Memorandum of Agreement (the
"Funds"), and A I M Advisors, Inc. ("AIM").
For and in consideration of the mutual terms and agreements set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and AIM agree as
follows:
The Company and AIM agree until the date set forth on the attached
Exhibit "A" that AIM will limit total expenses, exclusive of Rule 12b-1
distribution plan payments, interest expense, taxes and extraordinary expenses,
to the rates set forth on Exhibit "A" of the average daily net assets allocable
to such class. Neither the Company nor AIM may remove or amend the limits to
the Company's detriment prior to the date set forth on Exhibit "A." AIM will
not have any right to reimbursement of any amount so limited.
The Company and AIM agree to review the then-current limits for each
class of each Fund listed on Exhibit "A" on a date prior to the date listed on
that Exhibit to determine whether such limits should be amended, continued or
terminated. Unless the Company, by vote of its Board of Trustees, or AIM
terminates the limits, or the Company and AIM are unable to reach an agreement
on the amount of the limits to which the Company and AIM desire to be bound,
the limits will continue for additional one-year terms at the rate to which the
Company and AIM mutually agree. Exhibit "A" will be amended to reflect that
rate and the new date through which the Company and AIM agree to be bound.
It is expressly agreed that the obligations of the Company hereunder
shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Company personally, but shall only bind
the assets and property of the Fund, as provided in the Company's Agreement and
Declaration of Trust. The execution and delivery of this Memorandum of
Agreement have been authorized by the Trustees of the Company, and this
Memorandum of Agreement has been executed and delivered by an authorized
officer of the Company acting as such; neither such authorization by such
Trustees nor such execution and delivery by such officer shall be deemed to
have been made by any of them individually or to impose any liability on any of
them personally, but shall bind only the assets and property of the Fund, as
provided in the Company's Agreement and Declaration of Trust.
IN WITNESS WHEREOF, the Company and AIM have entered into this
Memorandum of Agreement as of the date first above written.
Short-Term Investments Trust,
on behalf of each Fund listed in Exhibit "A"
to this Memorandum of Agreement
By:
-----------------------------------------
Title:
--------------------------------------
A I M Advisors, Inc.
By:
-----------------------------------------
Title:
--------------------------------------
<PAGE> 2
EXHIBIT "A"
SHORT-TERM INVESTMENTS TRUST
FUND LIMITATION COMMITTED UNTIL
- ---- ---------- ---------------
Treasury TaxAdvantage
Portfolio
Institutional Class 0.20% June 30, 2000
Cash Management 0.20% June 30, 2000
Class
Resource Class 0.20% June 30, 2000
Private Investment 0.20% June 30, 2000
Class
Personal Investment 0.20% June 30, 2000
Class
Reserve Class 0.20% June 30, 2000
Government & Agency
Portfolio
Institutional Class 0.09% June 30, 2000
Cash Management 0.09% June 30, 2000
Class
Resource Class 0.09% June 30, 2000
Private Investment 0.09% June 30, 2000
Class
Personal Investment 0.09% June 30, 2000
Class
Reserve Class 0.09% June 30, 2000
<PAGE> 1
EXHIBIT j(1)
CONSENT OF COUNSEL
SHORT-TERM INVESTMENTS TRUST
----------------------------
We hereby consent to the use of our name and to the reference
to our firm under the caption "General Information About the Trust - Legal
Matters" in the Statements of Additional Information for the Government & Agency
Portfolio, the Treasury Portfolio and the Treasury TaxAdvantage Portfolio, all
of which are included in Post-Effective Amendment No. 33 to the Registration
Statement under the Securities Act of 1933, as amended (No. 2-58287) and
Amendment No. 34 to the Registration Statement under the Investment Company Act
of 1940, as amended (No. 811-2729) on Form N-1A of Short-Term Investments Trust.
/s/ Ballard Spahr Andrews & Ingersoll, LLP
--------------------------------------------
Ballard Spahr Andrews & Ingersoll, LLP
Philadelphia, Pennsylvania
November 8, 1999
<PAGE> 1
Exhibit j(2)
INDEPENDENT AUDITORS' CONSENT
-----------------------------
The Board of Trustees and Shareholders
Short-Term Investments Trust:
We consent to the use of our reports on the Government & Agency Portfolio, the
Treasury Portfolio and the Treasury TaxAdvantage Portfolio (series portfolios
of Short-Term Investments Trust) dated October 1, 1999 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
- ----------
KPMG LLP
Houston, Texas
November 8, 1999
<PAGE> 1
EXHIBIT m(2)(c)
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>
<S> <C>
TREASURY PORTFOLIO ANNUAL RATE
- ------------------ -----------
Reserve Class 1.00%
Personal Investment Class 0.75%
Private Investment Class 0.50%
Resource Class 0.20%
Cash Management Class 0.10%
TREASURY TAXADVANTAGE PORTFOLIO ANNUAL RATE
- ------------------------------- -----------
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>
<S> <C>
GOVERNMENT & AGENCY PORTFOLIO ANNUAL RATE
- ----------------------------- -----------
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 December 18, 1998
---------------
SHORT-TERM INVESTMENTS TRUST
Attest: /s/ LISA A. MOSS By: /s/ ROBERT H. GRAHAM
---------------------------- --------------------------------
Name: Lisa A. Moss Name: Robert H. Graham
Title: Assistant Secretary Title: President
(SEAL)
-2-
<PAGE> 1
EXHIBIT n(4)
THIRD AMENDED AND RESTATED MULTIPLE CLASS PLAN
OF
THE AIM FAMILY OF FUNDS--Registered Trademark--
1. This Third Amended and Restated Multiple Class Plan (the "Plan") adopted in
accordance with Rule 18f-3 under the Act shall govern the terms and
conditions under which the Funds may issue separate Classes of Shares
representing interests in one or more Portfolios of each Fund.
2. Definitions. As used herein, the terms set forth below shall have the
meanings ascribed to them below.
(a) Act - Investment Company Act of 1940, as amended.
(b) AIM Cash Reserve Shares - shall mean the AIM Cash Reserve Shares Class
of AIM Money Market Fund, a Portfolio of AIM Funds Group.
(c) CDSC - contingent deferred sales charge.
(d) CDSC Period - the period of years following acquisition of Shares
during which such Shares may be assessed a CDSC upon redemption.
(e) Class - a class of Shares of a Fund representing an interest in a
Portfolio.
(f) Class A Shares - shall mean those Shares designated as Class A Shares
in the Fund's organizing documents.
(g) Class B Shares - shall mean those Shares designated as Class B Shares
in the Fund's organizing documents.
(h) Class C Shares - shall mean those Shares designated as Class C Shares
in the Fund's organizing documents.
(i) Directors - the directors or trustees of a Fund.
(j) Distribution Expenses - expenses incurred in activities which are
primarily intended to result in the distribution and sale of Shares as
defined in a Plan of Distribution and/or agreements relating thereto.
(k) Distribution Fee - a fee paid by a Fund to the Distributor to
compensate the Distributor for Distribution Expenses.
(l) Distributor - A I M Distributors, Inc. or Fund Management Company, as
applicable.
(m) Fund - those investment companies advised by A I M Advisors, Inc.
which have adopted this Plan.
1
<PAGE> 2
(n) Institutional Shares - shall mean Shares of a Fund representing an
interest in a Portfolio offered for sale to institutional customers as
may be approved by the Directors from time to time and as set forth in
the Fund's prospectus.
(o) Plan of Distribution - Any plan adopted under Rule 12b-1 under the Act
with respect to payment of a Distribution Fee and/or Service Fee.
(p) Portfolio - a series of the Shares of a Fund constituting a separate
investment portfolio of the Fund.
(q) Service Fee - a fee paid to financial intermediaries for the ongoing
provision of personal services to Fund shareholders and/or the
maintenance of shareholder accounts.
(r) Share - a share of common stock of or beneficial interest in a Fund,
as applicable.
3. Allocation of Income and Expenses.
(a) Distribution Fees and Service Fees - Each Class shall bear directly
any and all Distribution Fees and/or Service Fees payable by such
Class pursuant to a Plan of Distribution adopted by the Fund with
respect to such Class.
(b) Transfer Agency and Shareholder Recordkeeping Fees - Each Class shall
bear directly the transfer agency fees and expenses and other
shareholder recordkeeping fees and expenses specifically attributable
to that Class; provided, however, that where two or more Classes of a
Portfolio pay such fees and/or expenses at the same rate or in the
same amount, those Classes shall bear proportionately such fees and
expenses based on the relative net assets attributable to each such
Class.
(c) Allocation of Other Expenses - Each Class shall bear proportionately
all other expenses incurred by a Fund based on the relative net assets
attributable to each such Class.
(d) Allocation of Income, Gains and Losses - Except to the extent provided
in the following sentence, each Portfolio will allocate income and
realized and unrealized capital gains and losses to a Class based on
the relative net assets of each Class. Notwithstanding the foregoing,
each Portfolio that declares dividends on a daily basis will allocate
income on the basis of settled shares.
(e) Waiver and Reimbursement of Expenses - A Portfolio's adviser,
underwriter or any other provider of services to the Portfolio may
waive or reimburse the expenses of a particular Class or Classes.
4. Distribution and Servicing Arrangements. The distribution and servicing
arrangements identified below will apply for the following Classes offered
by a Fund with respect to a Portfolio. The provisions of the Fund's
prospectus describing the distribution and servicing arrangements in detail
are incorporated herein by this reference.
2
<PAGE> 3
(a) Class A Shares. Class A Shares shall be offered at net asset value
plus a front-end sales charge as approved from time to time by the
Directors and set forth in the Fund's prospectus, which sales charge
may be reduced or eliminated for certain money market fund shares, for
larger purchases, under a combined purchase privilege, under a right
of accumulation, under a letter of intent or for certain categories of
purchasers as permitted by Section 22(d) of the Act and as set forth
in the Fund's prospectus. Class A Shares that are not subject to a
front-end sales charge as a result of the foregoing shall be subject
to a CDSC for the CDSC Period set forth in Section 5(a) of this Plan
if so provided in the Fund's prospectus. The offering price of Shares
subject to a front-end sales charge shall be computed in accordance
with Rule 22c-1 and Section 22(d) of the Act and the rules and
regulations thereunder. Class A Shares shall be subject to ongoing
Service Fees and/or Distribution Fees approved from time to time by
the Directors and set forth in the Fund's prospectus.
(b) Class B Shares. Class B Shares shall be (i) offered at net asset
value, (ii) subject to a CDSC for the CDSC Period set forth in Section
5(b), (iii) subject to ongoing Service Fees and Distribution Fees
approved from time to time by the Directors and set forth in the
Fund's prospectus, and (iv) converted to Class A Shares eight years
from the end of the calendar month in which the shareholder's order to
purchase was accepted, as set forth in the Fund's prospectus.
(c) Class C Shares. Class C Shares shall be (i) offered at net asset
value, (ii) subject to a CDSC for the CDSC Period set forth in Section
5(c), and (iii) subject to ongoing Service Fees and Distribution Fees
approved from time to time by the Directors and set forth in the
Fund's prospectus.
(d) Institutional Shares. Institutional Shares shall be (i) offered at net
asset value, (ii) offered only to certain categories of institutional
customers as approved from time to time by the Directors and as set
forth in the Fund's prospectus and (iii) may be subject to ongoing
Service Fees and/or Distribution Fees as approved from time to time by
the Directors and set forth in the Fund's prospectus.
(e) AIM Cash Reserve Shares. AIM Cash Reserve Shares shall be (i) offered
at net asset value and (ii) subject to ongoing Service Fees and/or
Distribution Fees approved from time to time by the Directors and set
forth in the Fund's prospectus. AIM Cash Reserve Shares acquired
through exchange of Class A Shares of another Portfolio may be subject
to a CDSC for the CDSC Period set forth in Section 5(a) of this Plan
if so provided in the Fund's prospectus.
5. CDSC. A CDSC shall be imposed upon redemptions of Class A Shares that do
not incur a front-end sales charge and of Class B Shares and Class C Shares
as follows:
(a) Class A Shares. The CDSC Period for Class A Shares shall be 18 months.
The CDSC Rate shall be as set forth in the Fund's prospectus, the
relevant portions of which are incorporated herein by this reference.
No CDSC shall be imposed on Class A Shares unless so provided in a
Fund's prospectus.
3
<PAGE> 4
(b) Class B Shares. The CDSC Period for the Class B Shares shall be six
years. The CDSC Rate for the Class B Shares shall be as set forth in
the Fund's prospectus, the relevant portions of which are incorporated
herein by this reference.
(c) Class C Shares. The CDSC Period for the Class C Shares shall be one
year. The CDSC Rate for the Class C Shares shall be as set forth in
the Fund's prospectus, the relevant portions of which are incorporated
herein by reference.
(d) Method of Calculation. The CDSC shall be assessed on an amount equal
to the lesser of the then current market value or the cost of the
Shares being redeemed. No sales charge shall be imposed on increases
in the net asset value of the Shares being redeemed above the initial
purchase price. No CDSC shall be assessed on Shares derived from
reinvestment of dividends or capital gains distributions. The order in
which Shares are to be redeemed when not all of such Shares would be
subject to a CDSC shall be determined by the Distributor in accordance
with the provisions of Rule 6c-10 under the Act.
(e) Waiver. The Distributor may in its discretion waive a CDSC otherwise
due upon the redemption of Shares on terms disclosed in the Fund's
prospectus or statement of additional information and, for the Class A
Shares and AIM Cash Reserve Shares, as allowed under Rule 6c-10 under
the Act.
6. Exchange Privileges. Exchanges of Shares shall be permitted between Funds
as follows:
(a) Class A Shares may be exchanged for Class A Shares of another
Portfolio or AIM Cash Reserve Shares, subject to certain limitations
set forth in the Fund's prospectus as it may be amended from time to
time, relevant portions of which are incorporated herein by this
reference.
(b) Class B Shares may be exchanged for Class B Shares of another
Portfolio at their relative net asset value.
(c) Class C Shares may be exchanged for Class C Shares of any other
Portfolio at their relative net asset value.
(d) AIM Cash Reserve Shares may be exchanged for Class A Shares, Class B
Shares or Class C Shares of another Portfolio, subject to certain
limitations set forth in the Fund's prospectus as it may be amended
from time to time, relevant portions of which are incorporated herein
by this reference.
(e) Depending upon the Portfolio from which and into which an exchange is
being made and when the shares were purchased, shares being acquired
in an exchange may be acquired at their offering price, at their net
asset value or by paying the difference in sales charges, as disclosed
in the Fund's prospectus and statement of additional information.
4
<PAGE> 5
(f) CDSC Computation. The CDSC payable upon redemption of Class A Shares,
Class B Shares, Class C Shares and AIM Cash Reserve Shares subject to
a CDSC shall be computed in the manner described in the Fund's
prospectus.
7. Service and Distribution Fees. The Service Fee and Distribution Fee
applicable to any Class shall be those set forth in the Fund's prospectus,
relevant portions of which are incorporated herein by this reference. All
other terms and conditions with respect to Service Fees and Distribution
Fees shall be governed by the Plan of Distribution adopted by the Fund with
respect to such fees and Rule 12b-1 of the Act.
8. Conversion of Class B Shares.
(a) Shares Received upon Reinvestment of Dividends and Distributions -
Shares purchased through the reinvestment of dividends and
distributions paid on Shares subject to conversion shall be treated as
if held in a separate sub-account. Each time any Shares in a
Shareholder's account (other than Shares held in the sub-account)
convert to Class A Shares, a proportionate number of Shares held in
the sub-account shall also convert to Class A Shares.
(b) Conversions on Basis of Relative Net Asset Value - All conversions
shall be effected on the basis of the relative net asset values of the
two Classes without the imposition of any sales load or other charge.
(c) Amendments to Plan of Distribution for Class A Shares - If any
amendment is proposed to the Plan of Distribution under which Service
Fees and Distribution Fees are paid with respect to Class A Shares of
a Fund that would increase materially the amount to be borne by those
Class A Shares, then no Class B Shares shall convert into Class A
Shares of that Fund until the holders of Class B Shares of that Fund
have also approved the proposed amendment. If the holders of such
Class B Shares do not approve the proposed amendment, the Directors of
the Fund and the Distributor shall take such action as is necessary to
ensure that the Class voting against the amendment shall convert into
another Class identical in all material respects to Class A Shares of
the Fund as constituted prior to the amendment.
9. Effective Date. This Plan shall not take effect until a majority of the
Directors of a Fund, including a majority of the Directors who are not
interested persons of the Fund, shall find that the Plan, as proposed and
including the expense allocations, is in the best interests of each Class
individually and the Fund as a whole.
10. Amendments. This Plan may not be amended to materially change the
provisions of this Plan unless such amendment is approved in the manner
specified in Section 9 above.
5
<PAGE> 1
EXHIBIT o(1)
THE AIM MANAGEMENT GROUP
CODE OF ETHICS
(ADOPTED MAY 1, 1981)
(AS LAST AMENDED AUGUST 17, 1999)
WHEREAS, the members of the AIM Management Group are A I M Management
Group Inc. ("AIM Management") and A I M Advisors, Inc. ("AIM Advisors") and
its wholly owned and indirect subsidiaries (individually and collectively
referred to as "AIM"); and
WHEREAS, certain members of AIM provide investment advisory services to
AIM's investment companies and other clients; and
WHEREAS, certain members of AIM provide distribution services as
principal underwriters for AIM's investment company clients; and
WHEREAS, certain members of AIM provide shareholder services as the
transfer agent, dividend disbursing agent and shareholder processing agent for
AIM's investment company clients; and
WHEREAS, the investment advisory business involves decisions and
information which may have at least a temporary impact on the market price of
securities, thus creating a potential for conflicts of interest between the
persons engaged in such business and their clients; and
WHEREAS, the members of AIM have a fiduciary relationship with respect
to each portfolio under management and the interests of the client accounts and
of the shareholders of AIM's investment company clients must take precedence
over the personal interests of the employees of AIM, thus requiring a rigid
adherence to the highest standards of conduct by such employees; and
WHEREAS, every practical step must be taken to ensure that no
intentional or inadvertent action is taken by an employee of AIM which is, or
appears to be, adverse to the interests of AIM or any of its client accounts,
including the defining of standards of behavior for such employees, while at
the same time avoiding unnecessary interference with the privacy or personal
freedom of such employees; and
WHEREAS, the members of AIM originally adopted a Code of Ethics ("the
Code") on May 1, 1981, and adopted amendments thereto in January 1989, October
1989, April 1991, December 6, 1994 and December 5, 1995, December 10, 1996, and
now deem it advisable to update and revise said Code in light of new investment
company products developed by AIM and changing circumstances in the securities
markets in which AIM conducts business; and
NOW, THEREFORE, the Boards of Directors of AIM Management and AIM
Advisors hereby adopt the following revised Code pursuant to the provisions of
Rule 17j-1 under the Investment Company Act of 1940 ("1940 Act"), with the
intention that certain provisions of the Code shall become applicable to the
officers, directors and employees of AIM.
I. Applicability
A. The provisions of AIM's Code shall apply to certain officers,
directors and employees (as hereinafter designated) of AIM. Unless
otherwise indicated, the term "employee" as used herein means: (i)
all officers, directors and employees of AIM Advisors and its
wholly owned and indirect subsidiaries and (ii) officers,
directors and employees of AIM Management who
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<PAGE> 2
have an active part in the management, portfolio selection,
underwriting or shareholder functions with respect to
AIM's investment company clients or provide one or more similar
services for AIM's non-investment company clients. The term
"employee" does not include directors of AIM Management who do not
maintain an office at the home office of AIM Management and who do
not regularly obtain information concerning the investment
recommendations or decisions made by AIM on behalf of client
accounts ("independent directors").
B. The Code shall also apply to any person or entity appointed as a
sub-advisor for an AIM investment company client account unless
such person or entity has adopted a code of ethics in compliance
with Section 17(j) of the 1940 Act; or, in the event that such
person or entity is domiciled outside of the United States, has
adopted employee standards of conduct that provide equivalent
protections to AIM's client accounts. In performing sub-advisory
services, such person or entity will be subject to the direction
and supervision of AIM, and subject to the policies and control of
the Boards of Directors/Trustees of the respective AIM investment
company client(s).
II. Interpretation and Enforcement
A. The Chief Executive Officer of AIM Management shall appoint a
Code of Ethics Committee ("Committee"). The Committee shall have
the responsibility for interpreting the provisions of the Code, for
adopting and implementing Procedures for the enforcement of the
provisions of the Code, and for determining whether a violation of
the provisions of the Code, or of any such related Procedures has
occurred. The Committee will appoint an officer to monitor
personal investment activity by "Covered Persons" (as defined in
the Procedures adopted hereunder), both before and after any trade
occurs and to prepare periodic and annual reports, conduct
education seminars and obtain employee certifications as deemed
appropriate. In the event of a finding that a violation has
occurred requiring significant remedial action, the Committee
shall take such action as it deems appropriate on the imposition
of sanctions or initiation of disgorgement proceedings. The
Committee shall also make recommendations and submit reports to
the Boards of Directors/Trustees of AIM's investment company
clients.
B. If a sub-advisor has adopted a code of ethics in accordance with
Section 17(j) of the 1940 Act, then pursuant to a sub-advisory
agreement with AIM, it shall be the duty of such sub-advisor to
furnish AIM with a copy of the following:
o code of ethics and related procedures of the sub-advisor,
and a statement as to its employees' compliance therewith;
o any statement or policy on insider trading adopted pursuant
to Section 204A under the 1940 Act; and the procedures
designed to prevent the misuse of material non-public
information by any person associated with such sub-advisor;
and
o such other information as may reasonably be necessary for
AIM to report to the Boards of Directors/Trustees of its
investment company client account(s) as to such
sub-advisor's adherence to the Boards' policies and controls
referenced in Section I.B. above.
III. Procedures Adopted Under the Code
From time to time, AIM's Committee shall adopt Procedures to carry out
the intent of the Code. Among other things, the Procedures require
certain new employees to complete an Asset Disclosure Form, a Brokerage
Accounts Listing Form and such other forms as deemed appropriate by the
Committee. Such Procedures are hereby incorporated into the Code and are
made a part of the Code. Therefore, a violation of the Procedures shall
be deemed a violation of the Code itself.
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<PAGE> 3
IV. Compliance with Governing Laws, Regulations and Procedures
A. Each employee shall have and maintain knowledge of and shall
comply strictly with all applicable federal and state laws and all
rules and regulations of any governmental agency or
self-regulatory organization governing his/her actions as an
employee.
B. Each employee shall comply with all laws and regulations, and
AIM's prohibition against insider trading. Trading on or
communicating material non-public information, or "inside
information", of any sort, whether obtained in the course of
research activities, through a client relationship or otherwise,
is strictly prohibited.
C. Each employee shall comply with the procedures and guidelines
established by AIM to ensure compliance with applicable federal
and state laws and regulations of governmental agencies and
self-regulatory organizations. No employee shall knowingly
participate in, assist, or condone any act in violation of any
statute or regulation governing AIM or any act that would violate
any provision of this Code, or of the Procedures adopted
hereunder.
D. Each employee shall have and maintain knowledge of and shall
comply with the provisions of this Code and any Procedures adopted
hereunder.
E. Each employee having supervisory responsibility shall exercise
reasonable supervision over employees subject to his/her control,
with a view to preventing any violation by such persons of
applicable statutes or regulations, AIM's corporate procedures, or
the provisions of the Code, or the Procedures adopted hereunder.
F. Any employee obtaining evidence that an act in violation of
applicable statutes, regulations or provisions of the Code or of
any Procedures adopted hereunder has occurred shall immediately
report such evidence to the Chief Compliance Officer of AIM. Such
action by the employee will remain confidential, unless the
employee waives confidentiality or federal or state authorities
compel disclosure. Failure to report such evidence may result in
disciplinary proceedings and may include sanctions as set forth in
Section VI hereof.
V. Ethical Standards
A. Employees shall conduct themselves in a manner consistent with the
highest ethical and fiduciary standards. They shall avoid any
action, whether for personal profit or otherwise, that results in
an actual or potential conflict of interest with AIM or its client
accounts, or which may be otherwise detrimental to the interests
of the members of AIM or its client accounts.(1)
B. Employees shall act in a manner consistent with their fiduciary
obligation to clients of AIM, and shall not deprive any client
account of an investment opportunity in order to personally
benefit from that opportunity.
- --------------------------
(1) Conflicts of interest generally result from a situation in which an
individual has a personal interest in a matter that is or may be competitive
with his or her responsibilities to other persons or entities (such as AIM or
its client accounts) or where an individual has or may have competing
obligations or responsibilities to two or more persons or entities. In the case
of the relationship between a client account on the one hand, and AIM, its
officers, directors and employees, on the other hand, such conflict may result
from the purchase or sale of securities for a client account and for the
personal account of the individual involved or the account of any "affiliate"
of such individual, as such term is defined in the 1940 Act. Such conflict may
also arise from the purchase or sale for a client account of securities in
which an officer, director or employee of AIM has an economic interest.
Moreover, such conflict may arise in connection with vendor relationships in
which such employee has any direct or indirect financial interest, family
interests or other personal interest. To the extent of conflicts of interest
between AIM and a vendor, such conflicts must be resolved in a manner that is
not disadvantageous to AIM. In any such case, potential or actual conflicts
must be disclosed to AIM and the first preference and priority must be to avoid
such conflicts of interest wherever possible and, where they unavoidably occur,
to resolve them in a manner that is not disadvantageous to a client.
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<PAGE> 4
C. Without the knowledge and approval of the Chief Executive Officer
of AIM Management, employees shall not engage in a business
activity or practice for compensation in competition with the
members of AIM. Each employee, who is deemed to be a "Covered
Person" as defined in the Procedures adopted hereunder, shall
obtain the written approval of AIM Management's Chief Executive
Officer to participate on a board of directors/trustees of any of
the following organizations:
o publicly traded company, partnership or trust;
o hospital or philanthropic institution;*
o local or state municipal authority;* and/or
o charitable organization.*
* These restrictions relate to organizations that have or intend
to raise proceeds in a public securities offering.
In the relatively small number of instances in which board
approval is authorized, investment personnel serving as directors
shall be isolated from those making investment decisions through
AIM's "Chinese Wall" Procedures.
D. Each employee, in making an investment recommendation or taking
any investment action, shall exercise diligence and thoroughness,
and shall have a reasonable and adequate basis for any such
recommendation or action.
E. Each employee shall not attempt to improperly influence for such
person's personal benefit any investment strategy to be followed
or investment action to be taken by the members of AIM for its
client accounts.
F. Each employee shall not improperly use for such person's personal
benefit any knowledge, whether obtained through such person's
relationship with AIM or otherwise, of any investment
recommendation made or to be made, or of any investment action
taken or to be taken by AIM for its client accounts.
G. Employees shall not disclose any non-public information relating
to a client account's portfolio or transactions or to the
investment recommendations of AIM, nor shall any employee disclose
any non-public information relating to the business or operations
of the members of AIM, unless properly authorized to do so.
H. Employees shall not accept, directly or indirectly, from a
broker/dealer or other vendor who transacts business with AIM or
its client accounts, any gifts, gratuities or other things of more
than de minimis value or significance that their acceptance might
reasonably be expected to interfere with or influence the exercise
of independent and objective judgment in carrying out such
person's duties or otherwise gives the appearance of a possible
impropriety. For this purpose, gifts, gratuities and other things
of value shall not include unsolicited entertainment so long as
such unsolicited entertainment is not so frequent or extensive as
to raise any question of impropriety.
I. Employees who are registered representatives and/or principals of
AIM shall not acquire securities for an account for which he/she
has a direct or indirect beneficial interest in an initial public
offering ("IPO") or on behalf of any person, entity or
organization that is not an AIM client. All other employees shall
not acquire securities for an account for which he/she has a
direct or indirect beneficial interest offered in an IPO or on
behalf of any person, entity or organization that is not an AIM
client account except in those circumstances where different
amounts of such offerings are specified for different investor
types (e.g., private investors and institutional investors) and
such transaction has been pre-cleared by the Compliance Office.
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<PAGE> 5
J. All personal securities transactions by employees must be
conducted consistent with this Code and the Procedures adopted
hereunder, and in such a manner as to avoid any actual or
potential conflicts of interest or any abuse of such employee's
position of trust and responsibility. Unless an exemption is
available, employees who are deemed to be "Covered Persons" as
defined in the Procedures adopted hereunder, shall pre-clear all
personal securities transactions in securities in accordance with
the Procedures adopted hereunder.
K. Each employee, who is deemed to be a "Covered Person" as defined
in the Procedures adopted hereunder, (or registered representative
and/or principal of AIM), shall refrain from engaging in personal
securities transactions in connection with a security that is not
registered under Section 12 of the Securities Act of 1933 (i.e., a
private placement security) unless such transaction has been
pre-approved by the Chief Compliance Officer or the Director of
Investments (or their designees).
L. Employees, who are deemed to be "Covered Persons" as defined in
the Procedures adopted hereunder, may not engage in a transaction
in connection with the purchase or sale of a security within seven
calendar days before and after an AIM investment company client
trades in that same (or equivalent) security unless the de minimis
exemption is available.
M. Each employee, who is deemed to be a "Covered Person" as defined
in the Procedures adopted hereunder, may not purchase and
voluntarily sell, or sell and voluntarily purchase the same (or
equivalent) securities of the same issuer within 60 calendar days
unless such employee complies with the disgorgement procedures
adopted by the Code of Ethics Committee. Subject to certain
limited exceptions set forth in the related Procedures, any
transaction under this provision may result in disgorgement
proceedings for any profits received in connection with such
transaction by such employee.
VI. Sanctions
Employees violating the provisions of AIM's Code or any Procedures
adopted hereunder may be subject to sanctions, which may include, among
other things, restrictions on such person's personal securities
transactions; a letter of admonition, education or formal censure;
fines, suspension, re-assignment, demotion or termination of employment;
or other significant remedial action. Employees may also be subject to
disgorgement proceedings for transactions in securities that are
inconsistent with Sections V.L. and V.M. above.
VII. Additional Disclosure
This Code and the related Procedures cannot, and do not, cover every
situation in which choices and decisions must be made, because other
company policies, practices and procedures (as well as good common
sense) and good business judgment also apply. Every person subject to
this Code should read and understand these documents thoroughly. They
present important rules of conduct and operating controls for all
employees. Employees are also expected to present questions to the
attention of their supervisors and to the Chief Compliance Officer (or
designee) and to report suspected violations as specified in these
documents.
For the Boards of Directors:
The AIM Management Group
by: /s/CHARLES T. BAUER
-------------------------------------------------
Charles T. Bauer
AUGUST 17, 1999
-------------------------------------------------
Date
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<PAGE> 1
EXHIBIT o(2)
CODE OF ETHICS
OF
SHORT-TERM INVESTMENTS TRUST
WHEREAS, SHORT-TERM INVESTMENTS TRUST (the "Company") is a registered
investment company under the Investment Company Act of 1940, as amended (the
"ICA");
WHEREAS, Rule 17j-1 under the ICA requires the Company to adopt a Code of
Ethics; and
NOW, THEREFORE, the Company hereby adopts the following Code of Ethics,
effective as of the 5th day of May, 1993.
I. DEFINITIONS
-----------
For the purpose of the Code of Ethics the following terms shall have the
meanings set forth below:
(a) "Access person" means any trustee, officer, or advisory person of the
Company; provided, however, that any person who is an access person of
any investment advisor of, or principal underwriter for, any
registered investment company and who is required by Rule 17j-1 of the
ICA to report his or her securities transactions to such investment
advisor or principal underwriter, shall not be deemed an access person
of the Company.
(b) "Advisory person" means
(i) any employee of the Company, its investment advisor or
administrator (or of any entity in a control relationship with
the Company, its investment advisor or administrator, as defined
in (d) hereof), who, in connection with his or her regular
functions or duties, makes, participates in, or obtains
information (other than publicly available information) regarding
the purchase or sale of a security by the Company, or whose
functions relate to the making of any recommendations with
respect to such purchases or sales; and
(ii) any natural person directly or indirectly owning, controlling,
or holding with power to vote, 25% or more of the outstanding
voting securities of any of the Company, its investment advisor
or administrator, who obtains information (other than publicly
available information) concerning recommendations made by the
Company, its investment advisor or administrator with regard to
the purchase or sale of a security.
(c) "Affiliated persons" or "Affiliates" means
(i) any employee or access person of the Company, and any member of
the immediate family (defined as spouse, child, mother, father,
brother, sister, in-law or any other relative) of any such person
who lives in the same household as such person or who is
financially dependent upon such person;
<PAGE> 2
Code of Ethics of: Page 2
Short-Term Investments Trust
(ii) any account for which any of the persons described in (c)(i)
hereof is a custodian, trustee or otherwise acting in a
fiduciary capacity, or with respect to which any such person
either has the authority to make investment decisions or from
time to time give investment advice; and
(iii) any partnership, corporation, joint venture, trust or other
entity in which any employee of the Company or access person of
the Company directly or indirectly, in the aggregate, has a 10%
or more beneficial interest or for which any such person is a
general partner or an executive officer.
(d) "Control" means the power to exercise a controlling influence over
the management or policies of a corporation. Any person who owns
beneficially, either directly or through one or more controlled
corporations, more than 25% of the voting securities of a corporation
shall be presumed to control such corporation.
(e) "Security" means any note, stock, treasury stock, bond, debenture,
evidence of indebtedness, certificate of interest or participation in
any profit-sharing agreement, collateral-trust certificate,
preorganization certificate or subscription, transferable share,
investment contract, voting-trust certificate, certificate of deposit
for a security, fractional undivided interest in oil, gas, or other
mineral rights, or, in general, any interest or instrument commonly
known as a "security", or any certificate of interest or participation
in, temporary or interim certificate for, receipt of, guarantee of, or
warrant or right to subscribe to or purchase, any of the foregoing;
provided, however, that "security" shall not mean securities issued or
guaranteed by the Government of the United States, its agencies or
instrumentalities, bankers' acceptances, bank certificates of deposit,
commercial paper and shares of registered open-end investment
companies.
(f) "Purchase of sale of a security" includes the writing of an option to
purchase or sell a security.
(g) "Security held or to be acquired" by the Company means any security
which, within the most recent fifteen (15) days, (i) is or has been
held by the Company, or (ii) is being or has been considered by the
Company for purchase by the Company.
(h) "Beneficial ownership of a security" by any person includes
securities held by: (a) a spouse, minor children or relatives who
share the same home with such person; (b) an estate for such person's
benefit; (c) a trust, of which (i) such person is a trustee or such
person or members of such person's immediate family have a vested
interest in the income or corpus of the trust, or (ii) such person
owns a vested beneficial interest, or (iii) such person is the settlor
and such person has the power to revoke the trust without the consent
of all the beneficiaries; (d) a partnership in which such person is a
partner; (e) a corporation (other than with respect to treasury shares
of the corporation) of which such person is an officer, director or
10% stockholder; (f) any other person if, by reason of contract,
understanding, relationship, agreement or other arrangement, such
person obtains therefrom benefits substantially equivalent to those of
ownership; or (g) such person's spouse or minor children or any other
person, if, even though such person does not obtain therefrom the
above-mentioned benefits of ownership, such person can vest or revest
title in himself at once or at some future time. A beneficial owner of
a security also includes any person who, directly or indirectly,
through any contract, arrangement, understanding, relationship or
otherwise, has or shares voting power and/or investment power with
respect to such security. Voting power includes
<PAGE> 3
Code of Ethics of: Page 3
Short-Term Investments Trust
the power to vote, or to direct the voting of such security, and
investment power includes the power to dispose, or to direct the
disposition of such security. A person is the beneficial owner of a
security if he has the right to acquire beneficial ownership of such
security at any time within sixty (60) days.
II. IDENTIFICATION OF ACCESS PERSONS
--------------------------------
(a) The Company will maintain a list of all access persons and will
notify each access person in writing that such person is an access
person. Once a person has been so identified he or she shall continue
to be an access person until otherwise notified in writing by the
Company; provided, however, if such person is an access person solely
because he or she is a trustee of the Company, such person shall
cease to be an access person at the time such person ceases to be a
trustee.
(b) Each access person will be given a copy of the Code of Ethics at the
time such person becomes an access person.
III. COMPLIANCE WITH GOVERNING LAWS, REGULATIONS AND PROCEDURES
----------------------------------------------------------
(a) Each access person shall comply strictly with all applicable federal
and state laws and all rules and regulations of any governmental
agency or self-regulatory organization governing his or her
activities.
(b) Each access person shall comply strictly with procedures established
by the Company to ensure compliance with applicable federal and state
laws and regulations of governmental agencies and self-regulatory
organizations.
(c) Access persons shall not knowingly participate in, assist, or condone
any acts in violation of any statute or regulation governing
securities matters, nor any act which would violate any provision of
this Code of Ethics or any rules adopted thereunder.
IV. CONFIDENTIALITY OF TRANSACTIONS
-------------------------------
(a) Information relating to the Company's portfolio and research and
studies activities is confidential until publicly available. Whenever
statistical information or research is supplied to or requested by the
Company, such information must not be disclosed to any persons other
than as duly authorized by the President or the Board of Trustees of
the Company. If the Company is considering a particular purchase or
sale of a security, this must not be disclosed except to such duly
authorized persons.
(b) If any access person should obtain information concerning the
Company's portfolio (including, the consideration by the Company of
acquiring, or recommending any security for the Company's portfolio),
whether in the course of such person's duties or otherwise, such
person shall respect the confidential nature of this information and
shall not divulge it to anyone unless it is properly part of such
person's services to the Company to do so or such person is
specifically authorized to do so by the President of the Company.
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Short-Term Investments Trust
V. ETHICAL STANDARDS
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(a) Access persons shall conduct themselves in a manner consistent with
the highest ethical standards. They shall avoid any action, whether
for personal profit or otherwise, that results in an actual or
potential conflict of interest, or the appearance of a conflict of
interest, with the Company or which may be otherwise detrimental to
the interests of the Company.
(b) Conflicts of interest generally result from a situation in which an
individual has personal interests in a matter that is or may be
competitive with his responsibilities to another person or entity
(such as the Company) or where an individual has or may have competing
obligations or responsibilities to two or more persons or entities. In
the case of the relationship between the Company on the one hand, and
its employees and access persons and their respective affiliates, on
the other hand, such conflicts may result from the purchase or sale of
securities for the account of the Company and for the account of any
affiliated person or from the purchase or sale for the account of the
Company of securities in which an access person or employee of the
Company, or his or her affiliates has an interest. In these cases, all
potential or actual conflicts must be disclosed and the first
preference and priority must be to avoid such conflicts of interest
whenever possible and, where they unavoidably occur, to resolve them
in a manner not disadvantageous to the Company.
VI. ACTIVITIES AND TRANSACTIONS OF ACCESS PERSONS
---------------------------------------------
(a) No access person shall recommend to, or cause or attempt to cause, the
Company to acquire, dispose of, or hold any security (including, any
option, warrant or other right or interest relating to such security)
which such access person or an affiliate of such access person has
direct or indirect beneficial ownership, unless the access person
shall first disclose to the Board of Trustees all facts reasonably
necessary to identify the nature of the ownership of such access
person or his or her affiliate in such security.
(b) No access person or affiliate of such access person shall engage in a
purchase or sale of a security (including, any option, warrant or
other right or interest relating to such security), other than on
behalf of the Company, with respect to any security, which, to the
actual knowledge of such access person at the time of such purchase or
sale, is (i) being considered for purchase or sale by the Company; or
(ii) being purchased or sold by the Company.
(c) The prohibitions of Section VI(b) above shall not apply to:
(i) Purchases or sales effected in any account over which the
access person has no direct or indirect influence or control.
(ii) Purchases or sales which are nonvolitional on the part of either
the access person or the Company.
(iii) Purchases which are part of an automatic dividend reinvestment
plan.
(iv) Purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of its securities, to
the extent such rights were acquired from such issuer, and sales
of such rights so acquired.
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Short-Term Investments Trust
(v) Purchases or sales which receive the prior approval of the
President of the Company because they are only remotely
potentially harmful to the Company because they would be very
unlikely to affect trading in or the market value of the security,
or because they clearly are not related economically to the
securities to be purchased, sold or held by the Company.
(d) If, in compliance with the limitations and procedures set forth in
this Section VI, any access person or an affiliate of such person
shall engage in a purchase or sale of a security held or to be
acquired by the Company, first preference and priority must be given
to any transactions which involve the Company, and the Company must
have the benefit of the best price obtainable on acquisition and the
best price obtainable on disposition of such securities.
(e) If, as a result of fiduciary obligations to other persons or entities,
an access person believes that such person or an affiliate of such
person is unable to comply with certain provisions of the Code, such
access person shall so advise the Board of Trustees in writing,
setting forth with reasonable specificity the nature of such fiduciary
obligations and the reasons why such access person believes such
person is unable to comply with any such provisions. The Board of
Trustees may, in its discretion, exempt such access person or an
affiliate of such person from any such provisions, if the Board of
Trustees shall determine that the services of such access person are
valuable to the Company and the failure to grant such exemption is
likely to cause such access person to be unable to render services to
the Company. Any access person granted an exemption (including, an
exception for an affiliate of such person) pursuant to this Section
VI(e) shall, within three business days after engaging in a purchase
or sale of a security held or to be acquired by a client, furnish the
Board of Trustees with a written report concerning such transaction,
setting forth the information specified in Section VII(b) hereof.
VII. REPORTING PROCEDURES
--------------------
(a) Except as provided by Sections VII(c) and (d) hereof, every access
person shall report to the Board of Trustees the information described
in Section VII(b) hereof with respect to transactions in any security
in which such access person has, or by reason of such transaction
acquires, any direct or indirect beneficial ownership in the security
(whether or not such security is a security held or to be acquired by
a client); provided, however, that any such report may contain a
statement that the report shall not be construed as an admission by
the person making such report that he has any direct or indirect
beneficial ownership in the security to which the report relates.
(b) Every report required to be made pursuant to Section VII(a) hereof
shall be made not later than ten days after the end of the calendar
quarter in which the transaction to which the report relates was
effected and shall contain the following information:
(i) The date of the transaction, the title and the number of shares,
and the principal amount of each security involved;
(ii) The nature of the transaction (i.e., purchase, sale or any other
type of acquisition or disposition);
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Short-Term Investments Trust
(iii) The price at which the transaction was effected; and
(iv) The name of the broker, dealer or bank with or through whom
the transaction was effected.
(c) Notwithstanding the provisions of Section VII(a) and (b) hereof, no
person shall be required to make a report with respect to
transactions effected for any account over which such person does not
have any direct or indirect influence or control.
(d) Notwithstanding the provisions of Section VII(a) and (b) hereof, an
access person who is not an "interested person" of the Company within
the meaning of Section 2(a)(19) of the ICA, and who would be required
to make a report solely by reason of being a trustee of the Company,
need only report a transaction in a security if such trustee, at the
time of the transaction, knew or, in the ordinary course of
fulfilling his official duties as a trustee of the Company, should
have known, that, during the 15-day period immediately preceding or
after the date of the transaction by the trustee, such security is or
was purchased or sold, or considered by the Company or its investment
advisor for purchase or sale by the Company.
(e) Every access person who beneficially owns, directly or indirectly,
1/2% or more of the stock of any company the securities of which are
eligible for purchase by the Company shall report such holdings to
the Company.
VIII. REVIEW PROCEDURES
-----------------
(a) The reports submitted by access persons pursuant to Section VII(b)
hereof shall be reviewed at least quarterly by the Board of Trustees
or such other persons or committees as shall be designated by the
Board of Trustees, in order to monitor compliance with this Code of
Ethics.
(b) If it is determined by the Board of Trustees that a violation of this
Code of Ethics has occurred and that the person violating this Code
of Ethics has purchased or sold a security at a more advantageous
price than that obtained by the Company, such person shall be
required to offer to sell to or purchase from the Company, as the
case may be, such security at the more advantageous price. If this
cannot be consummated, then the Board of Trustees shall take such
other course of action as it may deem appropriate. With respect to
any violation of this Code of Ethics, the Board of Trustees may take
any preventive, remedial or other action which it may deem
appropriate. In determining whether or not there has been, or may be,
a conflict of interest between the Company and any person subject to
this Code of Ethics, the Board of Trustees shall consider all of the
relevant facts and circumstances.
