<PAGE> 1
As filed with the Securities and Exchange Commission on May 24, 2000
Registration No. 2-58287
Investment Co. Act No. 811-2729
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
---
Pre-Effective Amendment No.
---- ---
Post-Effective Amendment No. 35 X
---- ---
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
---
Amendment No. 36 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>
Jim Coppedge, Esquire Martha J. Hays, Esquire
A I M Advisors, Inc. Ballard Spahr Andrews & Ingersoll, LLP
11 Greenway Plaza, Suite 100 1735 Market Street, 51st Floor
Houston, Texas 77046-1173 Philadelphia, Pennsylvania 19103-7599
Approximate Date of Proposed Public Offering: As soon as practicable after the effective
date of this Amendment
</TABLE>
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b)
- ---
X on June 1, 2000, pursuant to paragraph (b)
- ---
60 days after filing pursuant to paragraph (a)(1)
- ---
on (date) pursuant to paragraph (a)(1)
- ---
75 days after filing pursuant to paragraph (a)(2)
- ---
on (date) pursuant to paragraph (a)(2) of rule 485.
- ---
If appropriate, check the following box:
X 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
GOVERNMENT & AGENCY
PORTFOLIO
------------------------------------------------------------------------
Cash Management Class
Government & Agency Portfolio seeks to maximize current income
consistent with the preservation of capital and the maintenance of
liquidity.
PROSPECTUS
JUNE 1, 2000
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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
<PAGE> 3
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
- - - - - - - - - - - - - - - - - - - - - - - - - -
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 4
Advisor Compensation 4
OTHER INFORMATION 4
- - - - - - - - - - - - - - - - - - - - - - - - - -
Suitability for Investors 4
Dividends and Distributions 4
FINANCIAL HIGHLIGHTS 5
- - - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - - -
Distribution and Service (12b-1) Fees A-1
Purchasing Shares A-1
Redeeming Shares A-1
Pricing of Shares A-2
Taxes A-2
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM
LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La
Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with
DISCIPLINE are registered service marks and AIM Bank Connection and AIM Internet
Connect 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.
<PAGE> 4
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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 investment
objective of the fund may be changed by the Board of Trustees without
shareholder approval.
The fund attempts to meet its objective by investing, normally, at least 65%
of its total assets in direct obligations of the U.S. Treasury, and other
securities issued or guaranteed as to principal and interest by the U.S.
Government or its agencies and instrumentalities (agency securities), as well as
repurchase agreements secured by those obligations. Agency securities may be
supported by:
- - the full faith and credit of the U.S. Treasury;
- - the right of the issuer to borrow from the U.S. Treasury;
- - the discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; or
- - 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. Any percentage limitations with respect to assets of the fund are applied
at the time of purchase.
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 or are sold, and the proceeds are reinvested in securities with
different interest rates.
The following factors could reduce the fund's income and/or share price:
- - sharply rising or falling interest rates; and
- - downgrades of credit ratings or defaults of any of the fund's holdings.
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.
1
<PAGE> 5
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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. The Cash Management Class shares are not subject to sales loads.
[GRAPH]
<TABLE>
<CAPTION>
Annual
Year Ended Total
September 30 Return
- ------------ ------
<S> <C>
1999.................................... 5.05%
</TABLE>
The Cash Management Class shares' year-to-date total return as of March 31, 2000
was 1.41%.
During the period shown in the bar chart, Cash Management Class' highest
quarterly return was 1.35% (quarter ended December 31, 1999) and its lowest
quarterly return was 1.17% (quarter ended March 31, 1999).
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 SINCE INCEPTION
December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash Management Class 5.05% -- -- 5.10% 09/01/98
- ------------------------------------------------------------------------------------------------------
</TABLE>
Cash Management Class shares' seven-day yield on December 31, 1999 was 4.93%.
For the current seven-day yield, call (800) 877-7745.
2
<PAGE> 6
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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>
SHAREHOLDER FEES
- - - - - - - - - - - - - - - - - - - - - - - - - -
(fees paid directly from
your investment) CASH MANAGEMENT CLASS
- ----------------------------------------------
<S> <C>
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
- ----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- - - - - - - - - - - - - - - - - - - - - - - - - -
(expenses that are deducted
from fund assets) CASH MANAGEMENT CLASS
- ----------------------------------------------
<S> <C>
Management Fees 0.10%
Distribution and/or
Service (12b-1) Fees 0.10
Other Expenses 0.10
Total Annual Fund
Operating Expenses(1) 0.30
- ----------------------------------------------
</TABLE>
(1) The distributor has agreed to waive 0.02% of the Rule 12b-1 distribution
plan fee. The investment advisor has agreed to limit Total Annual Fund
Operating Expenses, excluding the Rule 12b-1 distribution plan fee,
interest, taxes, extraordinary items and indirect expenses resulting from
expense offset arrangements (if any), to 0.08%. The waivers and/or
limitations may be terminated at any time. Total Annual Fund Operating
Expenses, net of these agreements, are 0.16%.
You should also consider the effect of any account fees charged by the financial
institution managing your 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>
3
<PAGE> 7
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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 120
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.
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.
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
The fund generally declares dividends on each business day and pays any
dividends monthly.
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.
4
<PAGE> 8
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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).
The information for the period September 1, 1999 through February 29, 2000 is
unaudited. The information for the period September 1, 1998 through August 31,
1999 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
-----------------------------------------------------
FOR THE PERIOD FOR THE PERIOD
SEPTEMBER 1, 1999 SEPTEMBER 1, 1998
THROUGH THROUGH
FEBRUARY 29, 2000 AUGUST 31, 1999
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00
Income from investment operations:
Net investment income 0.03 0.05
Less distributions:
Dividends from net investment income (0.03) (0.05)
Net asset value, end of period $ 1.00 $ 1.00
Total return(a) 2.71% 4.98%
- ----------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ----------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $91,595 $85,113
Ratio of expenses to average net assets:
Including fee waivers and/or expense
reimbursements 0.14%(b) 0.14%
Excluding fee waivers and/or expense
reimbursements 0.28%(b) 0.30%
Ratio of net investment income to average net
assets 5.41%(b) 4.83%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(a) Not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $86,224,758.
5
<PAGE> 9
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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 and service fees of 0.10% per annum to Fund
Management Company (the distributor) for the sale and distribution of its shares
and 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 0843,
Houston, Texas 77001-0843 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 your order. Subsequent purchases of shares of the fund 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 your institution.
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.
REDEMPTIONS BY THE FUND
If the fund determines that you have not provided a correct Social Security or
other tax ID number on your account application, the fund may, at its
discretion, redeem the account and distribute the proceeds to you.
A-1
<PAGE> 10
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
SHAREHOLDER INFORMATION (continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
- 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. 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.
A-2
<PAGE> 11
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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
- ---------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P.O. Box 0843
Houston, TX 77001-0843
BY TELEPHONE: (800) 877-7745
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
</TABLE>
- ---------------------------------------------------------
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
- ----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com INVEST WITH DISCIPLINE
- --Registered Trademark-- --Registered Trademark--
<PAGE> 12
GOVERNMENT & AGENCY
PORTFOLIO
------------------------------------------------------------------------
Institutional Class
Government & Agency Portfolio seeks to maximize current income
consistent with the preservation of capital and the maintenance of
liquidity.
PROSPECTUS
JUNE 1, 2000
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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
<PAGE> 13
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 4
Advisor Compensation 4
OTHER INFORMATION 4
- - - - - - - - - - - - - - - - - - - - - - - - - -
Suitability for Investors 4
Dividends and Distributions 4
FINANCIAL HIGHLIGHTS 5
- - - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - - -
Purchasing Shares A-1
Redeeming Shares A-1
Pricing of Shares A-1
Taxes A-2
STATEMENT OF ADDITIONAL INFORMATION B-1
- - - - - - - - - - - - - - - - - - - - - - - - - -
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM
LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La
Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with
DISCIPLINE are registered service marks and AIM Bank Connection and AIM Internet
Connect 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.
<PAGE> 14
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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 investment
objective of the fund may be changed by the Board of Trustees without
shareholder approval.
The fund attempts to meet its objective by investing, normally, at least 65%
of its total assets in direct obligations of the U.S. Treasury, and other
securities issued or guaranteed as to principal and interest by the U.S.
Government or its agencies and instrumentalities (agency securities), as well as
repurchase agreements secured by those obligations. Agency securities may be
supported by:
- - the full faith and credit of the U.S. Treasury;
- - the right of the issuer to borrow from the U.S. Treasury;
- - the discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; or
- - 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. Any percentage limitations with respect to assets of the fund are applied
at the time of purchase.
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 or are sold, and the proceeds are reinvested in securities with
different interest rates.
The following factors could reduce the fund's income and/or share price:
- - sharply rising or falling interest rates; and
- - downgrades of credit ratings or defaults of any of the fund's holdings.
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.
1
<PAGE> 15
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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. The Institutional Class shares are not subject to sales loads.
[GRAPH]
<TABLE>
<CAPTION>
Annual
Year Ended Total
December 31 Return
- ----------- ------
<S> <C>
1999 .................................. 5.14%
</TABLE>
The Institutional Class shares' year-to-date total return as of March 31, 2000
was 1.43%.
During the period shown in the bar chart, Institutional Class' highest
quarterly return was 1.37% (quarter ended December 31, 1999) and its lowest
quarterly return was 1.19% (quarter ended March 31, 1999).
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 SINCE INCEPTION
December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Institutional Class 5.14% -- -- 5.18% 09/01/98
- ------------------------------------------------------------------------------------
</TABLE>
Institutional Class shares' seven-day yield on December 31, 1999 was 5.01%. For
the current seven-day yield, call (800) 659-1005.
2
<PAGE> 16
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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>
SHAREHOLDER FEES
- - - - - - - - - - - - - - - - - - - - - - - - - -
(fees paid directly from
your investment) INSTITUTIONAL CLASS
- -------------------------------------------------
<S> <C>
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
- -------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- - - - - - - - - - - - - - - - - - - - - - - - - -
(expenses that are deducted
from fund assets) INSTITUTIONAL CLASS
- -------------------------------------------------
<S> <C>
Management Fees 0.10%
Distribution and/or
Service (12b-1) Fees None
Other Expenses 0.10
Total Annual Fund
Operating Expenses(1) 0.20
- -------------------------------------------------
</TABLE>
(1) The investment advisor has agreed to limit Total Annual Fund Operating
Expenses, excluding interest, taxes, extraordinary items and increases for
indirect credits (if any), to 0.08%. This expense limitation can be
terminated any time.
You should also consider the effect of any account fees charged by the financial
institution managing your 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>
3
<PAGE> 17
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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 120
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.
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.
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
The fund generally declares dividends on each business day and pays any
dividends monthly.
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.
4
<PAGE> 18
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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).
The information for the period September 1, 1999 through February 29, 2000 is
unaudited. The information for the period September 1, 1998 through August 31,
1999 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
-------------------------------------------------------------
FOR THE PERIOD FOR THE PERIOD
SEPTEMBER 1, 1999 SEPTEMBER 1, 1998
THROUGH THROUGH
FEBRUARY 29, 2000 AUGUST 31, 1999
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00
Income from investment operations:
Net investment income 0.03 0.05
Less distributions:
Dividends from net investment income (0.03) (0.05)
Net asset value, end of period $ 1.00 $ 1.00
Total return(a) 2.75% 5.07%
- -----------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- -----------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $325,686 $139,860
Ratio of expenses to average net assets:
Including fee waivers and/or expense
reimbursements 0.06%(b) 0.06%
Excluding fee waivers and/or expense
reimbursements 0.18%(b) 0.20%
Ratio of net investment income to average
net assets 5.49%(b) 4.91%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(a) Not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $265,446,920.
5
<PAGE> 19
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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 0843,
Houston, Texas 77001-0843 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 your order. Subsequent purchases of
shares of the fund 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.
REDEMPTIONS BY THE FUND
If the fund determines that you have not provided a correct Social Security or
other tax ID number on your account application, the fund may, at its
discretion, redeem the account and distribute the proceeds to you.
- -------------------------------------------------------------------------------
THE FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
- 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.
A-1
<PAGE> 20
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
SHAREHOLDER INFORMATION (continued)
- --------------------------------------------------------------------------------
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. 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.
A-2
<PAGE> 21
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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
- ---------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P. O. Box 0843
Houston, TX 77001-0843
BY TELEPHONE: (800) 659-1005
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
</TABLE>
- ---------------------------------------------------------
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
- -----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com INVEST WITH DISCIPLINE
- --Registered Trademark-- --Registered Trademark--
<PAGE> 22
GOVERNMENT & AGENCY
PORTFOLIO
- --------------------------------------------------------------------------------
Personal Investment Class
Government & Agency Portfolio seeks to maximize current income
consistent with the preservation of capital and the maintenance of
liquidity.
PROSPECTUS
JUNE 1, 2000
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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
<PAGE> 23
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 4
Advisor Compensation 4
OTHER INFORMATION 4
- - - - - - - - - - - - - - - - - - - - - - - - -
Suitability for Investors 4
Dividends and Distributions 4
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - -
Distribution and Service (12b-1) Fees A-1
Purchasing Shares A-1
Redeeming Shares A-1
Pricing of Shares A-2
Taxes A-2
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM
LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La
Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with
DISCIPLINE are registered service marks and AIM Bank Connection and AIM Internet
Connect 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.
<PAGE> 24
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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 investment
objective of the fund may be changed by the Board of Trustees without
shareholder approval.
The fund attempts to meet its objective by investing, normally, at least 65%
of its total assets in direct obligations of the U.S. Treasury, and other
securities issued or guaranteed as to principal and interest by the U.S.
Government or its agencies and instrumentalities (agency securities), as well as
repurchase agreements secured by those obligations. Agency securities may be
supported by:
- - the full faith and credit of the U.S. Treasury;
- - the right of the issuer to borrow from the U.S. Treasury;
- - the discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; or
- - 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. Any percentage limitations with respect to assets of the fund are applied
at the time of purchase.
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 or are sold, and the proceeds are reinvested in securities with
different interest rates.
The following factors could reduce the fund's income and/or share price:
- - sharply rising or falling interest rates; and
- - downgrades of credit ratings or defaults of any of the fund's holdings.
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.
1
<PAGE> 25
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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. Neither the Personal Investment Class shares nor the Institutional
Class shares are subject to sales loads.
[GRAPH]
<TABLE>
<CAPTION>
Annual
Year Ended Total
December 31 Return
- ----------- ------
<S> <C>
1999.................................... 5.14%
</TABLE>
The return shown is that of the fund's Institutional Class shares, which are not
offered in this prospectus. Personal Investment Class shares would have a lower
annual return because, although the shares are invested in the same portfolio of
securities, the Personal Investment Class has higher expenses.
The Institutional Class shares' year-to-date total return as of March 31, 2000
was 1.43%.
During the period shown in the bar chart, Institutional Class' highest
quarterly return was 1.37% (quarter ended December 31, 1999) and its lowest
quarterly return was 1.19% (quarter ended March 31, 1999).
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 SINCE INCEPTION
December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Institutional Class 5.14% -- -- 5.18% 09/01/98
- ------------------------------------------------------------------------------------------------------
Personal Investment Class -- -- -- -- 01/31/00
- ------------------------------------------------------------------------------------------------------
</TABLE>
Institutional Class shares' seven-day yield on December 31, 1999 was 5.01%. For
the current seven-day yield of Personal Investment Class, call (800) 877-4744.
2
<PAGE> 26
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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>
SHAREHOLDER FEES
- - - - - - - - - - - - - - - - - - - - - - - - -
(fees paid directly from PERSONAL
your investment) INVESTMENT CLASS
- -----------------------------------------------
<S> <C>
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
- -----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- - - - - - - - - - - - - - - - - - - - - - - - -
(expenses that are deducted PERSONAL
from fund assets) INVESTMENT CLASS
- -------------------------------------------------
<S> <C>
Management Fees 0.10%
Distribution and/or
Service (12b-1) Fees 0.75
Other Expenses 0.10
Total Annual Fund
Operating Expenses(1) 0.95
- -------------------------------------------------
</TABLE>
(1) The distributor has agreed to waive 0.25% of the Rule 12b-1 distribution
plan fee. The investment advisor has agreed to limit Total Annual Fund
Operating Expenses, excluding the Rule 12b-1 distribution plan fee,
interest, taxes, extraordinary items and indirect expenses resulting from
expense offset arrangements (if any), to 0.08%. The waiver and/or limitation
can be terminated at any time. Total Annual Fund Operating Expenses, net of
these agreements, are 0.58%.
You should also consider the effect of any account fees charged by the financial
institution managing your 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>
3
<PAGE> 27
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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 120
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.
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.
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
The fund generally declares dividends on each business day and pays any
dividends monthly.
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.
4
<PAGE> 28
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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 and service fees of 0.75% per annum to
Fund Management Company (distributor) for the sale and distribution of its
shares and 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 0843,
Houston, Texas 77001-0843 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 your order. Subsequent purchases of shares of the fund 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 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.
REDEMPTIONS BY THE FUND
If the fund determines that you have not provided a correct Social Security or
other tax ID number on your account application, the fund may, at its
discretion, redeem the account and distribute the proceeds to you.
A-1
<PAGE> 29
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
SHAREHOLDER INFORMATION (continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
- 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. 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.
A-2
<PAGE> 30
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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
- ---------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P. O. Box 0843
Houston, TX 77001-0843
BY TELEPHONE: (800) 877-4744
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports only)
</TABLE>
- ---------------------------------------------------------
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
- -----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com INVEST WITH DISCIPLINE
- --Registered Trademark-- --Registered Trademark--
<PAGE> 31
GOVERNMENT & AGENCY
PORTFOLIO
------------------------------------------------------------------------
Private Investment Class
Government & Agency Portfolio seeks to maximize current income
consistent with the preservation of capital and the maintenance of
liquidity.
PROSPECTUS
JUNE 1, 2000
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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
<PAGE> 32
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 4
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 4
Advisor Compensation 4
OTHER INFORMATION 4
- - - - - - - - - - - - - - - - - - - - - - - - - -
Suitability for Investors 4
Dividends and Distributions 4
FINANCIAL HIGHLIGHTS 5
- - - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - - -
Distribution and Service (12b-1) Fees A-1
Purchasing Shares A-1
Redeeming Shares A-1
Pricing of Shares A-2
Taxes A-2
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM
LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La
Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with
DISCIPLINE are registered service marks and AIM Bank Connection and AIM Internet
Connect 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.
<PAGE> 33
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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 investment
objective of the fund may be changed by the Board of Trustees without
shareholder approval.
The fund attempts to meet its objective by investing, normally, at least 65%
of its total assets in direct obligations of the U.S. Treasury, and other
securities issued or guaranteed as to principal and interest by the U.S.
Government or its agencies and instrumentalities (agency securities), as well as
repurchase agreements secured by those obligations. Agency securities may be
supported by:
- - the full faith and credit of the U.S. Treasury;
- - the right of the issuer to borrow from the U.S. Treasury;
- - the discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; or
- - the credit of the agency or 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. Any percentage limitations with respect to assets of the fund are applied
at the time of purchase.
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 or are sold, and the proceeds are reinvested in securities with
different interest rates.
The following factors could reduce the fund's income and/or share price:
- - sharply rising or falling interest rates; and
- - downgrades of credit ratings or defaults of any of the fund's holdings.
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.
1
<PAGE> 34
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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. The Private Investment Class shares are not subject to
sales loads.
[GRAPH]
<TABLE>
<CAPTION>
Annual
Year Ended Total
December 31 Return
- ----------- ------
<S> <C>
1999 .................................. 4.82%
</TABLE>
The Private Investment Class shares' year-to-date total return as of March 31,
2000 was 1.35%.
During the period shown in the bar chart, Private Investment Class' highest
quarterly return was 1.29% (quarter ended December 31, 1999) and the lowest
quarterly return was 1.12% (quarters ended March 31, 1999 and June 30, 1999).
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 SINCE INCEPTION
December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Private Investment Class 4.82% -- -- 4.87% 09/01/98
- -----------------------------------------------------------------------------
</TABLE>
Private Investment Class shares' seven-day yield on December 31, 1999 was 4.71%.
For the current seven-day yield, call (800) 877-7748.
2
<PAGE> 35
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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>
SHAREHOLDER FEES
- - - - - - - - - - - - - - - - - - - - - - - - - -
(fees paid directly from
your investment) PRIVATE INVESTMENT CLASS
- -------------------------------------------------
<S> <C>
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
- -------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- - - - - - - - - - - - - - - - - - - - - - - - - -
(expenses that are deducted
from fund assets) PRIVATE INVESTMENT CLASS
- -------------------------------------------------
<S> <C>
Management Fees 0.10%
Distribution and/or
Service (12b-1) Fees 0.50
Other Expenses 0.10
Total Annual Fund
Operating Expenses(1) 0.70
- -------------------------------------------------
</TABLE>
(1) The distributor has agreed to waive 0.20% of the Rule 12b-1 distribution
plan fee. The investment advisor has agreed to limit Total Annual Fund
Operating Expenses, excluding the Rule 12b-1 distribution plan fee,
interest, taxes, extraordinary items and indirect expenses resulting from
expense offset arrangements (if any), to 0.08%. The waivers and/or
limitations may be terminated at any time. Total Annual Fund Operating
Expenses, net of these agreements, are 0.38%.
You should also consider the effect of any account fees charged by the financial
institution managing your 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>
3
<PAGE> 36
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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 120
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.
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.
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
The fund generally declares dividends on each business day and pays any
dividends monthly.
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.
4
<PAGE> 37
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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).
The information for the period September 1, 1999 through February 29, 2000 is
unaudited. The information for the period September 1, 1998 through August 31,
1999 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 FOR THE PERIOD
SEPTEMBER 1, 1999 SEPTEMBER 1, 1998
THROUGH THROUGH
FEBRUARY 29, 2000 AUGUST 31, 1999
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00
Income from investment operations:
Net investment income 0.03 0.05
Less distributions:
Dividends from net investment income (0.03) (0.05)
Net asset value, end of period $ 1.00 $ 1.00
Total return(a) 2.59% 4.75%
- ----------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ----------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $51,055 $45,528
Ratio of expenses to average net assets:
Including fee waivers and/or expense reimbursements 0.36%(b) 0.36%
Excluding fee waivers and/or expense reimbursements 0.68%(b) 0.70%
Ratio of net investment income to average net assets 5.19%(b) 4.62%
- ----------------------------------------------------------------------------------------------------
</TABLE>
(a) Not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $47,554,865.
5
<PAGE> 38
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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 and service fees of 0.50% per annum to
Fund Management Company (distributor) for the sale and distribution of its
shares and 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 0843,
Houston, Texas 77001-0843 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 your order. Subsequent purchases of shares of the fund 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 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.
REDEMPTIONS BY THE FUND
If the fund determines that you have not provided a correct Social Security or
other tax ID number on your account application, the fund may, at its
discretion, redeem the account and distribute the proceeds to you.
A-1
<PAGE> 39
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
SHAREHOLDER INFORMATION (continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
- 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. 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.
A-2
<PAGE> 40
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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
- ------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P. O. Box 0843
Houston, TX 77001-0843
BY TELEPHONE: (800) 877-7748
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
</TABLE>
- ------------------------------------------------------
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
- -----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com INVEST WITH DISCIPLINE
- --Registered Trademark-- --Registered Trademark--
<PAGE> 41
GOVERNMENT & AGENCY PORTFOLIO
------------------------------------------------------------------------
Reserve Class
Government & Agency Portfolio seeks to maximize current income
consistent with the preservation of capital and the maintenance of
liquidity.
PROSPECTUS
JUNE 1, 2000
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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
- --Registered Trademark-- --Registered Trademark--
<PAGE> 42
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 4
Advisor Compensation 4
OTHER INFORMATION 4
- - - - - - - - - - - - - - - - - - - - - - - - -
Suitability for Investors 4
Dividends and Distributions 4
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - -
Distribution and Service (12b-1) Fees A-1
Purchasing Shares A-1
Redeeming Shares A-1
Pricing of Shares A-2
Taxes A-2
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM
LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La
Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with
DISCIPLINE are registered service marks and AIM Bank Connection and AIM Internet
Connect 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.
<PAGE> 43
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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 investment
objective of the fund may be changed by the Board of Trustees without
shareholder approval.
The fund attempts to meet its objective by investing, normally, at least 65%
of its total assets in direct obligations of the U.S. Treasury, and other
securities issued or guaranteed as to principal and interest by the U.S.
Government or its agencies and instrumentalities (agency securities), as well as
repurchase agreements secured by those obligations. Agency securities may be
supported by:
- - the full faith and credit of the U.S. Treasury;
- - the right of the issuer to borrow from the U.S. Treasury;
- - the discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; or
- - 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. Any percentage limitations with respect to assets of the fund are applied
at the time of purchase.
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 or are sold, and the proceeds are reinvested in securities with
different interest rates.
The following factors could reduce the fund's income and/or share price:
- - sharply rising or falling interest rates; and
- - downgrades of credit ratings or defaults of any of the fund's holdings.
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.
1
<PAGE> 44
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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. Neither the Reserve Class shares nor the Institutional Class
shares are subject to sales loads.
[GRAPH]
<TABLE>
<CAPTION>
Annual
Year Ended Total
December 31 Return
- ----------- ------
<S> <C>
1999.................................... 5.14%
</TABLE>
The return shown is that of the fund's Institutional Class shares, which are not
offered in this prospectus. Reserve Class shares would have a lower annual
return because, although the shares are invested in the same portfolio of
securities, the Reserve Class has higher expenses.
The Institutional Class shares' year-to-date total return as of March 31, 2000
was 1.43%.
During the period shown in the bar chart, Institutional Class' highest
quarterly return was 1.37% (quarter ended December 31, 1999) and its lowest
quarterly return was 1.19% (quarter ended March 31, 1999).
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 SINCE INCEPTION
December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Institutional Class 5.14% -- -- 5.18% 09/01/98
- ---------------------------------------------------------------------------
Reserve Class -- -- -- -- 01/26/00
- ---------------------------------------------------------------------------
</TABLE>
Institutional Class shares' seven-day yield on December 31, 1999 was 5.01%. For
the current seven-day yield of Reserve Class shares, call (800) 417-8837.
2
<PAGE> 45
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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>
SHAREHOLDER FEES
- - - - - - - - - - - - - - - - - - - - - - - - -
(fees paid directly from
your investment) RESERVE CLASS
- -----------------------------------------------
<S> <C>
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
- -----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- - - - - - - - - - - - - - - - - - - - - - - - -
(expenses that are deducted
from fund assets) RESERVE CLASS
- -----------------------------------------------
<S> <C>
Management Fees 0.10%
Distribution and/or
Service (12b-1) Fees 1.00
Other Expenses 0.10
Total Annual Fund
Operating Expenses(1) 1.20
- -----------------------------------------------
</TABLE>
(1) The distributor has agreed to waive 0.20% of the Rule 12b-1 distribution
plan fee. The investment advisor has agreed to limit Total Annual Fund
Operating Expenses, excluding the Rule 12b-1 distribution plan fee,
interest, taxes, extraordinary items and indirect expenses resulting from
expense offset arrangements (if any), to 0.08%. The waivers and/or
limitations may be terminated at any time. Total Annual Fund Operating
Expenses, net of these agreements, are 0.88%.
You should also consider the effect of any account fees charged by the financial
institution managing your 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>
3
<PAGE> 46
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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 120
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.
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.
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
The fund generally declares dividends on each business day and pays any
dividends monthly.
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.
4
<PAGE> 47
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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 and service fees of 1.00% per annum to Fund
Management Company (distributor) for the sale and distribution of its shares and
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 0843,
Houston, Texas 77001-0843 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 your order. Subsequent purchases of shares of the fund 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 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.
REDEMPTIONS BY THE FUND
If the fund determines that you have not provided a correct Social Security or
other tax ID number on your account application, the fund may, at its
discretion, redeem the account and distribute the proceeds to you.
A-1
<PAGE> 48
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
SHAREHOLDER INFORMATION (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
- 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. 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.
A-2
<PAGE> 49
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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
- ------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P. O. Box 0843
Houston, TX 77001-0843
BY TELEPHONE: (800) 417-8837
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
</TABLE>
- ------------------------------------------------------
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
- ----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com INVEST WITH DISCIPLINE
- --Registered Trademark-- --Registered Trademark--
<PAGE> 50
GOVERNMENT & AGENCY
PORTFOLIO
------------------------------------------------------------------------
Resource Class
Government & Agency Portfolio seeks to maximize current income
consistent with the preservation of capital and the maintenance of
liquidity.
PROSPECTUS
JUNE 1, 2000
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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
<PAGE> 51
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 4
Advisor Compensation 4
OTHER INFORMATION 4
- - - - - - - - - - - - - - - - - - - - - - - - - -
Suitability for Investors 4
Dividends and Distributions 4
FINANCIAL HIGHLIGHTS 5
- - - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - - -
Distribution and Service (12b-1) Fees A-1
Purchasing Shares A-1
Redeeming Shares A-1
Pricing of Shares A-2
Taxes A-2
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM
LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La
Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with
DISCIPLINE are registered service marks and AIM Bank Connection and AIM Internet
Connect 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.
<PAGE> 52
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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 investment
objective of the fund may be changed by the Board of Trustees without
shareholder approval.
The fund attempts to meet its objective by investing, normally, at least 65%
of its total assets in direct obligations of the U.S. Treasury, and other
securities issued or guaranteed as to principal and interest by the U.S.
Government or its agencies and instrumentalities (agency securities), as well as
repurchase agreements secured by those obligations. Agency securities may be
supported by:
- - the full faith and credit of the U.S. Treasury;
- - the right of the issuer to borrow from the U.S. Treasury;
- - the discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; or
- - 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. Any percentage limitations with respect to assets of the fund are applied
at the time of purchase.
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 or are sold, and the proceeds are reinvested in securities with
different interest rates.
The following factors could reduce the fund's income and/or share price:
- - sharply rising or falling interest rates; and
- - downgrades of credit ratings or defaults of any of the fund's holdings.
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.
1
<PAGE> 53
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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. The Resource Class shares are not subject to sales loads.
[GRAPH]
<TABLE>
<CAPTION>
Annual
Year Ended Total
December 31 Return
- ----------- ------
<S> <C>
1999 .................................... 4.97%
</TABLE>
The Resource Class shares' year-to-date total return as of March 31, 2000 was
1.39%.
During the period shown in the bar chart, Resource Class' highest quarterly
return was 1.33% (quarter ended December 31, 1999) and its lowest quarterly
return was 1.15% (quarter ended March 31, 1999).
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 SINCE INCEPTION
December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Resource Class 4.97% -- -- 5.02% 09/01/98
- ---------------------------------------------------------------------------
</TABLE>
Resource Class shares' seven-day yield on December 31, 1999 was 4.85%. For the
current seven-day yield, call (800) 825-6858.
2
<PAGE> 54
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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>
SHAREHOLDER FEES
- - - - - - - - - - - - - - - - - - - - - - - - -
(fees paid directly from
your investment) RESOURCE CLASS
- -----------------------------------------------
<S> <C>
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
- -----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- - - - - - - - - - - - - - - - - - - - - - - - -
(expenses that are deducted
from fund assets) RESOURCE CLASS
- -----------------------------------------------
<S> <C>
Management Fees 0.10%
Distribution and/or
Service (12b-1) Fees 0.20
Other Expenses 0.10
Total Annual Fund
Operating Expenses(1) 0.40
- -----------------------------------------------
</TABLE>
(1) The distributor has agreed to waive 0.04% of the Rule 12b-1 distribution
plan fee. The investment advisor has agreed to limit Total Annual Fund
Operating Expenses, excluding the Rule 12b-1 distribution plan fee,
interest, taxes, extraordinary items and indirect expenses resulting from
expense offset arrangements (if any), to 0.08%. The waivers and/or
limitations may be terminated at any time. Total Annual Fund Operating
Expenses, net of these agreements, are 0.24%.
You should also consider the effect of any account fees charged by the financial
institution managing your 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>
3
<PAGE> 55
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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 120
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.
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.
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
The fund generally declares dividends on each business day and pays any
dividends monthly.
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.
4
<PAGE> 56
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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).
The information for the period September 1, 1999 through February 29, 2000 is
unaudited. The information for the period September 1, 1998 through August 31,
1999 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 FOR THE PERIOD
SEPTEMBER 1, 1999 SEPTEMBER 1, 1998
THROUGH THROUGH
FEBRUARY 29, 2000 AUGUST 31, 1999
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00
Income from investment operations:
Net investment income 0.03 0.05
Less distributions:
Dividends from net investment income (0.03) (0.05)
Net asset value, end of period $ 1.00 $ 1.00
Total return(a) 2.66% 4.90%
- ---------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ---------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $54,003 $11,684
Ratio of expenses to average net assets:
Including fee waivers and/or expense reimbursements 0.22%(b) 0.22%
Excluding fee waivers and/or expense reimbursements 0.38%(b) 0.40%
Ratio of net investment income to average net assets 5.33%(b) 4.75%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(a) Not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $47,635,809.
5
<PAGE> 57
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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 and service fees of 0.20% per annum to Fund
Management Company (distributor) for the sale and distribution of its shares and
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 0843,
Houston, Texas 77001-0843 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 your order. Subsequent purchases of shares of the fund 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 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.
REDEMPTIONS BY THE FUND
If the fund determines that you have not provided a correct Social Security or
other tax ID number on your account application, the fund may, at its
discretion, redeem the account and distribute the proceeds to you.
A-1
<PAGE> 58
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
SHAREHOLDER INFORMATION (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
- 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. 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.
A-2
<PAGE> 59
-----------------------------
GOVERNMENT & AGENCY PORTFOLIO
-----------------------------
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
- ------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P.O. Box 0843
Houston, TX 77001-0843
BY TELEPHONE: (800) 825-6858
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
</TABLE>
- ------------------------------------------------------
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
- ----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com INVEST WITH DISCIPLINE
- --Registered Trademark-- --Registered Trademark--
<PAGE> 60
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 JUNE 1, 2000
RELATING TO THE PROSPECTUS OF EACH OF THE FOLLOWING CLASSES OF THE
GOVERNMENT & AGENCY PORTFOLIO:
CASH MANAGEMENT CLASS PROSPECTUS DATED JUNE 1, 2000,
INSTITUTIONAL CLASS PROSPECTUS DATED JUNE 1, 2000,
PERSONAL INVESTMENT CLASS PROSPECTUS DATED JUNE 1, 2000,
PRIVATE INVESTMENT CLASS PROSPECTUS DATED JUNE 1, 2000,
RESERVE CLASS PROSPECTUS DATED JUNE 1, 2000
AND RESOURCE CLASS PROSPECTUS DATED JUNE 1, 2000
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Introduction................................................ B-3
General Information about the Trust......................... B-3
The Trust and Its Shares............................... B-3
Portfolio Transactions and Brokerage........................ B-5
General Brokerage Policy............................... B-5
Allocation of Portfolio Transactions................... B-6
Section 28(e) Standards................................ B-6
Share Purchases and Redemptions............................. B-7
Purchases and Redemptions.............................. B-7
Redemptions by the Portfolio........................... B-7
Net Asset Value Determination.......................... B-7
Distribution Agreement................................. B-8
Distribution Plan...................................... B-8
Banking Regulations.................................... B-10
Performance Information................................ B-10
Investment Program and Restrictions......................... B-11
Investment Program..................................... B-11
Investment Policies.................................... B-12
Investment Restrictions................................ B-13
Management.................................................. B-15
Trustees and Officers.................................. B-15
Remuneration of Trustees............................... B-17
Investment Advisor..................................... B-19
Administrative Services................................ B-20
Expenses............................................... B-20
Transfer Agent and Custodian........................... B-21
Legal Matters.......................................... B-21
Reports................................................ B-21
Sub-Accounting......................................... B-21
Principal Holders of Securities........................ B-21
Dividends, Distributions and Tax Matters.................... B-30
Dividends and Distributions............................ B-30
Tax Matters............................................ B-30
Qualification as a Regulated Investment Company........ B-30
Excise Tax on Regulated Investment Companies........... B-31
Portfolio Distributions................................ B-31
Sale or Redemption of Shares........................... B-32
Foreign Shareholders................................... B-32
Effect of Future Legislation; Local Tax
Considerations........................................ B-32
Financial Statements........................................ FS
</TABLE>
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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 June 1,
2000, the Institutional Class Prospectus dated June 1, 2000, the Personal
Investment Class Prospectus dated June 1, 2000, the Private Investment Class
Prospectus dated June 1, 2000, the Reserve Class Prospectus dated June 1, 2000
and the Resource Class Prospectus dated June 1, 2000 (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 Government
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 the Government TaxAdvantage Portfolio are offered
pursuant to separate prospectuses and separate statements of additional
information.
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.
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
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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. 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 further 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 also 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
or her official capacity for the Trust, that his or her conduct was in the
Trust's best interests, (2) in all other cases, that his or her conduct was at
least not opposed to the Trust's best interest 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 or she 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. 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. 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.
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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 or spread (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.
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 or account 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.
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ALLOCATION OF PORTFOLIO TRANSACTIONS
AIM and its affiliates manage numerous 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, the Portfolio 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.
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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 0843, Houston, Texas
77001-0843. 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 or her 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 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.
NET ASSET VALUE DETERMINATION
The net asset value per share of each class 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.
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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 has established 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. Mail addressed to FMC should be sent to P.O. Box 4497, Houston,
Texas 77210-4497. 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 the 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 Portfolio's 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.
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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 of customer cash
account balances in the shares of these classes; (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 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
Resources Class, respectively). With respect to the Cash Management Class,
Private Investment Class, and Resources Class, FMC received no compensation
pursuant to the Plan for the fiscal year ended August 31, 1999. During the
fiscal year ended August 31, 1999, FMC 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 or her 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.
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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
On November 12, 1999, the Gramm-Leach-Bliley Act of 1999 was signed into law.
This Act removed the regulatory barriers previously established between banks
and bank holding companies, and insurance companies and broker-dealers. Various
provisions of this Act became effective immediately, and others will become
effective through November 2000. While the ultimate effect of such legislation
is unclear, financial holding companies and their affiliated bank and financial
subsidiaries will be able to participate in the distribution of mutual fund
shares.
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 February 29, 2000, the current and effective
yields for the Private Investment Class were 5.49% and 5.64%, respectively. For
the seven-day period ended February 29, 2000, the current and effective yields
for the Institutional Class were 5.79% and 5.96%, respectively. For the
seven-day period ended February 29, 2000, the current and effective yields for
the Cash Management Class were 5.71% and 5.88%, respectively. As February 29,
2000, the Personal Investment Class and the Reserve Class had not commenced
operations. For the seven-day period ended February 29, 2000, the current and
effective yields for the Resource Class were 5.63% and 5.79%, 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.
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The Trust may compare the performance of a class or the performance of
securities in which it may invest to:
- iMoneyNet, Inc., formerly IBC Financial Data, Inc., 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 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 is set forth in
each Prospectus under the heading "Investment Objective and Strategies." 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.
Set forth in this section is a description of the Portfolio's investment
policies, strategies and practices. The investment objective of the Portfolio is
non-fundamental and may be changed by the Board of Trustees without shareholder
approval. The Portfolio's investment policies, strategies and practices are also
non-fundamental. The Board of Trustees of the Trust reserves the right to change
any of these non-fundamental investment policies, strategies or practices
without shareholder approval. However, shareholders will be notified before any
material change in the investment policies becomes effective. The Portfolio has
adopted certain investment restrictions, some of which are fundamental and
cannot be changed without shareholder approval. See "Investment Program and
Restrictions -- Investment Restrictions" in this Statement of Additional
Information. Any percentage limitations with respect to assets of the Portfolio
will be applied at the time of purchase. A later change in percentage resulting
from changes in asset values will not be considered a violation of the
percentage limitations. The percentage limitations applicable to borrowings
will be applied in accordance with applicable provisions of the 1940 Act and the
rules and regulations promulgated thereunder which specifically limit the
Portfolio's borrowing abilities.
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.
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.
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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
GOVERNMENT OBLIGATIONS. The Portfolio may invest in securities issued or
guaranteed as to principal and interest by the U.S. Government or by its
agencies or instrumentalities. Such obligations may be supported (a) by the full
faith and credit of the U.S. Treasury (as in the case of Government National
Mortgage Association Certificates), (b) by the right of the issuer to borrow
from the U.S. Treasury (as in the case of obligations of the Federal Home Loan
Bank), (c) by discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality (as in the case of the Federal
National Mortgage Association), or (d) only by the credit of the agency or
instrumentality itself (as in the case of obligations of the Federal Farm Credit
Bank). No assurance can be given that the U.S. Government will provide financial
support to such U.S. Government sponsored agencies or instrumentalities in the
future and it is not obligated by law to renew, grant or extend future financial
support.
REPURCHASE AGREEMENTS. The Portfolio intends to invest in repurchase
agreements with banks and broker-dealers pertaining to the securities described
above and which at the date of purchase are "First Tier" securities as defined
in Rule 2a-7 under the 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 1940 Act.
ILLIQUID SECURITIES. The Portfolio will invest no more than 10% of its net
assets in illiquid securities.
INTERFUND LOANS. The Portfolio may lend up to 33 1/3% of its total assets to
another AIM Fund, on such terms and conditions as the SEC may require in an
exemptive order. An application for exemptive relief has been filed with the SEC
on behalf of the Portfolio and other AIM Funds. The Portfolio may also borrow
from another AIM Fund to satisfy redemption requests or to cover unanticipated
cash shortfalls due to a delay in the delivery of cash to the Portfolio's
custodian or improper delivery instructions by a broker effectuating a
transaction. It is anticipated that the Portfolio would not participate as a
borrower in the interfund lending facility because it would rarely need to
borrow cash to meet redemptions; however, it is anticipated that the Portfolio
will be a lender to other AIM Funds under the interfund lending facility.
INVESTMENTS IN OTHER INVESTMENT COMPANIES. The Portfolio may invest in other
investment companies to the extent permitted by the 1940 Act, and rules and
regulations thereunder, and if applicable, exemptive orders granted by the SEC.
The following restrictions apply to investments in other investment companies:
(i) the Portfolio may not purchase more than 3% of the total outstanding voting
stock of another investment company; (ii) the Portfolio may not invest more than
5% of its total assets in securities issued by another investment company: and
(iii) the Portfolio may not invest more than 10% of its total assets in
securities issued by other investment companies. With respect to the Portfolio's
purchase of shares of another investment company, the Portfolio will indirectly
bear its proportionate share of the advisory fees and other operating expenses
of such investment company.
LENDING OF PORTFOLIO SECURITIES. Consistent with applicable regulatory
requirements the Portfolio may lend its portfolio securities (principally to
broker-dealers) to the extent of one-third of its total assets. Such loans would
be callable at any time and would be continuously secured by collateral equal to
no less than the market value, determined daily, of the loaned securities. Such
collateral will be cash or debt securities issued or guaranteed by the U.S.
Government or any of its agencies. The Portfolio would continue to receive the
income on loaned securities and would, at the same time, earn interest on the
loan collateral or on the investment of the loan collateral if it were cash. Any
cash collateral pursuant to these loans would be invested in short-term money
market instruments or affiliated money market funds. Where voting or consent
rights with respect to loaned securities pass to the borrower, the Portfolio
will follow the policy of calling the loan, in whole or in part as may be
appropriate, to permit the exercise of such voting or consent rights if the
matters involved are expected to have a material effect on the Portfolio's
investment in the loaned securities. Lending securities entails a risk of loss
to the Portfolio if and to the extent that the market value of the securities
loaned were to increase and the lender did not increase the collateral
accordingly.
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PORTFOLIO TRANSACTIONS. The Portfolio does not seek profits through short-term
trading and will generally hold portfolio securities to maturity, but AIM may
seek to enhance the yield of the Portfolio by taking advantage of yield
disparities or other factors that occur in the money markets. For example,
market conditions frequently result in similar securities trading at different
prices. AIM may dispose of any portfolio security prior to its maturity if such
disposition and reinvestment of proceeds are expected to enhance yield
consistent with AIM's judgment as to desirable portfolio maturity structure or
if such disposition is believed to be advisable due to other circumstances or
conditions. Securities held by the Portfolio will be disposed of prior to
maturity if an earlier disposition is deemed desirable by AIM to meet redemption
requests. In addition, AIM will continually monitor the creditworthiness of
issuers whose securities are held by the Portfolio, and securities held by the
Portfolio may be disposed of prior to maturity as a result of a revised credit
evaluation of the issuer or other circumstances or considerations. The
Portfolio's policy of investing in securities with maturities of 397 days or
less will result in high portfolio turnover. Since brokerage commissions are not
normally paid on investments of the type made by the Portfolio, the high
turnover rate should not adversely affect the Portfolio's net income.
PURCHASING DELAYED DELIVERY SECURITIES. In managing the Portfolio's
investments, AIM may indicate to dealers or issuers its interest in acquiring
certain securities for the Portfolio for settlement beyond a customary
settlement date. In some cases, the Portfolio may agree to purchase such
securities at stated prices and yields. In such cases, such securities are
considered "delayed delivery" securities when traded in the secondary market.
Since this is done to facilitate the acquisition of portfolio securities and is
not for the purpose of investment leverage, the amount of delayed delivery
securities involved may not exceed the estimated amount of funds available for
investment on the settlement date. Until the settlement date, liquid assets of
the Portfolio with a dollar value sufficient at all times to make payment for
the delayed delivery securities will be segregated. The total amount of
segregated liquid assets may not exceed 25% of the Portfolio's total assets. The
delayed delivery securities, which will not begin to accrue interest until the
settlement date, will be recorded as an asset of the Portfolio and will be
subject to the risks of market value fluctuations. The purchase price of the
delayed delivery securities will be recorded as a liability of the Portfolio
until settlement. Absent extraordinary circumstances, the Portfolio's right to
acquire delayed delivery securities will not be divested prior to the settlement
date.
MARGIN TRANSACTIONS, SHORT SALES AND OPTIONS. The Portfolio does not intend to
engage in short sales or to purchase or sell put or call options. The Portfolio
will not purchase any security on margin, except that it may obtain such
short-term credits as may be necessary for the clearance of purchases and sales
of portfolio securities.
The investment policies described above may be changed by the Board of
Trustees without the affirmative vote of a majority of the outstanding shares of
beneficial interest of the Trust.
INVESTMENT RESTRICTIONS
Fundamental Restrictions
Fundamental restrictions may be changed only by a vote of the lesser of (i)
67% or more of the Portfolio's shares present at a meeting if the holders of
more than 50% of the outstanding shares are present in person or represented by
proxy, or (ii) more than 50% of the Portfolio's outstanding shares. Any
investment restriction that involves a maximum or minimum percentage of
securities or assets shall not be considered to be violated unless an excess
over or a deficiency under the percentage occurs immediately after, and is
caused by, an acquisition or disposition of securities or utilization of assets
by the Portfolio.
(1) The Portfolio is a "diversified company" as defined in the 1940
Act. The Portfolio will not 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, and the rules and regulations promulgated
thereunder, as such statute, rules and regulations are amended from time to
time or are interpreted from time to time by the SEC staff (collectively,
the "1940 Act Laws and Interpretations") or except to the extent that the
Portfolio may be permitted to do so by exemptive order or similar relief
(collectively, with the 1940 Act Laws and Interpretations, the "1940 Act
Laws, Interpretations and Exemptions"). In complying with this restriction,
however, the Portfolio may purchase securities of other investment
companies to the extent permitted by the 1940 Act Laws, Interpretations and
Exemptions.
(2) The Portfolio may not borrow money or issue senior securities,
except as permitted by the 1940 Act Laws, Interpretations and Exemptions.
(3) The Portfolio may not underwrite the securities of other issuers.
This restriction does not prevent the Portfolio from engaging in
transactions involving the acquisition, disposition or resale of its
portfolio securities, regardless of whether the Portfolio may be considered
to be an underwriter under the Securities Act of 1933.
(4) The Portfolio will not make investments that will result in the
concentration (as that term may be defined or interpreted by the 1940 Act
Laws, Interpretations and Exemptions) of its investments in the securities
of issuers primarily
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engaged in the same industry. This restriction does not limit the
Portfolio's investments in (i) obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, (ii) tax-exempt obligations
issued by governments or political subdivisions of governments, or (iii)
bank instruments. In complying with this restriction, the Portfolio will
not consider a bank-issued guaranty or financial guaranty insurance as a
separate security.
(5) The Portfolio may not purchase real estate or sell real estate
unless acquired as a result of ownership of securities or other
instruments. This restriction does not prevent the Portfolio from investing
in issuers that invest, deal, or otherwise engage in transactions in real
estate or interests therein, or investing in securities that are secured by
real estate or interests therein.
(6) The Portfolio may not purchase physical commodities or sell
physical commodities unless acquired as a result of ownership of securities
or other instruments. This restriction does not prevent the Portfolio from
engaging in transactions involving futures contracts and options thereon or
investing in securities that are secured by physical commodities.
(7) The Portfolio may not make personal loans or loans of its assets
to persons who control or are under common control with the Portfolio,
except to the extent permitted by 1940 Act Laws, Interpretations and
Exemptions. This restriction does not prevent the Portfolio from, among
other things, purchasing debt obligations, entering into repurchase
agreements, loaning its assets to broker-dealers or institutional
investors, or investing in loans, including assignments and participation
interests.
(8) The Portfolio may, notwithstanding any other fundamental
investment policy or limitation, invest all of its assets in the securities
of a single open-end management investment company with substantially the
same fundamental investment objectives, policies and restrictions as the
Portfolio.
The investment restrictions set forth above provide the Portfolio with the
ability to operate under new interpretations of the 1940 Act or pursuant to
exemptive relief from the SEC without receiving prior shareholder approval of
the change. Even though the Portfolio has this flexibility, the Board of
Trustees of the Trust has adopted non-fundamental restrictions for the Portfolio
relating to certain of these restrictions which the advisor must follow in
managing the Portfolio. Any changes to these non-fundamental restrictions, which
are set forth below, require the approval of the Board of Trustees.
Non-Fundamental Restrictions
The following non-fundamental investment restrictions apply to the Portfolio.
They may be changed without approval of the Portfolio's voting securities.
(1) In complying with the fundamental restriction regarding issuer
diversification, the Portfolio will not, with respect to 100% of its total
assets, purchase the securities of any issuer (other than securities issued
or guaranteed by the U.S. Government or any of its agencies or
instrumentalities), if, as a result, (i) more than 5% of the Portfolio's
total assets would be invested in the securities of that issuer, except as
permitted by Rule 2a-7 under the 1940 Act, or (ii) the Portfolio would hold
more than 10% of the outstanding voting securities of that issuer. The
Portfolio may (i) purchase securities of other investment companies as
permitted by Section 12(d)(1) of the 1940 Act and (ii) invest its assets in
securities of other money market funds and lend money to other investment
companies and their series portfolios that have AIM or an affiliate of AIM
as an investment advisor (an "AIM Advised Fund"), subject to the terms and
conditions of any exemptive orders issued by the SEC.
(2) In complying with the fundamental restriction regarding borrowing
money and issuing senior securities, the Portfolio may borrow money in an
amount not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). The Portfolio may
borrow from banks, broker-dealers or an AIM Advised Fund. The Portfolio may
not borrow for leveraging, but may borrow for temporary or emergency
purposes, in anticipation of or in response to adverse market conditions,
or for cash management purposes. The Portfolio may not purchase additional
securities when any borrowings from banks exceed 5% of the Portfolio's
total assets.
(3) In complying with the fundamental restriction regarding industry
concentration, the Portfolio may invest up to 25% of its total assets in
the securities of issuers whose principal business activities are in the
same industry.
(4) In complying with the fundamental restriction with regard to
making loans, the Portfolio may lend up to 33 1/3% of its total assets and
may lend money to another AIM Advised Fund, on such terms and conditions as
the SEC may require in an exemptive order.
(5) Notwithstanding the fundamental restriction on investing all
assets in an open-end fund, the Portfolio may not invest all of its assets
in the securities of a single open-end management investment company with
the same fundamental investment objectives, policies and restrictions as
the Portfolio.
B-14
<PAGE> 74
MANAGEMENT
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>
- -----------------------------------------------------------------------------------------------------------------------
*CHARLES T. BAUER (81) Trustee and Director and Chairman, A I M Management Group Inc.,
Chairman 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 (56) 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 Formerly, Director, Cortland Trust Inc. (investment
Six Blythewood Road company), CF & I Steel Corp., Monumental Life
Baltimore, MD 21210 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, President and Chief Operating Officer,
Baltimore, MD 21201 Mercantile-Safe Deposit Trust Co.; and President,
Mercantile Bankshares.
- -----------------------------------------------------------------------------------------------------------------------
JACK M. FIELDS (48) 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 (63) Trustee Partner, Kramer Levin Naftalis & Frankel, LLP (law
919 Third Avenue 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.
B-15
<PAGE> 75
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
POSITIONS HELD
NAME, ADDRESS AND AGE WITH REGISTRANT PRINCIPAL OCCUPATION DURING AT LEAST THE PAST 5 YEARS
<S> <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 and Chief
Executive Officer, Managed Products, AMVESCAP PLC.
- -----------------------------------------------------------------------------------------------------------------------
PREMA MATHAI-DAVIS(49) Trustee Chief Executive Officer, YWCA of the USA.
350 Fifth Avenue, Suite 301
New York, NY 10118
- -----------------------------------------------------------------------------------------------------------------------
LEWIS F. PENNOCK (57) Trustee Partner, Pennock & Cooper (law firm).
6363 Woodway, Suite 825
Houston, TX 77057
- -----------------------------------------------------------------------------------------------------------------------
LOUIS S. SKLAR (60) Trustee Executive Vice President, Development and Operations,
The Williams Tower, Hines Interests Limited Partnership (real estate
50th Floor development).
2800 Post Oak Blvd.
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 (41) 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 (45) 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.
B-16
<PAGE> 76
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: (i) considering management's recommendations
of independent accountants for each Portfolio and evaluating such accountants'
performance, costs and financial stability; (ii) with AIM, reviewing and
coordinating audit plans prepared by the Portfolio independent accountants and
management's internal audit staff; and (iii) reviewing financial statements
contained in periodic reports to shareholders with the Portfolio's independent
accountants and management.
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: (i) overseeing AIM's
investment-related compliance systems and procedures to ensure their continued
adequacy; and (ii) considering and acting, on an interim basis between meetings
of the full Board, on investment-related matters requiring Board consideration,
including dividends and distributions, brokerage policies and pricing matters.
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: (i) considering and
nominating individuals to stand for election as independent Trustees as long as
the Trust maintains a distribution plan pursuant to Rule 12b-1 under the 1940
Act; (ii) reviewing from time to time the compensation payable to the
independent trustees; and (iii) making recommendations to the Board regarding
matters related to compensation, including deferred compensation plans and
retirement plans for the independent trustees.
The Nominating and Compensation Committee will consider nominees recommended
by a shareholder to serve as trustees, provided (i) that such person is a
shareholder of record at the time he or she submits such names and is entitled
to vote at the meeting of shareholders at which the trustees will be elected,
and (ii) that the Nominating and Compensation Committee or the Board, as
applicable, shall make the final determination of persons to be nominated.
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. The trustees of the
Trust who do not serve as officers of the Trust are compensated for their
services according to a fee schedule which recognizes the fact that they also
serve as directors or trustees of certain other regulated investment companies
managed, administered or distributed by AIM or its affiliates. Each such trustee
receives a fee, allocated among such investment companies 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 37,485 103,500
Owen Daly II.................................... 5,724 122,898 103,500
Edward K. Dunn, Jr.............................. 5,724 55,565 103,500
Jack Fields..................................... 5,695 15,826 101,500
Carl Frischling(4).............................. 5,694 97,791 103,500
Robert H. Graham................................ 0 0 0
John F. Kroeger(5).............................. 506 40,461 0
Prema Mathai-Davis.............................. 5,344 11,870 101,500
Lewis F. Pennock................................ 5,694 45,766 103,500
Ian W. Robinson(6).............................. 3,551 94,442 25,000
Louis S. Sklar.................................. 5,694 90,232 101,500
</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.
B-17
<PAGE> 77
(2) During the fiscal year ended August 31, 1999, the total amount of expenses
allocated to the Trust with respect of such retirement benefits was $35,554.
Data reflects compensation for the calendar year ended December 31, 1999.
(3) Each trustee serves as a trustee or director of a total of 12 registered
investment companies advised by AIM. Data reflects compensation for the
calendar year ended December 31, 1999.
(4) The Trust paid the law firm of Kramer Levin Naftalis & Frankel, LLP $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.
(5) Mr. Kroeger was a trustee until June 11, 1998, when he resigned. On that
date, he became a consultant to the Trust. 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 (for purposes of this paragraph only, 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, a trustee becomes eligible to
retire and receive full benefits under the Plan when he or she 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 or her
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 all benefits under the Plan, 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 the retainer amount reflected below
and various years of service. The estimated credited years of service for
Messrs. Crockett, Daly, Dunn, Fields, Frischling, Kroeger, Pennock, Robinson and
Sklar and Dr. Mathai-Davis are 13, 13, 2, 3, 23, 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 and Sklar and Dr. Mathai-Davis (for
purposes of this paragraph only, the "Deferring Trustees") have each executed a
Deferred Compensation Agreement (collectively, the "Compensation Agreements").
Pursuant to the Compensation 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
Compensation 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
B-18
<PAGE> 78
distribution of amounts in his or her deferral account, the balance of the
deferral account will be distributed to his or her designated beneficiary in a
single lump sum payment as soon as practicable after such Deferring Trustee's
death. The Compensation 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. AIM, together with
its subsidiaries advises, manages or administers over 120 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."
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 and certain other employees to (a) pre-clear all personal securities
transactions subject to the Code of Ethics; (b) file reports regarding such
transactions; (c) 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 (subject to a de minimis
exception), and (iii) transactions involving securities being considered for
investment by an AIM Fund (subject to the de minimis exception); and (d) abide
by certain other provisions of the Code of Ethics. The de minimis exception
under the Code of Ethics covers situations where there is no material conflict
of interest because of the large market capitalization of a security and the
relatively small number of shares involved in a personal transaction. The Code
of Ethics also generally prohibits AIM employees from purchasing securities in
initial public offerings. Personal trading reports are periodically reviewed by
AIM, and the Board of Trustees reviews quarterly and annual reports (which
summarize any significant violations of the Code of Ethics). Sanctions for
violating the Code of Ethics may include censure, monetary penalties, suspension
or termination of employment.
The Trust has entered into a Master Investment Advisory Agreement, dated June
1, 2000 (the "Advisory Agreement") with AIM. A prior investment advisory
agreement with similar terms to the Advisory Agreement was in effect prior to
June 1, 2000. The Advisory Agreement will remain in effect until June 30, 2001
and continue from year to year, only if such continuance 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 advisory 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 an advisory agreement in effect prior to June 1, 2000 which
provided for the same level of compensation to AIM as the Advisory Agreement,
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.
In addition, if the Portfolio engages in securities lending, AIM will provide
the Portfolio investment advisory services and related administrative services.
The Advisory Agreement describes the administrative services to be rendered by
AIM if the
B-19
<PAGE> 79
Portfolio engages in securities lending activities, as well as the compensation
AIM may receive for such administrative services. Services to be provided
include: (a) overseeing participation in the securities lending program to
ensure compliance with all applicable regulatory and investment guidelines; (b)
assisting the securities lending agent or principal (the agent) in determining
which specific securities are available for loan; (c) monitoring the agent to
ensure that securities loans are effected in accordance with AIM's instructions
and with procedures adopted by the Board; (d) preparing appropriate periodic
reports for, and seeking appropriate approvals from, the Board with respect to
securities lending activities; (e) responding to agent inquiries; and (f)
performing such other duties as may be necessary.
AIM's compensation for advisory services rendered in connection with
securities lending is included in the advisory fee schedule. As compensation for
the related administrative services AIM will provide, a lending fund will pay
AIM a fee equal to 25% of the net monthly interest or fee income retained or
paid to the fund from such activities. AIM currently intends to waive such fee,
and has agreed to seek Board approval prior to its receipt of all or a portion
of such fee.
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 her 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 a prior administrative
services agreement which provided for the same level of reimbursement to AIM as
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.
B-20
<PAGE> 80
TRANSFER AGENT AND CUSTODIAN
A I M Fund Services, Inc., ("AFS"), a wholly owned subsidiary of AIM, P.O. Box
0843, Houston, Texas 77001-0843, 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. As transfer agent, AFS processes orders for
purchases, redemptions and exchanges of shares; prepares and transmits payments
for dividends and distributions declared by the Portfolio; maintains shareholder
accounts; and provides shareholders with information regarding the Portfolio and
its accounts.
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. BONY maintains the portfolio securities owned by the Portfolio,
administers the purchases and sales of portfolio securities, collects interest
and other distributions made on securities held by the Portfolio and performs
other ministerial duties.
LEGAL MATTERS
The law firm of Ballard Spahr Andrews & Ingersoll, LLP, Philadelphia,
Pennsylvania serves as counsel to the Trust and passes upon legal matters for
the Trust.
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 May 19, 2000, and the percentage of such shares owned
by such shareholders as of such date are as follows:
B-21
<PAGE> 81
CASH MANAGEMENT CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
Ferris, Baker Watts, Inc........................... 46.63% --
1700 Pennsylvania Ave.
Washington, DC 20006
Fund Services Advisors, Inc........................ 12.41% --
1875 Century Park East -- Suite 1345
Los Angeles, CA 90067
Gardnyr Michael Capital, Inc....................... 9.29% --
2281 Lee Rd Ste 104
Winter Park, FL 32789
Investment Resources............................... 9.28% --
Independence Plaza
1050 Seventeenth Street, Ste. 1620
Denver, CO 80265
Mayor And City Council 416A1....................... 7.00% --
100 Guilford Ave
Baltimore, MD 21202
</TABLE>
INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
A I M Advisors, Inc................................ 35.34%(b) 35.34%(b)
AIM Fund of Funds Account
Money Market Portfolio Admin.
11 Greenway Plaza, Ste 100
Houston, TX 77046
Gardnyr Michael Capital, Inc....................... 12.85% --
2281 Lee Rd, Ste 104
Winter Park, FL 32789
Waukesha County.................................... 12.32% --
Finance Division, Dept Of Admin.
1320 Pewaukee Road, Ste 310
Waukesha, WI 53188 3878
Kenosha County Wisconsin........................... 6.19% --
1010 56th Street
Kenosha, WI 53140 3738
</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) Represents shares held in a cash management account for the benefit of
certain AIM Funds. AIM has the power to direct the disposition of such
shares, and thus is deemed to be a beneficial owner of the shares. Shares
have been acquired in accordance with an exemptive order issued by the SEC.
B-22
<PAGE> 82
PERSONAL INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
SunTrust Equitable Securities...................... 100% --
P.O. Box 4418, MC 3907
Atlanta, GA 30302
</TABLE>
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
Fund Services Advisors, Inc........................ 78.83% --
1875 Century Park East, Suite 1345
Los Angeles, CA 90067
Huntington Capital Corp............................ 7.69% --
41 S High St, Ninth Floor
Columbus, OH 43287
</TABLE>
RESERVE CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
First National Banker's Bank....................... 100% --
PO Drawer 80579
Baton Rouge, LA 70898
</TABLE>
RESOURCE CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
SunTrust Equitable Securities...................... 46.37% --
P.O. Box 4418, MC 3907
Atlanta, GA 30302
City of Chicago G.O. Bonds for City Colleges....... 37.25% --
121 North LaSalle Street
Room 204
Chicago, IL 60603
Sovereign Bank..................................... 9.85% --
C/O Chase Enterprises
280 Trumbull Street
Hartford, CT 06103
</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-23
<PAGE> 83
GOVERNMENT 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 Government
TaxAdvantage Portfolio as of May 19, 2000 and the percentage of such shares
owned by such shareholders as of such date are as follows:
INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
Bank of America N.A................................ 38.16% --
1401 Elm Street 11th Floor
P.O. Box 831000
Dallas, TX 75202 2911
Frost National Bank TX............................. 18.76% --
Muir & Co
C/O Frost
P.O. Box 2479
San Antonio, TX 78298 2479
First Trust / Var & Co............................. 12.40% --
Funds Control Suite 0404
180 East Fifth Street
St. Paul, MN 55101
First National Bank Of Maryland.................... 8.94% --
Trust Operations Mailstop 109-751
P.O. Box 1596
Baltimore, MD 21203
PaineWebber SSB.................................... 6.04% --
1000 Harbor Blvd 6th Floor
Mutual Fund Operations
State Street Custodial Accounts
Weehawken, NJ 07087-6790
</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-24
<PAGE> 84
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
Bank of New York................................... 45.16% --
One Wall Street
5th Floor
Stif/Master Note
New York, NY 10286
CIBC World Markets................................. 25.67% --
200 Liberty Street
World Financial Center
New York, NY 10281
Huntington Capital Corp............................ 14.87% --
41 S High St., Ninth Floor
Columbus, OH 43287
Frost National Bank TX............................. 5.84% --
Muir & Co
C/O Frost
P.O. Box 2479
San Antonio, TX 78298 2479
First Union Securities, Inc........................ 5.11% --
Money Market Funds
8739 Research Dr., Capital Markets
Charlotte, NC 28262-0675
</TABLE>
RESOURCE CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
EVEREN Clearing Corp............................... 100% --
111 East Kilbourn Ave.
Milwaukee, WI 53202
</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-25
<PAGE> 85
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 May 19, 2000 and the percentage of such shares owned by such
shareholders as of such date are as follows:
CASH MANAGEMENT CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
Bank of New York................................... 40.44% --
One Wall Street
5th Floor
Stif/Master Note
New York, NY 10286
Bank of Oklahoma................................... 14.99% --
P.O. Box 2180
Tulsa, OK 74101
Chase Bank of Texas................................ 13.10% --
600 Travis St., 8th Fl
8-CBT-39
Houston, TX 77252-8009
Fund Services Advisors, Inc........................ 7.90% --
1875 Century Park East -- Suite 1345
Los Angeles, CA 90067
Huntington Capital Corp............................ 6.60% --
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.
B-26
<PAGE> 86
INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
City of New York Deferred Compensation Plan.......... 8.78% --
40 Rector Street 3rd Floor
New York, NY 10006
Trust Company Bank................................... 8.30% --
Center 3139
P.O. Box 105504
Atlanta, GA 30348
State Street Bank & Trust............................ 6.16% --
108 Myrtle Street
North Quincy, MA 02171
Weststar Bank Trust Dept............................. 5.59% --
P.O. Box 1156
Bartlesville, OK 75004 1156
Trustmark National Bank.............................. 5.45% --
Trust Department
248 East Capitol
Jackson, MS 39205
Star Trust........................................... 5.38% --
425 Walnut St.
Mall Location 7155
Cincinnati, OH 45202
Texas Commerce Bank National Association, as Custo... 5.38% --
1585 Broadway
New York, NY 10036
Chase Bank of Texas, National Association............ 5.38% --
600 Travis, 9th Floor
Houston, TX 77002
</TABLE>
PERSONAL INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
Cullen/Frost Discount Brokers........................ 85.29% --
P.O. Box 2358
San Antonio, TX 78299
Kinco & Co. C/O Rnb Securities....................... 6.55% --
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.
B-27
<PAGE> 87
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
Bank of New York..................................... 36.88% --
One Wall Street
5th Floor
Stif/Master Note
New York, NY 10286
Huntington Capital Corp.............................. 12.86% --
41 S. High St., Ninth Floor
Columbus, OH 43287
Cullen/Frost Discount Brokers........................ 10.18% --
P.O. Box 2358
San Antonio, TX 78299
Bank One Trust Company............................... 7.81% --
1111 Polaris Parkway
Columbus, OH 43240
Zions First National Bank (NV)....................... 6.67% --
P.O. Box 30880
Salt Lake City, UT 84130
New Haven Savings Bank Trust Department.............. 5.07% --
P.O. Box 302
Trust Department
New Haven, CT 06502
</TABLE>
RESERVE CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
Bank of New York..................................... 99.92% --
440 Mamoroneck, 5th Fl.
Harrison, NY 10286
</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-28
<PAGE> 88
RESOURCE CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
First Union Subaccounts.............................. 48.93% --
8739 Research Drive
Capital Markets
Charlotte, NC 28262-0675
City of Chicago G.O. Bonds for City Colleges......... 18.30% --
121 North LaSalle Street
Room 204
Chicago, IL 60603
Mellon Bank NA....................................... 11.32% --
P.O. Box 710
Pittsburgh, PA 15230-0710
Sovereign Bank....................................... 8.72% --
C/O Chase Enterprises
280 Trumbull Street
Hartford, CT 06103
EVEREN Clearing Corp................................. 5.81% --
111 East Kilbourn Ave.
Milwaukee, WI 53202
</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 May 19, 2000, the trustees
and officers of the Trust as a group beneficially owned less than 1% of the
outstanding shares of each class of each Portfolio of the Trust.
B-29
<PAGE> 89
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 thereof. Such
election, or any revocation thereof, must be made in writing and sent by the
shareholder to the AFS at P.O. Box 0843, Houston, Texas 77001-0843. 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 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, allocated based upon such
class's pro rata share of the total shares outstanding which relate to the
Portfolio, less (b) Trust expenses accrued for the applicable dividend period
attributable to the Portfolio, such as custodian fees and accounting expenses,
allocated based upon each such class' pro rata share of the net assets of the
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 invest-
B-30
<PAGE> 90
ment 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 the Portfolio's taxable
year, at least 50% of the value of the Portfolio's assets must consist of cash
and cash items, U.S. Government securities, securities of other regulated
investment companies, and securities of other issuers (as to which the Portfolio
has not invested more than 5% of the value of the Portfolio's total assets in
securities of such issuer and as to which the Portfolio does not hold more than
10% of the outstanding voting securities of such issuer), and no more than 25%
of the value of its total assets may be invested in the securities of any other
issuer (other than U.S. Government securities and securities of other regulated
investment companies), or in two or more issuers which the Portfolio controls
and which are engaged in the same or similar trades or businesses.
If, for any taxable year the Portfolio does not qualify as a regulated
investment company, all of its taxable income (including its net capital gain)
will be subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable as
ordinary dividends to the extent of the Portfolio's current and accumulated
earnings and profits. Such distributions generally will be eligible for the
dividends received deduction in the case of corporate shareholders.
EXCISE TAX ON REGULATED INVESTMENT COMPANIES
A 4% non-deductible excise tax is imposed on a regulated investment company
that fails to distribute in each calendar year an amount equal to 98% of
ordinary taxable income for the calendar year and 98% of capital gain net income
for the one-year period ended on October 31 of such calendar year (or, at the
election of a regulated investment company having a taxable year ending November
30 or December 31, for its taxable year (a "taxable year election")). The
balance of such income must be distributed during the next calendar year. For
the foregoing purposes, a regulated investment company is treated as having
distributed any amount on which it is subject to income tax for any taxable year
ending in such calendar year.
The Portfolio intends to make sufficient distributions or deemed distributions
of its ordinary taxable income and capital gain net income prior to the end of
each calendar year to avoid liability for the excise tax. However, investors
should note that the Portfolio may in certain circumstances be required to
liquidate portfolio investments to make sufficient distributions to avoid excise
tax liability.
PORTFOLIO DISTRIBUTIONS
The Portfolio anticipates distributing substantially all of its investment
company taxable income for each taxable year. Such distributions will be taxable
to shareholders as ordinary income and treated as dividends for federal income
tax purposes, but they will not qualify for the 70% dividends received deduction
for corporations.
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 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 a class of the Portfolio (or of another AIM Fund).
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 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
B-31
<PAGE> 91
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 Portfolio 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 (taxable at a maximum rate of
20% for noncorporate shareholders) 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; 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 May 23,
2000. 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.
B-32
<PAGE> 92
FINANCIAL STATEMENTS
FS
<PAGE> 93
SCHEDULE OF INVESTMENTS
February 29, 2000
(Unaudited)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCY SECURITIES(a) - 26.41%
FEDERAL HOME LOAN MORTGAGE CORP. DISCOUNT NOTES - 13.84%
5.53% 03/09/00 $ 7,000 $ 6,991,398
- -----------------------------------------------------------------------------
5.68% 03/21/00 15,000 14,952,667
- -----------------------------------------------------------------------------
5.46% 03/29/00 7,000 6,970,273
- -----------------------------------------------------------------------------
5.58% 04/06/00 10,000 9,944,200
- -----------------------------------------------------------------------------
5.58% 04/14/00 7,000 6,952,260
- -----------------------------------------------------------------------------
5.58% 04/26/00 5,000 4,956,600
- -----------------------------------------------------------------------------
5.49% 05/10/00 3,025 2,992,738
- -----------------------------------------------------------------------------
5.60% 05/17/00 5,000 4,940,111
- -----------------------------------------------------------------------------
5.82% 06/13/00 3,937 3,870,806
- -----------------------------------------------------------------------------
5.94% 08/17/00 10,000 9,721,150
- -----------------------------------------------------------------------------
72,292,203
- -----------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION DISCOUNT NOTES - 12.57%
5.60% 04/10/00 5,000 4,968,889
- -----------------------------------------------------------------------------
5.56% 05/05/00 10,000 9,899,611
- -----------------------------------------------------------------------------
5.82% 06/08/00 4,932 4,853,063
- -----------------------------------------------------------------------------
5.83% 06/22/00 7,000 6,872,012
- -----------------------------------------------------------------------------
5.81% 07/13/00 15,000 14,675,608
- -----------------------------------------------------------------------------
5.80% 07/20/00 10,000 9,772,833
- -----------------------------------------------------------------------------
5.89% 08/03/00 10,000 9,746,403
- -----------------------------------------------------------------------------
5.89% 08/10/00 5,000 4,867,475
- -----------------------------------------------------------------------------
65,655,894
- -----------------------------------------------------------------------------
Total U.S. Government Agency Securities (Cost $137,948,097) 137,948,097
- -----------------------------------------------------------------------------
Total Investments (excluding Repurchase Agreements) 137,948,097
- -----------------------------------------------------------------------------
REPURCHASE AGREEMENTS(b) - 74.05%
Bank One Capital Markets, Inc.(c)
5.87% 03/01/00 127,000 127,000,000
- -----------------------------------------------------------------------------
Barclays Capital Inc.(d)
5.87% 03/01/00 25,000 25,000,000
- -----------------------------------------------------------------------------
Deutsche Bank Securities Corp.(e)
5.86% 03/01/00 25,000 25,000,000
- -----------------------------------------------------------------------------
First Union Capital Markets(f)
5.87% 03/01/00 25,000 25,000,000
- -----------------------------------------------------------------------------
Morgan Stanley Dean Witter & Co.(g)
5.85% 03/01/00 7,802 7,802,095
- -----------------------------------------------------------------------------
</TABLE>
FS-1
<PAGE> 94
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
REPURCHASE AGREEMENTS(b) - (Continued)
Societe Generale Cowen Securities(h)
5.87% 03/01/00 $ 25,000 $ 25,000,000
- -------------------------------------------------------------------------
Warburg Dillon Read LLC(i)
5.87% 03/01/00 127,000 127,000,000
- -------------------------------------------------------------------------
Westdeutsche Landesbank Girozentrale(j)
5.87% 03/01/00 25,000 25,000,000
- -------------------------------------------------------------------------
Total Repurchase Agreements (Cost $386,802,095) 386,802,095
- -------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.46% (Cost $524,750,192) 524,750,192
- -------------------------------------------------------------------------
OTHER LIABILITIES LESS ASSETS - (0.46)% (2,410,978)
- -------------------------------------------------------------------------
NET ASSETS - 100.00% $522,339,214
=========================================================================
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
(a) U.S. Government 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 02/29/00 with a maturing value of
$500,081,528. Collateralized by $515,023,000 U.S. Government obligations,
0% to 8.00% due 03/01/00 to 08/25/14 with an aggregate market value at
02/29/00 of $510,003,862.
(d) Joint repurchase agreement entered into 02/29/00 with a maturing value of
$396,637,718. Collateralized by $419,860,000 U.S. Government obligations,
0% to 6.25% due 04/13/00 to 05/15/29 with an aggregate market value at
02/29/00 of $404,505,314.
(e) Joint repurchase agreement entered into 02/29/00 with a maturing value of
$100,016,278. Collateralized by $101,295,000 U.S. Government obligations,
6.35% due 01/05/01 with a market value at 02/29/00 of $102,000,599.
(f) Joint repurchase agreement entered into 02/29/00 with a maturing value of
$150,024,458. Collateralized by $156,510,000 U.S. Government obligations,
0% to 7.42% due 07/06/00 to 12/27/17 with an aggregate market value at
02/29/00 of $153,002,600.
(g) Joint repurchase agreement entered into 02/29/00 with a maturing value of
$150,024,375. Collateralized by $164,246,000 U.S. Government obligations,
0% to 8.25% due 03/01/00 to 06/15/44 with an aggregate market value at
02/29/00 of $153,000,487.
(h) Joint repurchase agreement entered into 02/29/00 with a maturing value of
$200,032,611. Collateralized by $206,650,000 U.S. Government obligations,
0% to 6.875% due 06/01/00 to 01/15/05 with an aggregate market value at
02/29/00 of $204,474,729.
(i) Joint repurchase agreement entered into 02/29/00 with a maturing value of
$500,081,528. Collateralized by $505,552,783 U.S. Government obligations,
0% to 9.375% due 03/07/00 to 01/15/30 with an aggregate market value at
02/29/00 of $510,001,318.
(j) Joint repurchase agreement entered into 02/29/00 with a maturing value of
$150,024,458. Collateralized by $153,358,000 U.S. Government obligations,
0% due 03/15/00 with a market value at 02/29/00 of $153,000,216.
See Notes to Financial Statements.
FS-2
<PAGE> 95
STATEMENT OF ASSETS AND LIABILITIES
February 29, 2000
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase agreements, at value (amortized cost) $137,948,097
- --------------------------------------------------------------------------------------------
Repurchase agreements 386,802,095
- --------------------------------------------------------------------------------------------
Interest receivable 63,059
- --------------------------------------------------------------------------------------------
Investment for deferred compensation plan 8,646
- --------------------------------------------------------------------------------------------
Other assets 19,222
- --------------------------------------------------------------------------------------------
Total assets 524,841,119
- --------------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Dividends 2,387,646
- --------------------------------------------------------------------------------------------
Deferred compensation 8,646
- --------------------------------------------------------------------------------------------
Accrued administrative services fees 17,375
- --------------------------------------------------------------------------------------------
Accrued distribution fees 32,180
- --------------------------------------------------------------------------------------------
Accrued transfer agent fees 6,643
- --------------------------------------------------------------------------------------------
Accrued trustees' fees 1,990
- --------------------------------------------------------------------------------------------
Accrued operating expenses 47,425
- --------------------------------------------------------------------------------------------
Total liabilities 2,501,905
- --------------------------------------------------------------------------------------------
NET ASSETS $522,339,214
============================================================================================
NET ASSETS:
Institutional Class $325,686,107
============================================================================================
Private Investment Class $ 51,055,036
============================================================================================
Cash Management Class $ 91,595,264
============================================================================================
Resource Class $ 54,002,805
============================================================================================
Personal Investment Class $ 1
============================================================================================
Reserve Class $ 1
============================================================================================
SHARES OF BENEFICIAL INTEREST, $.01 PAR VALUE PER SHARE:
Institutional Class 325,686,107
============================================================================================
Private Investment Class 51,055,036
============================================================================================
Cash Management Class 91,595,264
============================================================================================
Resource Class 54,002,805
============================================================================================
Personal Investment Class 1
============================================================================================
Reserve Class 1
============================================================================================
NET ASSET VALUE PER SHARE:
Net asset value, offering and redemption price per share $ 1.00
============================================================================================
</TABLE>
See Notes to Financial Statements.
FS-3
<PAGE> 96
STATEMENT OF OPERATIONS
For the six months ended February 29, 2000
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $12,341,344
- ------------------------------------------------------------------
EXPENSES:
Advisory fees 222,359
- ------------------------------------------------------------------
Custodian fees 9,912
- ------------------------------------------------------------------
Administrative services fees 66,072
- ------------------------------------------------------------------
Trustees' fees 5,091
- ------------------------------------------------------------------
Transfer agent fees 38,817
- ------------------------------------------------------------------
Distribution fees (see Note 2) 209,847
- ------------------------------------------------------------------
Other 62,387
- ------------------------------------------------------------------
Total expenses 614,485
- ------------------------------------------------------------------
Less: Fee waivers and reimbursements (335,687)
- ------------------------------------------------------------------
Net expenses 278,798
- ------------------------------------------------------------------
Net investment income 12,062,546
- ------------------------------------------------------------------
Net increase in net assets resulting from operations $12,062,546
==================================================================
</TABLE>
See Notes to Financial Statements.
FS-4
<PAGE> 97
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended February 29, 2000 and year ended August 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
FEBRUARY 29, AUGUST 31,
2000 1999
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 12,062,546 $ 11,215,411
- --------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 12,062,546 11,215,411
- --------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Institutional Class (7,238,012) (5,533,351)
- --------------------------------------------------------------------------------------
Private Investment Class (1,223,927) (1,913,875)
- --------------------------------------------------------------------------------------
Personal Investment Class (2,653) --
- --------------------------------------------------------------------------------------
Cash Management Class (2,315,265) (3,191,932)
- --------------------------------------------------------------------------------------
Resource Class (1,277,909) (576,253)
- --------------------------------------------------------------------------------------
Reserve Class (4,780) --
- --------------------------------------------------------------------------------------
Share transactions-net (see Note 4) 243,154,102 279,185,112
- --------------------------------------------------------------------------------------
Net increase in net assets 243,154,102 279,185,112
- --------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 279,185,112 --
- --------------------------------------------------------------------------------------
End of period $522,339,214 $279,185,112
======================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $522,339,214 $279,185,112
======================================================================================
</TABLE>
See Notes to Financial Statements.
FS-5
<PAGE> 98
NOTES TO FINANCIAL STATEMENTS
February 29, 2000
(Unaudited)
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 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. 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 six months ended February 29, 2000, AIM waived fees
and reimbursed expenses of $270,020.
FS-6
<PAGE> 99
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 six months ended February 29, 2000,
AIM was paid $66,072 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 six months
ended February 29, 2000, AFS was paid $36,235 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, the 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. Currently, FMC has elected to waive a portion of its compensation
payable by the Fund such that the compensation paid pursuant to the Plan with
respect to the Private Investment Class, the Personal Investment Class, the
Cash Management Class, the Reserve Class, and the Resource Class equals 0.30%,
0.50%, 0.08%, 0.80% and 0.16%, respectively, maximum annual rate of the average
daily net assets attributable to such class. During the six months ended
February 29, 2000, the Private Investment Class, the Cash Management Class, the
Resource Class, the Personal Investment Class and the Reserve Class paid
$70,943, $34,301, $37,900, $252 and $784, respectively, as compensation under
the Plan. FMC waived fees of $65,667 for the same period.
Certain officers and trustees of the Trust are officers of AIM, FMC and AFS.
During the six months ended February 29, 2000, the Portfolio paid legal fees
of $1,844 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-7
<PAGE> 100
NOTE 4-SHARE INFORMATION
Changes in shares outstanding during the six months ended February 29, 2000 and
the year ended August 31, 1999:
<TABLE>
<CAPTION>
FEBRUARY 29, 2000 AUGUST 31, 1999
------------------------------ --------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
Sold:
Institutional Class 1,318,603,428 $1,318,603,428 596,607,970 $596,607,970
- -------------------------------------------------------------------------------------------------
Private Investment Class 66,261,748 66,261,748 101,447,592 101,447,592
- -------------------------------------------------------------------------------------------------
Cash Management Class 219,185,143 219,185,143 281,678,849 281,678,849
- -------------------------------------------------------------------------------------------------
Resource Class 401,722,852 401,722,852 167,590,664 167,590,664
- -------------------------------------------------------------------------------------------------
Personal Investment Class* 796,001 796,001 -- --
- -------------------------------------------------------------------------------------------------
Reserve Class* 6,115,326 6,115,326 -- --
- -------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Institutional Class 3,575,171 3,575,171 3,376,023 3,376,023
- -------------------------------------------------------------------------------------------------
Private Investment Class 1,095,566 1,095,566 1,572,109 1,572,109
- -------------------------------------------------------------------------------------------------
Cash Management Class 2,155,672 2,155,672 2,457,651 2,457,651
- -------------------------------------------------------------------------------------------------
Resource Class 585,468 585,468 383,792 383,792
- -------------------------------------------------------------------------------------------------
Personal Investment Class* -- -- -- --
- -------------------------------------------------------------------------------------------------
Reserve Class* 4,242 4,242 -- --
- -------------------------------------------------------------------------------------------------
Reacquired:
Institutional Class (1,136,352,435) (1,136,352,435) (460,124,050) (460,124,050)
- -------------------------------------------------------------------------------------------------
Private Investment Class (58,830,322) (58,830,322) (60,491,657) (60,491,657)
- -------------------------------------------------------------------------------------------------
Cash Management Class (214,858,934) (214,858,934) (199,023,117) (199,023,117)
- -------------------------------------------------------------------------------------------------
Resource Class (359,989,257) (359,989,257) (156,290,714) (156,290,714)
- -------------------------------------------------------------------------------------------------
Personal Investment Class* (796,000) (796,000) -- --
- -------------------------------------------------------------------------------------------------
Reserve Class* (6,119,567) (6,119,567) -- --
- -------------------------------------------------------------------------------------------------
Net increase 243,154,102 $ 243,154,102 279,185,112 $279,185,112
=================================================================================================
</TABLE>
* The Personal Investment Class and Reserve Class commenced sales on
January 31, 2000 and January 26, 2000, respectively.
FS-8
<PAGE> 101
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Cash Management
Class outstanding during the six months ended February 29, 2000 and the year
ended August 31, 1999.
<TABLE>
<CAPTION>
FEBRUARY 29, AUGUST 31,
2000 1999
------------ ----------
<S> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00
- ---------------------------------------------------- ------- -------
Income from investment operations:
Net investment income 0.03 0.05
- ---------------------------------------------------- ------- -------
Less distributions:
Dividends from net investment income (0.03) (0.05)
- ---------------------------------------------------- ------- -------
Net asset value, end of period $ 1.00 $ 1.00
==================================================== ======= =======
Total return(a) 2.71% 4.98%
==================================================== ======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $91,595 $85,113
==================================================== ======= =======
Ratio of expenses to average net assets:
Including fee waivers and/or expense reimbursements 0.14%(b) 0.14%
==================================================== ======= =======
Excluding fee waivers and/or expense reimbursements 0.28%(b) 0.30%
==================================================== ======= =======
Ratio of net investment income to average net assets 5.41%(b) 4.83%
==================================================== ======= =======
</TABLE>
(a) Not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $86,224,758.
FS-9
<PAGE> 102
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Institutional Class
outstanding during the six months ended February 29, 2000 and the year ended
August 31, 1999.
<TABLE>
<CAPTION>
FEBRUARY 29, AUGUST 31,
2000 1999
------------ ----------
<S> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00
- ---------------------------------------------------- -------- --------
Income from investment operations:
Net investment income 0.03 0.05
- ---------------------------------------------------- -------- --------
Less distributions:
Dividends from net investment income (0.03) (0.05)
==================================================== ======== ========
Net asset value, end of period $ 1.00 $ 1.00
==================================================== ======== ========
Total return(a) 2.75% 5.07%
==================================================== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $325,686 $139,860
==================================================== ======== ========
Ratio of expenses to average net assets:
Including fee waivers and/or expense reimbursements 0.06%(b) 0.06%
==================================================== ======== ========
Excluding fee waivers and/or expense reimbursements 0.18%(b) 0.20%
==================================================== ======== ========
Ratio of net investment income to average net assets 5.49%(b) 4.91%
==================================================== ======== ========
</TABLE>
(a) Not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $265,446,920.
FS-10
<PAGE> 103
NOTE 5 - FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Personal Investment
Class outstanding during the period January 31, 2000 (date sales commenced)
through February 29, 2000.
<TABLE>
<CAPTION>
<S> <C>
Net asset value, beginning of period $ 1.00
- ---------------------------------------------------- ------
Income from investment operations:
Net investment income 0.004
- ---------------------------------------------------- ------
Less distributions:
Dividends from net investment income (0.004)
- ---------------------------------------------------- ------
Net asset value, end of period $ 1.00
- ---------------------------------------------------- ------
Total return(a) 0.43%
- ---------------------------------------------------- ------
Ratios/supplemental data:
Net assets, end of period (000's omitted) $ 0
- ---------------------------------------------------- ------
Ratio of expenses to average net assets:
Including fee waivers and/or expense reimbursements 0.56%(b)
- ---------------------------------------------------- ------
Excluding fee waivers and/or expense reimbursements 0.93%(b)
- ---------------------------------------------------- ------
Ratio of net investment income to average net assets 4.99%(b)
- ---------------------------------------------------- ------
</TABLE>
(a)Not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $613,800.
FS-11
<PAGE> 104
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Private Investment
Class outstanding during the six months ended February 29, 2000 and the year
ended August 31, 1999.
<TABLE>
<CAPTION>
FEBRUARY 29, AUGUST 31,
2000 1999
------------ ------------
<S> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00
- ---------------------------------------------------- ------- -------
Income from investment operations:
Net investment income 0.03 0.05
- ---------------------------------------------------- ------- -------
Less distributions:
Dividends from net investment income (0.03) (0.05)
- ---------------------------------------------------- ------- -------
Net asset value, end of period $ 1.00 $ 1.00
- ---------------------------------------------------- ------- -------
Total return(a) 2.59% 4.75%
- ---------------------------------------------------- ------- -------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $51,055 $45,528
- ---------------------------------------------------- ------- -------
Ratio of expenses to average net assets:
Including fee waivers and/or expense reimbursements 0.36%(b) 0.36%
- ---------------------------------------------------- ------- -------
Excluding fee waivers and/or expense reimbursements 0.68%(b) 0.70%
- ---------------------------------------------------- ------- -------
Ratio of net investment income to average net assets 5.19%(b) 4.62%
- ---------------------------------------------------- ------- -------
</TABLE>
(a) Not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $47,554,865.
FS-12
<PAGE> 105
NOTE 5 - FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Reserve Class
outstanding during the period January 26, 2000 (date sales commenced) through
February 29, 2000.
<TABLE>
<CAPTION>
<S> <C>
Net asset value, beginning of period $ 1.00
- ---------------------------------------------------- ------
Income from investment operations:
Net investment income 0.005
- ---------------------------------------------------- ------
Less distributions:
Dividends from net investment income (0.005)
- ---------------------------------------------------- ------
Net asset value, end of period $ 1.00
==================================================== ======
Total return(a) 0.48%
==================================================== ======
Ratios/supplemental data:
Net assets, end of period (000's omitted) $ 0
==================================================== ======
Ratio of expenses to average net assets:
Including fee waivers and/or expense reimbursements 0.86%(b)
==================================================== ======
Excluding fee waivers and/or expense reimbursements 1.18%(b)
==================================================== ======
Ratio of net investment income to average net assets 4.69%(b)
==================================================== ======
</TABLE>
(a) Not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $1,024,308.
FS-13
<PAGE> 106
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Resource Class
outstanding during the six months ended February 29, 2000 and the year ended
August 31, 1999.
<TABLE>
<CAPTION>
FEBRUARY 29, AUGUST 31,
2000 1999
------------ ----------
<S> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00
- ---------------------------------------------------- ------- -------
Income from investment operations:
Net investment income 0.03 0.05
- ---------------------------------------------------- ------- -------
Less distributions:
Dividends from net investment income (0.03) (0.05)
==================================================== ======= =======
Net asset value, end of period $ 1.00 $ 1.00
==================================================== ======= =======
Total return(a) 2.66% 4.90%
==================================================== ======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $54,003 $11,684
==================================================== ======= =======
Ratio of expenses to average net assets
Including fee waivers and/or expense reimbursements 0.22%(b) 0.22%
==================================================== ======= =======
Excluding fee waivers and/or expense reimbursements 0.38%(b) 0.40%
==================================================== ======= =======
Ratio of net investment income to average net assets 5.33%(b) 4.75%
==================================================== ======= =======
</TABLE>
(a) Not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $47,635,809.
FS-14
<PAGE> 107
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.
/s/ KPMG LLP
KPMG LLP
October 1, 1999
Houston, Texas
FS-1
<PAGE> 108
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-2
<PAGE> 109
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-3
<PAGE> 110
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-4
<PAGE> 111
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-5
<PAGE> 112
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-6
<PAGE> 113
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-7
<PAGE> 114
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-8
<PAGE> 115
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> 116
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-10
<PAGE> 117
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-11
<PAGE> 118
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-12
<PAGE> 119
GOVERNMENT TAXADVANTAGE
PORTFOLIO
-----------------------------------------------------------------------
Cash Management Class
Government TaxAdvantage Portfolio seeks to maximize current income
consistent with the preservation of capital and the maintenance of
liquidity.
PROSPECTUS
JUNE 1, 2000
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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
<PAGE> 120
---------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
---------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 4
Advisor Compensation 4
OTHER INFORMATION 4
- - - - - - - - - - - - - - - - - - - - - - - - - -
Suitability for Investors 4
Dividends and Distributions 4
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - - -
Distribution and Service (12b-1) Fees A-1
Purchasing Shares A-1
Redeeming Shares A-1
Pricing of Shares A-2
Taxes A-2
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM
LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La
Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with
DISCIPLINE are registered service marks and AIM Bank Connection and AIM Internet
Connect 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.
<PAGE> 121
---------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
---------------------------------
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 investment
objective of the fund may be changed by the Board of Trustees without
shareholder approval.
The fund attempts to meet its objective by investing in direct obligations of
the U.S. Treasury, which include Treasury bills, notes and bonds, and in
securities issued or guaranteed as to principal and interest by the U.S.
Government or by its agencies or instrumentalities (agency securities). Agency
securities may be supported by:
- - the full faith and credit of the U.S. Treasury;
- - the right of the issuer to borrow from the U.S. Treasury;
- - the discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; or
- - the credit of the agency or instrumentality.
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 or are sold, and the proceeds are reinvested in securities with
different interest rates.
The following factors could reduce the fund's income and/or share price:
- - sharply rising or falling interest rates; and
- - downgrades of credit ratings or defaults of any of the fund's holdings.
1
<PAGE> 122
---------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
---------------------------------
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. Neither the Cash Management Class shares nor the Institutional
Class shares are subject to sales loads.
<TABLE>
<CAPTION>
Annual
Year Ended Total
December 31 Returns
- ----------- -------
<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%
1999.................................... 4.60%
</TABLE>
The returns shown are those of the fund's Institutional Class shares, which are
not offered in this prospectus. Cash Management Class shares would have lower
annual returns because, although the shares are invested in the same portfolio
of securities, the Cash Management Class has higher expenses.
The Institutional Class and the Cash Management Class shares' year-to-date
total return as of March 31, 2000 was 1.29% and 1.27%, respectively.
During the periods shown in the bar chart, Institutional Class' highest
quarterly return was 1.41% (quarter ended June 30, 1995) and its lowest
quarterly return was 0.72% (quarter ended June 30, 1993).
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 SINCE INCEPTION
December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Institutional Class 4.60% 5.11% -- 4.77% 08/17/90
- ------------------------------------------------------------------------------------------------------
Cash Management Class -- -- -- -- 12/30/99
- ------------------------------------------------------------------------------------------------------
</TABLE>
Institutional Class shares' seven-day yield on December 31, 1999 was 5.00%. For
the current seven-day yield of Cash Management Class shares, call (800)
877-7745.
2
<PAGE> 123
---------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
---------------------------------
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>
SHAREHOLDER FEES
- - - - - - - - - - - - -- - - - - - - - - - - -
(fees paid directly from
your investment) CASH MANAGEMENT CLASS
- ----------------------------------------------
<S> <C>
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
- ----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- - - - - - - - - - - - - - - - - - - -- - - - -
(expenses that are deducted
from fund assets)(1) CASH MANAGEMENT CLASS
- ----------------------------------------------
<S> <C>
Management Fees 0.20%
Distribution and/or
Service (12b-1) Fees 0.10
Other Expenses 0.15
Total Annual Fund
Operating Expenses(2) 0.45
- ----------------------------------------------
</TABLE>
(1) The fees and expenses are based on estimated net assets for the current
fiscal period.
(2) The distributor has agreed to waive 0.02% of the Rule 12b-1 distribution
plan fee. The investment advisor has agreed to limit Total Annual Fund
Operating Expenses, excluding the Rule 12b-1 distribution plan fee,
interest, taxes, extraordinary items and indirect expenses resulting from
expense offset arrangements (if any), to 0.11%. The waivers and/or
limitations may be terminated at any time. Total Annual Fund Operating
Expenses, net of these agreements, are 0.19%.
You should also consider the effect of any account fees charged by the financial
institution managing your 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>
3
<PAGE> 124
---------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
---------------------------------
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 120
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.
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.
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
The fund generally declares dividends on each business day and pays any
dividends monthly.
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.
4
<PAGE> 125
---------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
---------------------------------
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 and service fees of 0.10% per annum to Fund
Management Company (the distributor) for the sale and distribution of its shares
and 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 0843,
Houston, Texas 77001-0843 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 your order. Subsequent purchases of shares of the fund 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 your institution.
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.
REDEMPTIONS BY THE FUND
If the fund determines that you have not provided a correct Social Security or
other tax ID number on your account application, the fund may, at its
discretion, redeem the account and distribute the proceeds to you.
A-1
<PAGE> 126
---------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
---------------------------------
SHAREHOLDER INFORMATION (continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY
TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
- 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. 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.
A-2
<PAGE> 127
----------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
----------------------------------
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
- ---------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P.O. Box 0843
Houston, TX 77001-0843
BY TELEPHONE: (800) 877-7745
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
</TABLE>
- ---------------------------------------------------------
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 TaxAdvantage Portfolio
SEC 1940 Act file number: 811-2729
- -----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com INVEST WITH DISCIPLINE
- --Registered Trademark-- --Registered Trademark--
<PAGE> 128
GOVERNMENT TAXADVANTAGE
PORTFOLIO
------------------------------------------------------------------------
Institutional Class
Government TaxAdvantage Portfolio seeks to maximize current income
consistent with the preservation of capital and the maintenance of
liquidity.
PROSPECTUS
JUNE 1, 2000
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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
<PAGE> 129
---------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
---------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 4
Advisor Compensation 4
OTHER INFORMATION 4
- - - - - - - - - - - - - - - - - - - - - - - - - -
Suitability for Investors 4
Dividends and Distributions 4
FINANCIAL HIGHLIGHTS 5
- - - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - - -
Purchasing Shares A-1
Redeeming Shares A-1
Pricing of Shares A-1
Taxes A-2
STATEMENT OF ADDITIONAL INFORMATION B-1
- - - - - - - - - - - - - - - - - - - - - - - - - -
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM
LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La
Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with
DISCIPLINE are registered service marks and AIM Bank Connection and AIM Internet
Connect 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.
<PAGE> 130
---------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
---------------------------------
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 investment
objective of the fund may be changed by the Board of Trustees without
shareholder approval.
The fund attempts to meet its objective by investing in direct obligations of
the U.S. Treasury, which include Treasury bills, notes and bonds, and in
securities issued or guaranteed as to principal and interest by the U.S.
Government or by its agencies or instrumentalities (agency securities). Agency
securities may be supported by:
- - the full faith and credit of the U.S. Treasury;
- - the right of the issuer to borrow from the U.S. Treasury;
- - the discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; or
- - the credit of the agency or instrumentality.
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 or are sold, and the proceeds are reinvested in securities with
different interest rates.
The following factors could reduce the fund's income and/or share price:
- - sharply rising or falling interest rates; and
- - downgrades of credit ratings or defaults of any of the fund's holdings.
1
<PAGE> 131
---------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
---------------------------------
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.
[GRAPH]
<TABLE>
<CAPTION>
Annual
Year Ended Total
September 30 Returns
- ------------ -------
<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%
1999.................................... 4.60%
</TABLE>
The Institutional Class shares' year-to-date total return as of March 31, 2000
was 1.29%.
During the periods shown in the bar chart, the highest quarterly return was
1.41% (quarter ended June 30, 1995) and the lowest quarterly return was 0.72%
(quarter ended June 30, 1993).
PERFORMANCE TABLE
The following performance table reflects the performance of the Institutional
Class shares over the periods indicated.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------------------------------
SINCE INCEPTION
(for the periods ended December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Institutional Class 4.60% 5.11% -- 4.77% 08/17/90
- --------------------------------------------------------------------------------------------------------
</TABLE>
Institutional Class shares' seven-day yield on December 31, 1999 was 5.00%. For
the current seven-day yield, call (800) 659-1005.
2
<PAGE> 132
---------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
---------------------------------
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>
SHAREHOLDER FEES
- - - - - - - - - - - - - - - - - - - - - - - - - -
(fees paid directly from
your investment) INSTITUTIONAL CLASS
- -------------------------------------------------
<S> <C>
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
- -------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- - - - - - - - - - - - - - - - - - - - - - - - - -
(expenses that are deducted
from fund assets) INSTITUTIONAL CLASS
- -------------------------------------------------
<S> <C>
Management Fees 0.20%
Distribution and/or
Service (12b-1) Fees None
Other Expenses 0.15
Total Annual Fund
Operating Expenses(1) 0.35
- -------------------------------------------------
</TABLE>
(1) The investment advisor has agreed to limit Total Annual Fund Operating
Expenses, excluding interest, taxes, extraordinary items and increases for
indirect credit (if any), to 0.11%. This expense limitation can be
terminated at any time.
You should also consider the effect of any account fees charged by the financial
institution managing your 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>
3
<PAGE> 133
---------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
---------------------------------
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 120
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.
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.
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
The fund generally declares dividends on each business day and pays any
dividends monthly.
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.
4
<PAGE> 134
---------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
---------------------------------
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).
The information for the period September 1, 1999 through February 29, 2000 is
unaudited. The information for the years ended August 31, 1999, 1998, 1997, 1996
and 1995 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
--------------------------------------------------------------------
FOR THE PERIOD
SEPTEMBER 1,
1999 THROUGH
FEBRUARY 29, YEAR ENDED AUGUST 31,
2000 1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income 0.02 0.04 0.05 0.05 0.05 0.05
Less distributions:
Dividends from net investment income (0.02) (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 $ 1.00
Total return(a) 2.45% 4.51% 5.30% 5.13% 5.19% 5.35%
- ----------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ----------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $53,789 $88,517 $113,084 $258,251 $407,218 $394,376
Ratio of expenses to average net assets:
Including fee waivers and/or expense
reimbursements 0.11%(b) 0.19% 0.20% 0.20% 0.20% 0.20%
Excluding fee waivers and/or expense
reimbursements 0.36%(b) 0.35% 0.28% 0.23% 0.23% 0.23%
Ratio of net investment income to average
net assets 4.84%(b) 4.42% 5.05% 5.00% 5.06% 5.21%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $76,062,395.
5
<PAGE> 135
---------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
---------------------------------
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 0843,
Houston, Texas 77001-0843 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 your order. Subsequent purchases of
shares of the fund 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.
REDEMPTIONS BY THE FUND
If the fund determines that you have not provided a correct Social Security or
other tax ID number on your account application, the fund may, at its
discretion, redeem the account and distribute the proceeds to you.
- --------------------------------------------------------------------------------
THE FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
- 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
A-1
<PAGE> 136
---------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
---------------------------------
SHAREHOLDER INFORMATION (continued)
- --------------------------------------------------------------------------------
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. 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.
A-2
<PAGE> 137
---------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
---------------------------------
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
- ---------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P.O. Box 0843
Houston, TX 77001-0843
BY TELEPHONE: (800) 659-1005
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
</TABLE>
- ---------------------------------------------------------
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 TaxAdvantage Portfolio
SEC 1940 Act file number: 811-2729
- ----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com INVEST WITH DISCIPLINE
- --Registered Trademark-- --Registered Trademark--
<PAGE> 138
GOVERNMENT TAXADVANTAGE
PORTFOLIO
------------------------------------------------------------------------
Personal Investment Class
Government TaxAdvantage Portfolio seeks to maximize current income
consistent with the preservation of capital and the maintenance of
liquidity.
PROSPECTUS
JUNE 1, 2000
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.
An investment in the fund:
- is not FDIC insured:
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
<PAGE> 139
----------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
----------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 4
Advisor Compensation 4
OTHER INFORMATION 4
- - - - - - - - - - - - - - - - - - - - - - - - - -
Suitability for Investors 4
Dividends and Distributions 4
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - - -
Distribution and Service (12b-1) Fees A-1
Purchasing Shares A-1
Redeeming Shares A-1
Pricing of Shares A-2
Taxes A-2
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM
LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La
Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with
DISCIPLINE are registered service marks and AIM Bank Connection and AIM Internet
Connect 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.
<PAGE> 140
----------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
----------------------------------
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 investment
objective of the fund may be changed by the Board of Trustees without
shareholder approval.
The fund attempts to meet its objective by investing in direct obligations of
the U.S. Treasury, which include Treasury bills, notes and bonds, and in
securities issued or guaranteed as to principal and interest by the U.S.
Government or by its agencies or instrumentalities (agency securities). Agency
securities may be supported by:
- - the full faith and credit of the U.S. Treasury;
- - the right of the issuer to borrow from the U.S. Treasury;
- - the discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; or
- - the credit of the agency or instrumentality.
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 or are sold, and the proceeds are reinvested in securities with
different interest rates.
The following factors could reduce the fund's income and/or share price:
- - sharply rising or falling interest rates; and
- - downgrades of credit ratings or defaults of any of the fund's holdings.
1
<PAGE> 141
----------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
----------------------------------
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.
[GRAPH]
<TABLE>
<CAPTION>
Annual
Year Ended Total
December 31 Returns
- ----------- -------
<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%
1999.................................... 4.60%
</TABLE>
The returns shown are those of the fund's Institutional Class shares, which are
not offered in this prospectus. Personal Investment Class shares would have
lower annual returns because, although the shares are invested in the same
portfolio of securities, the Personal Investment Class has higher expenses. As
of the date of this prospectus, the Personal Investment Class had not commenced
operations.
The Institutional Class shares' year-to-date total return as of March 31, 2000
was 1.29%.
During the periods shown in the bar chart, Institutional Class' highest
quarterly return was 1.41% (quarter ended June 30, 1995) and its lowest
quarterly return was 0.72% (quarter ended June 30, 1993).
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 SINCE INCEPTION
December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Institutional Class 4.60% 5.11% -- 4.77% 08/17/90
- ------------------------------------------------------------------------------------------------------
Personal Investment Class -- -- -- -- --
- ------------------------------------------------------------------------------------------------------
</TABLE>
Institutional Class shares' seven-day yield on December 31, 1999 was 5.00%. For
the current seven-day yield of Personal Investment Class shares, call (800)
877-4744.
2
<PAGE> 142
----------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
----------------------------------
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>
SHAREHOLDER FEES
- - - - - - - - - - - - - - - - - - - - - - - - - -
(fees paid directly from PERSONAL
your investment) INVESTMENT CLASS
- -----------------------------------------------
<S> <C>
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
- -----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- - - - - - - - - - - - - - - - - - - - - - - - - -
(expenses that are deducted PERSONAL
from fund assets)(1) INVESTMENT CLASS
- -----------------------------------------------
<S> <C>
Management Fees 0.20%
Distribution and/or
Service (12b-1) Fees 0.75
Other Expenses 0.15
Total Annual Fund
Operating Expenses(2) 1.10
- -----------------------------------------------
</TABLE>
(1) The fees and expenses are based on estimated net assets for the current
fiscal period.
(2) The distributor has agreed to waive 0.25% of the Rule 12b-1 distribution
plan fee. The investment advisor has agreed to limit Total Annual Fund
Operating Expenses, excluding the Rule 12b-1 distribution plan fee,
interest, taxes, extraordinary items and indirect expenses resulting from
expense offset arrangements (if any), to 0.11%. The waivers and/or
limitation may be terminated at any time. Total Annual Fund Operating
Expenses, net of these agreements, are 0.61%.
You should also consider the effect of any account fees charged by the financial
institution managing your 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 $112 $350
- -------------------------------------------
</TABLE>
3
<PAGE> 143
----------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
----------------------------------
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 120
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.
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.
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
The fund generally declares dividends on each business day and pays any
dividends monthly.
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.
4
<PAGE> 144
----------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
----------------------------------
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 and service fees of 0.75% per annum to
Fund Management Company (distributor) for the sale and distribution of its
shares and 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 0843,
Houston, Texas 77001-0843 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 your order. Subsequent purchases of shares of the fund 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 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.
REDEMPTIONS BY THE FUND
If the fund determines that you have not provided a correct Social Security or
other tax ID number on your account application, the fund may, at its
discretion, redeem the account and distribute the proceeds to you.
A-1
<PAGE> 145
----------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
----------------------------------
SHAREHOLDER INFORMATION (continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY
TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
- 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. 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.
A-2
<PAGE> 146
----------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
----------------------------------
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
- ---------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P.O. Box 0843
Houston, TX 77001-0843
BY TELEPHONE: (800) 877-4744
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
</TABLE>
- ---------------------------------------------------------
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 TaxAdvantage Portfolio
SEC 1940 Act file number: 811-2729
- -----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com INVEST WITH DISCIPLINE
- --Registered Trademark-- --Registered Trademark--
<PAGE> 147
GOVERNMENT TAXADVANTAGE
PORTFOLIO
------------------------------------------------------------------------
Private Investment Class
Government TaxAdvantage Portfolio seeks to maximize current income
consistent with the preservation of capital and the maintenance of
liquidity.
PROSPECTUS
JUNE 1, 2000
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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
<PAGE> 148
---------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
---------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 4
Advisor Compensation 4
OTHER INFORMATION 4
- - - - - - - - - - - - - - - - - - - - - - - - -
Suitability for Investors 4
Dividends and Distributions 4
FINANCIAL HIGHLIGHTS 5
- - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - -
Distribution and Service (12b-1) Fees A-1
Purchasing Shares A-1
Redeeming Shares A-1
Pricing of Shares A-2
Taxes A-2
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM
LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La
Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with
DISCIPLINE are registered service marks and AIM Bank Connection and AIM Internet
Connect 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.
<PAGE> 149
---------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
---------------------------------
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 investment
objective of the fund may be changed by the Board of Trustees without
shareholder approval.
The fund attempts to meet its objective by investing in direct obligations of
the U.S. Treasury, which include Treasury bills, notes and bonds, and in
securities issued or guaranteed as to principal and interest by the U.S.
Government or by its agencies or instrumentalities (agency securities). Agency
securities may be supported by:
- - the full faith and credit of the U.S. Treasury;
- - the right of the issuer to borrow from the U.S. Treasury;
- - the discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; or
- - the credit of the agency or instrumentality.
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 or are sold, and the proceeds are reinvested in securities with
different interest rates.
The following factors could reduce the fund's income and/or share price:
- - sharply rising or falling interest rates; and
- - downgrades of credit ratings or defaults of any of the fund's holdings.
1
<PAGE> 150
---------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
---------------------------------
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.
[GRAPH]
<TABLE>
<CAPTION>
Annual
Year Ended Total
December 31 Returns
- ----------- -------
<S> <C>
1995.................................... 5.32%
1996.................................... 4.83%
1997.................................... 4.89%
1998.................................... 4.85%
1999.................................... 4.34%
</TABLE>
The Private Investment Class shares' year-to-date total return as of March 31,
2000 was 1.22%.
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 1.00%
(quarter ended March 31, 1999).
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 SINCE INCEPTION
December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Private Investment Class 4.34% 4.84 -- 4.84% 12/21/94
- ----------------------------------------------------------------------------------------------------
</TABLE>
Private Investment Class shares' seven-day yield on December 31, 1999 was 4.75%.
For the current seven-day yield, call (800) 877-7748.
2
<PAGE> 151
---------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
---------------------------------
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>
SHAREHOLDER FEES
- - - - - - - - - - - - - - - - - - - - - - - - - -
(fees paid directly from
your investment) PRIVATE INVESTMENT CLASS
- -------------------------------------------------
<S> <C>
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
- -------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- - - - - - - - - - - - - - - - - - - - - - - - - -
(expenses that are deducted
from fund assets) PRIVATE INVESTMENT CLASS
- -------------------------------------------------
<S> <C>
Management Fees 0.20%
Distribution and/or
Service (12b-1) Fees 0.50
Other Expenses 0.15
Total Annual Fund
Operating Expenses(1) 0.85
- -------------------------------------------------
</TABLE>
(1) The distributor has agreed to waive 0.25% of the Rule 12b-1 distribution
plan fee. The investment advisor has agreed to limit Total Annual Fund
Operating Expenses, excluding the Rule 12b-1 distribution plan fee,
interest, taxes, extraordinary items and indirect expenses resulting from
expense offset arrangements (if any), to 0.11%. The waivers and/or
limitations may be terminated at any time. Total Annual Fund Operating
Expenses, net of these agreements, are 0.36%.
You should also consider the effect of any account fees charged by the financial
institution managing your 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 $87 $271 $471 $1,049
- ----------------------------------------------------------------
</TABLE>
3
<PAGE> 152
---------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
---------------------------------
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 120
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.
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.
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
The fund generally declares dividends on each business day and pays any
dividends monthly.
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.
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.
4
<PAGE> 153
---------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
---------------------------------
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).
The information for the period September 1, 1999 through February 29, 2000 is
unaudited. The information for the years ended August 31, 1999, 1998, 1997, 1996
and for the period December 21, 1994 through August 31, 1995 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 FOR THE PERIOD
SEPTEMBER 1, DECEMBER 21, 1994
1999 THROUGH
THROUGH YEAR ENDED AUGUST 31, AUGUST 31,
FEBRUARY 29, 2000 1999 1998 1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income 0.02 0.04 0.05 0.05 0.05 0.04
Less distributions:
Dividends from net investment income (0.02) (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 $ 1.00
Total return(a) 2.32% 4.25% 5.04% 4.87% 4.93% 3.69%
- -------------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- -------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $50,724 $45,377 $31,143 $39,312 $49,978 $5,423
Ratio of expenses to average net assets:
Including fee waivers and/or expense
reimbursements 0.36%(b) 0.43% 0.45% 0.45% 0.45% 0.45%(c)
Excluding fee waivers and/or expense
reimbursements 0.86%(b) 0.85% 0.78% 0.74% 0.85% 1.02%(c)
Ratio of net investment income to average net
assets 4.59%(b) 4.18% 4.80% 4.75% 4.72% 5.21%(c)
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $46,676,621.
(c) Annualized.
5
<PAGE> 154
---------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
---------------------------------
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 and service fees of 0.50% per annum to
Fund Management Company (distributor) for the sale and distribution of its
shares and 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 0843,
Houston, Texas 77001-0843 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 your order. 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 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.
REDEMPTIONS BY THE FUND
If the fund determines that you have not provided a correct Social Security or
other tax ID number on your account application, the fund may, at its
discretion, redeem the account and distribute the proceeds to you.
A-1
<PAGE> 155
---------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
---------------------------------
SHAREHOLDER INFORMATION (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY
TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
- 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. 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.
A-2
<PAGE> 156
---------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
---------------------------------
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
- ---------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P.O. Box 0843
Houston, TX 77001-0843
BY TELEPHONE: (800) 877-7748
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
</TABLE>
- ---------------------------------------------------------
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 TaxAdvantage Portfolio
SEC 1940 Act file number: 811-2729
- ----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com INVEST WITH DISCIPLINE
- --Registered Trademark-- --Registered Trademark--
<PAGE> 157
GOVERNMENT TAXADVANTAGE
PORTFOLIO
------------------------------------------------------------------------
Reserve Class
Government TaxAdvantage Portfolio seeks to maximize current income
consistent with the preservation of capital and the maintenance of
liquidity.
PROSPECTUS
JUNE 1, 2000
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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
- --Registered Trademark-- --Registered Trademark--
<PAGE> 158
---------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
---------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 4
Advisor Compensation 4
OTHER INFORMATION 4
- - - - - - - - - - - - - - - - - - - - - - - - - -
Suitability for Investors 4
Dividends and Distributions 4
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - - -
Distribution and Service (12b-1) Fees A-1
Purchasing Shares A-1
Redeeming Shares A-1
Pricing of Shares A-2
Taxes A-2
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM
LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La
Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with
DISCIPLINE are registered service marks and AIM Bank Connection and AIM Internet
Connect 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.
<PAGE> 159
----------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
----------------------------------
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 investment
objective of the fund may be changed by the Board of Trustees without
shareholder approval.
The fund attempts to meet its objective by investing in direct obligations of
the U.S. Treasury, which include Treasury bills, notes and bonds, and in
securities issued or guaranteed as to principal and interest by the U.S.
Government or by its agencies or instrumentalities (agency securities). Agency
securities may be supported by:
- - the full faith and credit of the U.S. Treasury;
- - the right of the issuer to borrow from the U.S. Treasury;
- - the discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; or
- - the credit of the agency or instrumentality.
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 or are sold, and the proceeds are reinvested in securities with
different interest rates.
The following factors could reduce the fund's income and/or share price:
- - sharply rising or falling interest rates; and
- - downgrades of credit ratings or defaults of any of the fund's holdings.
1
<PAGE> 160
----------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
----------------------------------
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.
[GRAPH]
<TABLE>
<CAPTION>
Annual
Year Ended Total
September 30, Returns
- ------------- -------
<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%
1999.................................... 4.60%
</TABLE>
The returns shown are those of the fund's Institutional Class shares, which
are not offered in this prospectus. Reserve Class shares would have lower annual
returns because, although the shares are invested in the same portfolio of
securities, the Reserve Class has higher expenses. As of the date of this
prospectus, the Reserve Class had not commenced operations.
The Institutional Class shares' year-to-date total return as of March 31, 2000
was 1.29%.
During the periods shown in the bar chart, Institutional Class' highest
quarterly return was 1.41% (quarter ended June 30, 1995) and its lowest
quarterly return was 0.72% (quarter ended June 30, 1993).
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 SINCE INCEPTION
December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Institutional Class 4.60% 5.11% -- 4.77% 08/17/90
- ----------------------------------------------------------------------------------------------------
Reserve Class -- -- -- -- --
- ----------------------------------------------------------------------------------------------------
</TABLE>
Institutional Class shares' seven-day yield on December 31, 1999 was 5.00%. For
the current seven-day yield of Reserve Class shares, call (800) 417-8837.
2
<PAGE> 161
----------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
----------------------------------
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>
SHAREHOLDER FEES
- - - - - - - - - - - - - - - - - - - - - - - - - -
(fees paid directly from
your investment) RESERVE CLASS
- ----------------------------------------------
<S> <C>
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
- ----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- - - - - - - - - - - - - - - - - - - - - - - - - -
(expenses that are deducted
from fund assets)(1) RESERVE CLASS
- ----------------------------------------------
<S> <C>
Management Fees 0.20%
Distribution and/or
Service (12b-1) Fees 1.00
Other Expenses 0.15
Total Annual Fund
Operating Expenses(2) 1.35
- ----------------------------------------------
</TABLE>
(1) The fees and expenses are based on estimated net assets for the current
fiscal period.
(2) The distributor has agreed to waive 0.20% of the Rule 12b-1 distribution
plan fee. The investment advisor has agreed to limit Total Annual Fund
Operating Expenses, excluding the Rule 12b-1 distribution plan fee,
interest, taxes, extraordinary items and indirect expenses resulting from
expense offset arrangements (if any), to 0.11%. The waivers and/or
limitations may be terminated at any time. Total Annual Fund Operating
Expenses, net of these agreements, are 0.91%.
You should also consider the effect of any account fees charged by the financial
institution managing your 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 $137 $428
- ---------------------------------
</TABLE>
3
<PAGE> 162
----------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
----------------------------------
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 120
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.
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.
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
The fund generally declares dividends on each business day and pays any
dividends monthly.
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.
4
<PAGE> 163
----------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
----------------------------------
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 and service fees of 1.00% per annum to Fund
Management Company (distributor) for the sale and distribution of its shares and
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 0843,
Houston, Texas 77001-0843 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 your order. Subsequent purchases of shares of the fund 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 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.
REDEMPTIONS BY THE FUND
If the fund determines that you have not provided a correct Social Security or
other tax ID number on your account application, the fund may, at its
discretion, redeem the account and distribute the proceeds to you.
A-1
<PAGE> 164
----------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
----------------------------------
SHAREHOLDER INFORMATION (continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
- 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. 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.
A-2
<PAGE> 165
----------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
----------------------------------
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
- ---------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P. O. Box 0843
Houston, TX 77001-0843
BY TELEPHONE: (800) 417-8837
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
</TABLE>
- ---------------------------------------------------------
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 TaxAdvantage Portfolio
SEC 1940 Act file number: 811-2729
- ----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com INVEST WITH DISCIPLINE
- --Registered Trademark-- --Registered Trademark--
<PAGE> 166
GOVERNMENT TAXADVANTAGE
PORTFOLIO
------------------------------------------------------------------------
Resource Class
Government TaxAdvantage Portfolio seeks to maximize current income
consistent with the preservation of capital and the maintenance of
liquidity.
PROSPECTUS
JUNE 1, 2000
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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
<PAGE> 167
---------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
---------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 4
Advisor Compensation 4
OTHER INFORMATION 4
- - - - - - - - - - - - - - - - - - - - - - - - - -
Suitability for Investors 4
Dividends and Distributions 4
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - - -
Distribution and Service (12b-1) Fees A-1
Purchasing Shares A-1
Redeeming Shares A-1
Pricing of Shares A-2
Taxes A-2
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM
LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La
Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with
DISCIPLINE are registered service marks and AIM Bank Connection and AIM Internet
Connect 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.
<PAGE> 168
---------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
---------------------------------
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 investment
objective of the fund may be changed by the Board of Trustees without
shareholder approval.
The fund attempts to meet its objective by investing in direct obligations of
the U.S. Treasury, which include Treasury bills, notes and bonds, and in
securities issued or guaranteed as to principal and interest by the U.S.
Government or by its agencies or instrumentalities (agency securities). Agency
securities may be supported by:
- - the full faith and credit of the U.S. Treasury;
- - the right of the issuer to borrow from the U.S. Treasury;
- - the discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; or
- - the credit of the agency or instrumentality.
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 or are sold, and the proceeds are reinvested in securities with
different interest rates.
The following factors could reduce the fund's income and/or share price:
- - sharply rising or falling interest rates; and
- - downgrades of credit ratings or defaults of any of the fund's holdings.
1
<PAGE> 169
---------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
---------------------------------
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.
[GRAPH]
<TABLE>
<CAPTION>
Annual
Year Ended Total
December 31 Returns
- ----------- -------
<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%
1999.................................... 4.60%
</TABLE>
The returns shown are those of the fund's Institutional Class shares, which are
not offered in this prospectus. Resource Class shares would have lower annual
returns because, although the shares are invested in the same portfolio of
securities, the Resource Class has higher expenses.
The Institutional Class and the Resource Class shares' year-to-date total
return as of March 31, 2000 was 1.29% and 1.25%, respectively.
During the periods shown in the bar chart, Institutional Class' highest
quarterly return was 1.41% (quarter ended June 30, 1995) and its lowest
quarterly return was 0.72% (quarter ended June 30, 1993).
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 SINCE INCEPTION
December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Institutional Class 4.60% 5.11% -- 4.77% 08/17/90
- ------------------------------------------------------------------------------------------------------
Resource Class -- -- -- -- 12/30/99
- ------------------------------------------------------------------------------------------------------
</TABLE>
Institutional Class shares' seven-day yield on December 31, 1999 was 5.00%. For
the current seven-day yield of Resource Class shares, call (800) 825-6858.
2
<PAGE> 170
---------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
---------------------------------
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>
SHAREHOLDER FEES
- - - - - - - - - - - - - - - - - - - - - - - - - -
(fees paid directly from
your investment) RESOURCE CLASS
- -------------------------------------------------
<S> <C>
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
- -------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- - - - - - - - - - - - - - - - - - - - - - - - - -
(expenses that are deducted
from fund assets)(1) RESOURCE CLASS
- ----------------------------------------------
<S> <C>
Management Fees 0.20%
Distribution and/or
Service (12b-1) Fees 0.20
Other Expenses 0.15
Total Annual Fund
Operating Expenses(2) 0.55
- ----------------------------------------------
</TABLE>
(1) The fees and expenses are based on estimated net assets for the current
fiscal period.
(2) The distributor has agreed to waive 0.04% of the Rule 12b-1 distribution
plan fee. The investment advisor has agreed to limit Total Annual Fund
Operating Expenses, excluding the Rule 12b-1 distribution plan fee,
interest, taxes, extraordinary items and indirect expenses resulting from
expense offset arrangements (if any), to 0.11%. The waivers and/or
limitations may be terminated at any time. Total Annual Fund Operating
Expenses, net of these agreements, are 0.27%.
You should also consider the effect of any account fees charged by the financial
institution managing your 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>
3
<PAGE> 171
---------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
---------------------------------
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 120
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.
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.
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
The fund generally declares dividends on each business day and pays any
dividends monthly.
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.
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.
4
<PAGE> 172
---------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
---------------------------------
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 and service fees of 0.20% per annum to Fund
Management Company (distributor) for the sale and distribution of its shares and
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 0843,
Houston, Texas 77001-0843 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 your order, provided the transfer agent has received
notice of the order. Subsequent purchases of shares of the fund 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 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.
REDEMPTIONS BY THE FUND
If the fund determines that you have not provided a correct Social Security or
other tax ID number on your account application, the fund may, at its
discretion, redeem the account and distribute the proceeds to you.
A-1
<PAGE> 173
---------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
---------------------------------
SHAREHOLDER INFORMATION (continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
- 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. 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
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.
A-2
<PAGE> 174
---------------------------------
GOVERNMENT TAXADVANTAGE PORTFOLIO
---------------------------------
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
- ---------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P.O. Box 0843
Houston, TX 77001-0843
BY TELEPHONE: (800) 825-6858
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
</TABLE>
- ---------------------------------------------------------
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 TaxAdvantage Portfolio
SEC 1940 Act file number: 811-2729
- -----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com INVEST WITH DISCIPLINE
- --Registered Trademark-- --Registered Trademark--
<PAGE> 175
STATEMENT OF
ADDITIONAL INFORMATION
SHORT-TERM INVESTMENTS TRUST
GOVERNMENT 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
GOVERNMENT 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 JUNE 1, 2000
RELATING TO THE PROSPECTUS OF EACH OF THE FOLLOWING CLASSES OF THE
GOVERNMENT TAXADVANTAGE PORTFOLIO:
CASH MANAGEMENT CLASS PROSPECTUS DATED JUNE 1, 2000,
INSTITUTIONAL CLASS PROSPECTUS DATED JUNE 1, 2000,
PERSONAL INVESTMENT CLASS PROSPECTUS DATED JUNE 1, 2000,
PRIVATE INVESTMENT CLASS PROSPECTUS DATED JUNE 1, 2000,
RESERVE CLASS PROSPECTUS DATED JUNE 1, 2000
AND RESOURCE CLASS PROSPECTUS DATED JUNE 1, 2000
B-1
<PAGE> 176
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Introduction................................................ B-3
General Information about the Trust......................... B-3
The Trust and Its Shares............................... B-3
Portfolio Transactions and Brokerage........................ B-5
General Brokerage Policy............................... B-5
Allocation of Portfolio Transactions................... B-6
Section 28(e) Standards................................ B-6
Share Purchases and Redemptions............................. B-7
Purchases and Redemptions.............................. B-7
Redemptions by the Portfolio........................... B-7
Net Asset Value Determination.......................... B-8
Distribution Agreement................................. B-8
Distribution Plan...................................... B-9
Banking Regulations.................................... B-10
Performance Information................................ B-10
Investment Program and Restrictions......................... B-11
Investment Program..................................... B-11
Investment Policies.................................... B-12
Investment Restrictions................................ B-13
Management.................................................. B-15
Trustees and Officers.................................. B-16
Remuneration of Trustees............................... B-18
Investment Advisor..................................... B-20
Administrative Services................................ B-21
Expenses............................................... B-21
Transfer Agent and Custodian........................... B-22
Legal Matters.......................................... B-22
Reports................................................ B-22
Sub-Accounting......................................... B-23
Principal Holders of Securities........................ B-23
Dividends, Distributions and Tax Matters.................... B-30
Dividends and Distributions............................ B-30
Tax Matters............................................ B-30
Qualifications as a Regulated Investment Company....... B-30
Excise Tax on Regulated Investment Companies........... B-31
Portfolio Distributions................................ B-31
Sale or Redemption of Shares........................... B-32
Foreign Shareholders................................... B-32
Effect of Future Legislation; State and Local Tax
Considerations........................................ B-33
Financial Statements........................................ FS
</TABLE>
B-2
<PAGE> 177
INTRODUCTION
The Government 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 June 1, 2000, the Institutional Class Prospectus dated June 1, 2000, the
Personal Investment Class Prospectus dated June 1, 2000, the Private Investment
Class Prospectus dated June 1, 2000, the Reserve Class Prospectus dated June 1,
2000 and the Resource Class Prospectus dated June 1, 2000 (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. The 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.
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.
B-3
<PAGE> 178
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. 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 further 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 also provides that the trustees and officers will
not be personally liable for any act, omission or obligation of the Trust or any
Trustee or officer. However, nothing in the Declaration of Trust protects a
trustee or officer against any liability to the Trust or to the shareholders to
which a trustee or officer would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his or her office with the Trust. The Declaration of
Trust provides for indemnification by the Trust of the trustees, the officers,
employees or agents of the Trust if it is determined that such person acted in
good faith and reasonably believed: (1) in the case of conduct in his or her
official capacity for the Trust, that his or her conduct was in the Trust's best
interests, (2) in all other cases, that his or her conduct was at least not
opposed to the Trust's best interests and (3) in a criminal proceeding, that he
or she had no reason to believe that his or her conduct was unlawful. Such
person may not be indemnified against any liability to the Trust or to the
Trust's shareholders to which he or she 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. 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. 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.
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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.
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 or spread (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.
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 or account 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
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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 numerous 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, the Portfolio
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.
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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.
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 0843, Houston, Texas
77001-0843. 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 or her 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 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.
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NET ASSET VALUE DETERMINATION
The net asset value per share of each class 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 has established procedures designed to stabilize, to
the extent reasonably practicable, the Trust's price per share at $1.00 for the
Portfolio as computed for the purpose of sales and redemptions. Such procedures
include review of the Portfolio's portfolio holdings by the Board of Trustees,
at such intervals as they may deem appropriate, to determine whether the net
asset value calculated by using available market quotations or other reputable
sources for the Portfolio deviates from $1.00 per share and, if so, whether such
deviation may result in material dilution or is otherwise unfair to existing
holders of the Portfolio's shares. In the event the Board of Trustees determines
that such a deviation exists for the Portfolio, it will take such corrective
action as the Board of Trustees deems necessary and appropriate with respect to
the Portfolio, including the sale of portfolio instruments prior to maturity to
realize capital gains or losses or to shorten the average portfolio maturity;
the withholding of dividends; redemption of shares in kind; or the establishment
of a net asset value per share by using available market quotations.
DISTRIBUTION AGREEMENT
The Trust has entered into a Master Distribution Agreement (the
"Distribution Agreement") with FMC, a registered broker-dealer and a wholly
owned subsidiary of AIM, to act as the exclusive distributor of the shares of
each class of the Portfolio. The address of FMC is 11 Greenway Plaza, Suite 100,
Houston, Texas 77046-1173. Mail addressed to FMC should be sent to P.O. Box
4497, Houston, Texas 77210-4497. 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 the 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 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
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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 Portfolio's 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 of customer cash account balances in the shares of these
classes; (vii) providing periodic statements showing a customer's account
balance and integrating such statements with those of other transactions and
balances in the customer's other accounts serviced by such firm; (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.
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 or her 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
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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
On November 12, 1999, the Gramm-Leach-Bliley Act of 1999 was signed into
law. This Act removed the regulatory barriers previously established between
banks and bank holding companies, and insurance companies and broker-dealers.
Various provisions of this Act became effective immediately, and others will
become effective through November 2000. While the ultimate effect of such
legislation is unclear, financial holding companies and their affiliated bank
and financial subsidiaries will be able to participate in the distribution of
mutual fund shares.
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
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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 February 29, 2000, the current and effective
yields for the Private Investment Class were 4.95% and 5.08%, respectively. For
the seven-day period ended February 29, 2000, the current and effective yields
for the Institutional Class were 5.20% and 5.34%, respectively. For the
seven-day period ended February 29, 2000, the current and effective yields for
the Cash Management Class were 5.12% and 5.26%, respectively. For the seven-day
period ended February 29, 2000, the current and effective yields for the
Personal Investment Class were 4.70% and 4.40%, respectively. For the seven-day
period ended February 29, 2000, the current and effect yields for the Reserve
Class were 4.40% and 4.50%, respectively. For the seven-day period ended
February 29, 2000, the current and effective yields for the Resource Class were
5.04% and 5.17%, 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:
- iMoneyNet, Inc., formerly IBC Financial Data, Inc., 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 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 is set forth in
each Prospectus under the heading "Investment Objective and Strategies." 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.
Set forth in this section is a description of the Portfolio's investment
policies, strategies and practices. The investment objective of the Portfolio is
non-fundamental and may be changed by the Board of Trustees without shareholder
approval. The Portfolio's investment policies, strategies and practices are also
non-fundamental. The Board of Trustees of the Trust reserves the
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<PAGE> 186
right to change any of these non-fundamental investment policies, strategies or
practices without shareholder approval. However, shareholders will be notified
before any material change in the investment policies becomes effective. The
Portfolio has adopted certain investment restrictions, some of which are
fundamental and cannot be changed without shareholder approval. See "Investment
Program and Restrictions -- Investment Restrictions" in this Statement of
Additional Information. Any percentage limitations with respect to assets of the
Portfolio will be applied at the time of purchase. A later change in percentage
resulting from changes in asset values will not be considered a violation of the
percentage limitations. The percentage limitations applicable to borrowings and
reverse repurchase agreements will be applied in accordance with applicable
provisions of the 1940 Act and the rules and regulations promulgated thereunder
which specifically limit the Portfolio's borrowing abilities.
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 in securities issued or guaranteed as to
principal and interest by the U.S. Government or by its agencies or
instrumentalities.
INVESTMENT POLICIES
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.
REVERSE REPURCHASE AGREEMENTS. The Portfolio may 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 entering into a reverse
repurchase agreement. The Portfolio will only 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. 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.
ILLIQUID SECURITIES. The Portfolio will invest no more than 10% of its net
assets in illiquid securities.
INTERFUND LOANS. The Portfolio may lend up to 33 1/3% of its total assets
to another AIM Fund, on such terms and conditions as the SEC may require in an
exemptive order. An application for exemptive relief has been filed with the SEC
on behalf of the Portfolio and other AIM Funds. The Portfolio may also borrow
from another AIM Fund to satisfy redemption requests or to cover unanticipated
cash shortfalls due to a delay in the delivery of cash to the Portfolio's
custodian or improper delivery instructions by a broker effectuating a
transaction. It is anticipated that the Portfolio would not participate as a
borrower in the interfund lending facility because it would rarely need to
borrow cash to meet redemptions; however, it is anticipated that this Portfolio
will be a lender to other AIM Funds under the interfund lending facility.
INVESTMENT IN OTHER INVESTMENT COMPANIES. The Portfolio may invest in
other investment companies to the extent permitted by the 1940 Act, and rules
and regulations thereunder, and if applicable, exemptive orders granted by the
SEC. The following restrictions apply to investments in other investment
companies other than Affiliated Money Market Funds (defined below): (i) the
Portfolio may not purchase more than 3% of the total outstanding voting stock of
another investment company; (ii) the Portfolio may not invest more than 5% of
its total assets in securities issued by another investment company; and (iii)
the Portfolio may not invest more than 10% of its total assets in securities
issued by other investment companies other than Affiliated Money Market Funds.
With respect to the Portfolio's purchase of shares of another investment
company, including Affiliated Money Market Funds, the Portfolio will indirectly
bear its proportionate share of the advisory fees and other operating expenses
of such
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<PAGE> 187
investment company. The Portfolio has obtained an exemptive order from the SEC
allowing it to invest uninvested cash balances and cash collateral received in
connection with securities lending in money market funds that have AIM or an
affiliate of AIM as an investment adviser (the "Affiliated Money Market Funds"),
provided that, with respect to uninvested cash balances, investments in
Affiliated Money Market Funds do not exceed 25% of the total assets of the
Portfolio.
LENDING OF PORTFOLIO SECURITIES. Consistent with applicable regulatory
requirements the Portfolio may lend its portfolio securities (principally to
broker-dealers) to the extent of one-third of its total assets. Such loans would
be callable at any time and would be continuously secured by collateral equal to
no less than the market value, determined daily, of the loaned securities. Such
collateral will be cash or debt securities issued or guaranteed by the U.S.
Government or any of its agencies. The Portfolio would continue to receive the
income on loaned securities and would, at the same time, earn interest on the
loan collateral or on the investment of the loan collateral if it were cash. Any
cash collateral pursuant to these loans would be invested in short-term money
market instruments or affiliated money market funds. Where voting or consent
rights with respect to loaned securities pass to the borrower, the Portfolio
will follow the policy of calling the loan, in whole or in part as may be
appropriate, to permit the exercise of such voting or consent rights if the
matters involved are expected to have a material effect on the Portfolio's
investment in the loaned securities. Lending securities entails a risk of loss
to the Portfolio if and to the extent that the market value of the securities
loaned were to increase and the lender did not increase the collateral
accordingly.
PORTFOLIO TRANSACTIONS. The Portfolio does not seek profits through
short-term trading and will generally hold portfolio securities to maturity, but
AIM may seek to enhance the yield of the Portfolio by taking advantage of yield
disparities or other factors that occur in the money market. For example, market
conditions frequently result in similar securities trading at different prices.
AIM may dispose of any portfolio security prior to its maturity if such
disposition and reinvestment of proceeds are expected to enhance yield
consistent with AIM's judgment as to desirable portfolio maturity structure or
if such disposition is believed to be advisable due to other circumstances or
conditions. Securities held by the Portfolio will be disposed of prior to
maturity if an earlier disposition is deemed desirable by AIM to meet redemption
requests. The Portfolio's policy of investing in securities with maturities of
397 days or less will result in high portfolio turnover. Since brokerage
commissions are not normally paid on investments of the type made by the
Portfolio, however, the high turnover rate should not adversely affect the
Portfolio's net income.
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.
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.
MARGIN TRANSACTIONS, SHORT SALES AND OPTIONS. The Portfolio does not intend
to engage in short sales or to purchase or sell put or call options. The
Portfolio will not purchase any security on margin, except that it may obtain
such short-term credits as may be necessary for the clearance of purchases and
sales of portfolio securities.
ELIGIBLE SECURITIES. The Trust will invest only 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
Fundamental Restrictions
Fundamental restrictions may be changed only by a vote of the lesser of (i)
67% or more of the Portfolio's shares present at a meeting if the holders of
more than 50% of the outstanding shares are present in person or represented by
proxy, or (ii) more
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<PAGE> 188
than 50% of the Portfolio's outstanding shares. Any investment restriction that
involves a maximum or minimum percentage of securities or assets shall not be
considered to be violated unless an excess over or a deficiency under the
percentage occurs immediately after, and is caused by, an acquisition or
disposition of securities or utilization of assets by the Portfolio.
(1) The Portfolio is a "diversified company" as defined in the 1940
Act. The Portfolio will not 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, and the rules and regulations promulgated
thereunder, as such statute, rules and regulations are amended from time to
time or are interpreted from time to time by the SEC staff (collectively,
the "1940 Act Laws and Interpretations") or except to the extent that the
Portfolio may be permitted to do so by exemptive order or similar relief
(collectively, with the 1940 Act Laws and Interpretations, the "1940 Act
Laws, Interpretations and Exemptions"). In complying with this restriction,
however, the Portfolio may purchase securities or other investment
companies to the extent permitted by the 1940 Act Laws, Interpretations and
Exemptions.
(2) The Portfolio may not borrow money or issue senior securities,
except as permitted by the 1940 Act Laws, Interpretations and Exemptions.
(3) The Portfolio may not underwrite the securities of other issuers.
This restriction does not prevent the Portfolio from engaging in
transactions involving the acquisition, disposition or resale of its
portfolio securities, regardless of whether the Portfolio may be considered
to be an underwriter under the Securities Act of 1933.
(4) The Portfolio will not make investments that will result in the
concentration (as that term may be defined or interpreted by the 1940 Act
Laws, Interpretations and Exemptions) of its investments in the securities
of issuers primarily engaged in the same industry. This restriction does
not limit the Portfolio's investments in (i) obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities, (ii)
tax-exempt obligations issued by governments or political subdivisions of
governments, or (iii) bank instruments. In complying with this restriction,
the Portfolio will not consider a bank-issued guaranty or financial
guaranty insurance as a separate security.
(5) The Portfolio may not purchase real estate or sell real estate
unless acquired as a result of ownership of securities or other
instruments. This restriction does not prevent the Portfolio from investing
in issuers that invest, deal, or otherwise engage in transactions in real
estate or interests therein, or investing in securities that are secured by
real estate or interests therein.
(6) The Portfolio may not purchase physical commodities or sell
physical commodities unless acquired as a result of ownership of securities
or other instruments. This restriction does not prevent the Portfolio from
engaging in transactions involving futures contracts and options thereon or
investing in securities that are secured by physical commodities.
(7) The Portfolio may not make personal loans or loans of its assets
to persons who control or are under common control with the Portfolio,
except to the extent permitted by 1940 Act Laws, Interpretations and
Exemptions. This restriction does not prevent the Portfolio from, among
other things, purchasing debt obligations, entering into repurchase
agreements, loaning its assets to broker-dealers or institutional
investors, or investing in loans, including assignments and participation
interests.
(8) The Portfolio may, notwithstanding or any fundamental investment
policy or limitation, invest all of its assets in the securities of a
single open-end management investment company with substantially the same
fundamental investment objectives, policies and restrictions as the
Portfolio.
The investment restrictions set forth above provide the Portfolio with the
ability to operate under new interpretations of the 1940 Act or pursuant to
exemptive relief from the SEC without receiving prior shareholder approval of
the change. Even though the Portfolio has this flexibility, the Board of
Trustees of the Trust has adopted non-fundamental restrictions for the Portfolio
relating to certain of these restrictions which the advisor must follow in
managing the Portfolio. Any changes to these non-fundamental restrictions, which
are set forth below, require the approval of the Board of Trustees.
B-14
<PAGE> 189
Non-Fundamental Restrictions
The following non-fundamental investment restrictions apply to the
Portfolio. They may be changed without approval of the Portfolio's voting
securities.
(1) In complying with the fundamental restriction regarding issuer
diversification, the Portfolio will not, with respect to 100% of its total
assets, purchase the securities of any issuer (other than securities issued
or guaranteed by the U.S. Government or any of its agencies or
instrumentalities), if, as a result, (i) more than 5% of the Portfolio's
total assets would be invested in the securities of that issuer, except as
permitted by Rule 2a-7 under the 1940 Act, or (ii) the Portfolio would hold
more than 10% of the outstanding voting securities of that issuer. The
Portfolio may (i) purchase securities of other investment companies as
permitted by Section 12(d)(1) of the 1940 Act and (ii) invest its assets in
securities of other money market funds and lend money to other investment
companies and their series portfolios that have AIM or an affiliate of AIM
as an investment advisor (an "AIM Advised Fund"), subject to the terms and
conditions of any exemptive orders issued by the SEC.
(2) In complying with the fundamental restriction regarding borrowing
money and issuing senior securities, the Portfolio may borrow money in an
amount not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). The Portfolio may
borrow from banks, broker-dealers or an AIM Advised Fund. The Portfolio may
not borrow for leveraging, but may borrow for temporary or emergency
purposes, in anticipation of or in response to adverse market conditions,
or for cash management purposes. The Portfolio may not purchase additional
securities when any borrowings from banks exceed 5% of the Portfolio's
total assets.
(3) In complying with the fundamental restriction regarding industry
concentration, the Portfolio may invest up to 25% of its total assets in
the securities of issuers whose principal business activities are in the
same industry.
(4) In complying with the fundamental restriction with regard to
making loans, the Portfolio may lend up to 33 1/3% of its total assets and
may lend money to another AIM Advised Fund, on such terms and conditions as
the SEC may require in an exemptive order.
(5) Notwithstanding the fundamental restriction on investing all
assets in an open-end fund, the Portfolio may not invest all of its assets
in the securities of a single open-end management investment company with
the same fundamental investment objectives, policies and restrictions as
the Portfolio.
MANAGEMENT
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.
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<PAGE> 190
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 (81) Trustee and Director and Chairman, A I M Management Group Inc.,
Chairman 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 (56) 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 Formerly, Director, Cortland Trust Inc. (investment
Six Blythewood Road company), CF & I Steel Corp., Monumental Life
Baltimore, MD 21210 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, President and Chief Operating Officer,
Baltimore, MD 21201 Mercantile-Safe Deposit & Trust Co.; and President,
Mercantile Bankshares.
- --------------------------------------------------------------------------------------------------------------------------
JACK M. FIELDS (48) 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 (63) Trustee Partner, Kramer Levin Naftalis & Frankel, LLP (law
919 Third Avenue 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 and Chief
Executive Officer, Managed Products, 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.
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<PAGE> 191
<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
New York, NY 10118
- --------------------------------------------------------------------------------------------------------------------------
LEWIS F. PENNOCK (57) Trustee Partner, Pennock & Cooper (law firm).
6363 Woodway, Suite 825
Houston, TX 77057
- --------------------------------------------------------------------------------------------------------------------------
LOUIS S. SKLAR (60) Trustee Executive Vice President, Development and Operations,
The Williams 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 (41) 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 (45) 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 and Sklar and Dr. Mathai-Davis. The
Audit Committee is responsible for: (i) considering management's recommendations
of independent accountants for each Portfolio and evaluating such accountants'
performance, costs and financial stability; (ii) with AIM, reviewing and
coordinating audit plans prepared by the Portfolios' independent accountants and
management's internal audit staff; and
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<PAGE> 192
(iii) reviewing financial statements contained in periodic reports to
shareholders with the Portfolios' independent accountants and management.
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: (i) overseeing AIM's
investment-related compliance systems and procedures to ensure their continued
adequacy; and (ii) considering and acting, on an interim basis between meetings
of the full Board, on investment-related matters requiring Board consideration,
including dividends and distributions, brokerage policies and pricing matters.
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: (i) considering
and nominating individuals to stand for election as independent trustees as long
as the Trust maintains a distribution plan pursuant to Rule 12b-1 under the 1940
Act; (ii) reviewing from time to time the compensation payable to the
independent trustees; and (iii) making recommendations to the Board regarding
matters related to compensation, including deferred compensation plans and
retirement plans for the independent trustees.
The Nominating and Compensation Committee will consider nominees
recommended by a shareholder to serve as trustees, provided (i) that such person
is a shareholder of record at the time he or she submits such names and is
entitled to vote at the meeting of shareholders at which the trustees will be
elected, and (ii) that the Nominating and Compensation Committee or the Board,
as applicable, shall make the final determination of persons to be nominated.
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. The trustees of the
Trust who do not serve as officers of the Trust are compensated for their
services according to a fee schedule which recognizes the fact that they also
serve as directors or trustees of certain other regulated investment companies
managed, administered or distributed by AIM or its affiliates. Each such trustee
receives a fee, allocated among such investment companies 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 37,485 103,500
Owen Daly II...................................... 5,724 122,898 103,500
Edward K. Dunn, Jr. .............................. 5,724 55,565 103,500
Jack Fields....................................... 5,695 15,826 101,500
Carl Frischling(4)................................ 5,694 97,791 103,500
Robert H. Graham.................................. -0- 0 0
John F. Kroeger(5)................................ 506 40,461 0
Prema Mathai-Davis................................ 5,344 11,870 101,500
Lewis F. Pennock.................................. 5,694 45,766 103,500
Ian W. Robinson(6)................................ 3,551 94,442 25,000
Louis S. Sklar.................................... 5,694 90,232 101,500
</TABLE>
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<PAGE> 193
- ---------------
(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 with respect of such retirement benefits was $35,554.
Data reflects compensation for the calendar year ended December 31, 1999.
(3) Each trustee serves as a trustee or director of a total of 12 registered
investment companies advised by AIM. Data reflects compensation for the
calendar year ended December 31, 1999.
(4) The Trust paid the law firm of Kramer Levin Naftalis & Frankel LLP $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. 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 (for purposes of this paragraph only, 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, a trustee becomes eligible to
retire and receive full benefits under the Plan when he or she 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 or her
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 all benefits under the Plan, 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 the retainer amount reflected
below and various years of service. The estimated credited years of service for
Messrs. Crockett, Daly, Dunn, Fields, Frischling, Kroeger, Pennock, Robinson and
Sklar and Dr. Mathai-Davis are 13, 13, 2, 3, 23, 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 and Sklar and Dr. Mathai-Davis (for
purposes of this paragraph only, the "Deferring Trustees" ) have each executed a
Deferred Compensation Agreement (collectively, the "Compensation Agreements").
Pursuant to the Compensation 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
B-19
<PAGE> 194
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 or her deferral account, the balance of the deferral account will
be distributed to his or her designated beneficiary in a single lump sum payment
as soon as practicable after such Deferring Trustee's death. The Compensation
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.
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, manages or administers over 120 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."
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 and certain other employees to (a) pre-clear all personal securities
transactions subject to the Code of Ethics; (b) file reports regarding such
transactions; (c) 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 (subject to a de minimis
exception), and (iii) transactions involving securities being considered for
investment by an AIM Fund (subject to the de minimis exception); and (d) abide
by certain other provisions of the Code of Ethics. The de minimis exception
under the Code of Ethics covers situations where there is no material conflict
of interest because of the large market capitalization of a security and the
relatively small number of shares involved in a personal transaction. The Code
of Ethics also generally prohibits AIM employees from purchasing securities in
initial public offerings. Personal trading reports are periodically reviewed by
AIM, and the Board of Trustees reviews quarterly and annual reports (which
summarize any significant violations of the Code of Ethics). Sanctions for
violating the Code of Ethics may include censure, monetary penalties, suspension
or termination of employment.
The Trust has entered into a Master Investment Advisory Agreement dated
June 1, 2000 (the "Advisory Agreement") with AIM. A prior investment advisory
agreement with similar terms to the Advisory Agreement was in effect prior to
June 1, 2000. The Advisory Agreement will remain in effect until June 30, 2001,
and 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.
B-20
<PAGE> 195
As compensation for its advisory 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.......................................... 0.20%
Over $250 million to $500 million........................... 0.15%
Over $500 million........................................... 0.10%
</TABLE>
Pursuant to an advisory agreement in effect prior to June 1, 2000 which
provided for the same level of compensation to AIM as the Advisory Agreement,
AIM received fees (net of fee waivers, if any) from the 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.
In addition, if the Portfolio engages in securities lending, AIM will
provide the Portfolio investment advisory services and related administrative
services. The Advisory Agreement describes the administrative services to be
rendered by AIM if the Portfolio engages in securities lending activities, as
well as the compensation AIM may receive for such administrative services.
Services to be provided include: (a) overseeing participation in the securities
lending program to ensure compliance with all applicable regulatory and
investment guidelines; (b) assisting the securities lending agent or principal
(the agent) in determining which specific securities are available for loan; (c)
monitoring the agent to ensure that securities loans are effected in accordance
with AIM's instructions and with procedures adopted by the Board; (d) preparing
appropriate periodic reports for, and seeking appropriate approvals from, the
Board with respect to securities lending activities; (e) responding to agent
inquiries; and (f) performing such other duties as may be necessary.
AIM's compensation for advisory services rendered in connection with
securities lending is included in the advisory fee schedule. As compensation for
the related administrative services AIM will provide, a lending fund will pay
AIM a fee equal to 25% of the net monthly interest or fee income retained or
paid to the fund from such activities. AIM currently intends to waive such fee,
and has agreed to seek Board approval prior to its receipt of all or a portion
of such fee.
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 her 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 prior
administrative services agreements which provided for the same level of
reimbursement to AIM as the Administrative Services Agreement, 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
B-21
<PAGE> 196
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 0843, Houston, TX 77001-0843, 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. As transfer agent, AFS processes orders
for purchases, redemptions and exchanges of shares; prepares and transmits
payments for dividends and distributions declared by the Portfolio; maintains
shareholders accounts; and provides shareholders with information regarding the
Portfolio and its accounts.
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. BONY maintains the portfolio securities owned by the
Portfolio, administers the purchases and sales of portfolio securities, collects
interest and other distributions made on securities held by the Portfolio and
performs other ministerial duties.
LEGAL MATTERS
The law firm of Ballard Spahr Andrews & Ingersoll, LLP, Philadelphia,
Pennsylvania serves as counsel to the Trust, and passes upon legal matters for
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.
B-22
<PAGE> 197
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 May 19, 2000, and the percentage of such shares owned
by such shareholders as of such date are as follows:
CASH MANAGEMENT CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
Ferris, Baker Watts, Inc........................... 46.63% --
1700 Pennsylvania Ave.
Washington, DC 20006
Fund Services Advisors, Inc........................ 12.41% --
1875 Century Park East -- Suite 1345
Los Angeles, CA 90067
Gardnyr Michael Capital, Inc....................... 9.29% --
2281 Lee Rd Ste 104
Winter Park, FL 32789
Investment Resources............................... 9.28% --
Independence Plaza
1050 Seventeenth Street, Ste. 1620
Denver, CO 80265
Mayor And City Council 416A1....................... 7.00% --
100 Guilford Ave
Baltimore, MD 21202
</TABLE>
B-23
<PAGE> 198
INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
A I M Advisors, Inc................................ 35.34%(b) 35.34%(b)
AIM Fund of Funds Account
Money Market Portfolio Admin.
11 Greenway Plaza, Ste 100
Houston, TX 77046
Gardnyr Michael Capital, Inc....................... 12.85% --
2281 Lee Rd, Ste 104
Winter Park, FL 32789
Waukesha County.................................... 12.32% --
Finance Division, Dept Of Admin.
1320 Pewaukee Road, Ste 310
Waukesha, WI 53188 3878
Kenosha County Wisconsin........................... 6.19% --
1010 56th Street
Kenosha, WI 53140 3738
</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) Represents shares held in a cash management account for the benefit of
certain AIM Funds. AIM has the power to direct the disposition of such
shares, and thus is deemed to be a beneficial owner of the shares. Shares
have been acquired in accordance with an exemptive order issued by the SEC.
PERSONAL INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
SunTrust Equitable Securities...................... 100% --
P.O. Box 4418, MC 3907
Atlanta, GA 30302
</TABLE>
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
Fund Services Advisors, Inc........................ 78.83% --
1875 Century Park East, Suite 1345
Los Angeles, CA 90067
Huntington Capital Corp............................ 7.69% --
41 S High St, Ninth Floor
Columbus, OH 43287
</TABLE>
RESERVE CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
First National Banker's Bank....................... 100% --
PO Drawer 80579
Baton Rouge, LA 70898
</TABLE>
B-24
<PAGE> 199
RESOURCE CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
SunTrust Equitable Securities...................... 46.37% --
P.O. Box 4418, MC 3907
Atlanta, GA 30302
City of Chicago G.O. Bonds for City Colleges....... 37.25% --
121 North LaSalle Street
Room 204
Chicago, IL 60603
Sovereign Bank..................................... 9.85% --
C/O Chase Enterprises
280 Trumbull Street
Hartford, CT 06103
</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.
GOVERNMENT 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 Government
TaxAdvantage Portfolio as of May 19, 2000 and the percentage of such shares
owned by such shareholders as of such date are as follows:
INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
Bank of America N.A................................ 38.16% --
1401 Elm Street 11th Floor
P.O. Box 831000
Dallas, TX 75202 2911
Frost National Bank TX............................. 18.76% --
Muir & Co
C/O Frost
P.O. Box 2479
San Antonio, TX 78298 2479
First Trust / Var & Co............................. 12.40% --
Funds Control Suite 0404
180 East Fifth Street
St. Paul, MN 55101
First National Bank Of Maryland.................... 8.94% --
Trust Operations Mailstop 109-751
P.O. Box 1596
Baltimore, MD 21203
PaineWebber SSB.................................... 6.04% --
1000 Harbor Blvd 6th Floor
Mutual Fund Operations
State Street Custodial Accounts
Weehawken, NJ 07087-6790
</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-25
<PAGE> 200
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
Bank of New York................................... 45.16% --
One Wall Street
5th Floor
Stif/Master Note
New York, NY 10286
CIBC World Markets................................. 25.67% --
200 Liberty Street
World Financial Center
New York, NY 10281
Huntington Capital Corp............................ 14.87% --
41 S High St., Ninth Floor
Columbus, OH 43287
Frost National Bank TX............................. 5.84% --
Muir & Co
C/O Frost
P.O. Box 2479
San Antonio, TX 78298 2479
First Union Securities, Inc........................ 5.11% --
Money Market Funds
8739 Research Dr., Capital Markets
Charlotte, NC 28262-0675
</TABLE>
RESOURCE CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
EVEREN Clearing Corp............................... 100% --
111 East Kilbourn Ave.
Milwaukee, WI 53202
</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-26
<PAGE> 201
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 May 19, 2000 and the percentage of such shares owned by such
shareholders as of such date are as follows:
CASH MANAGEMENT CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
Bank of New York................................... 40.44% --
One Wall Street
5th Floor
Stif/Master Note
New York, NY 10286
Bank of Oklahoma................................... 14.99% --
P.O. Box 2180
Tulsa, OK 74101
Chase Bank of Texas................................ 13.10% --
600 Travis St., 8th Fl
8-CBT-39
Houston, TX 77252-8009
Fund Services Advisors, Inc........................ 7.90% --
1875 Century Park East -- Suite 1345
Los Angeles, CA 90067
Huntington Capital Corp............................ 6.60% --
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.
B-27
<PAGE> 202
INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
City of New York Deferred Compensation Plan.......... 8.78% --
40 Rector Street 3rd Floor
New York, NY 10006
Trust Company Bank................................... 8.30% --
Center 3139
P.O. Box 105504
Atlanta, GA 30348
State Street Bank & Trust............................ 6.16% --
108 Myrtle Street
North Quincy, MA 02171
Weststar Bank Trust Dept............................. 5.59% --
P.O. Box 1156
Bartlesville, OK 75004 1156
Trustmark National Bank.............................. 5.45% --
Trust Department
248 East Capitol
Jackson, MS 39205
Star Trust........................................... 5.38% --
425 Walnut St.
Mall Location 7155
Cincinnati, OH 45202
Texas Commerce Bank National Association, as Custo... 5.38% --
1585 Broadway
New York, NY 10036
Chase Bank of Texas, National Association............ 5.38% --
600 Travis, 9th Floor
Houston, TX 77002
</TABLE>
PERSONAL INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
Cullen/Frost Discount Brokers........................ 85.29% --
P.O. Box 2358
San Antonio, TX 78299
Kinco & Co. C/O Rnb Securities....................... 6.55% --
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.
B-28
<PAGE> 203
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
Bank of New York..................................... 36.88% --
One Wall Street
5th Floor
Stif/Master Note
New York, NY 10286
Huntington Capital Corp.............................. 12.86% --
41 S. High St., Ninth Floor
Columbus, OH 43287
Cullen/Frost Discount Brokers........................ 10.18% --
P.O. Box 2358
San Antonio, TX 78299
Bank One Trust Company............................... 7.81% --
1111 Polaris Parkway
Columbus, OH 43240
Zions First National Bank (NV)....................... 6.67% --
P.O. Box 30880
Salt Lake City, UT 84130
New Haven Savings Bank Trust Department.............. 5.07% --
P.O. Box 302
Trust Department
New Haven, CT 06502
</TABLE>
RESERVE CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
Bank of New York..................................... 99.92% --
440 Mamoroneck, 5th Fl.
Harrison, NY 10286
</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-29
<PAGE> 204
RESOURCE CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
First Union Subaccounts.............................. 48.93% --
8739 Research Drive
Capital Markets
Charlotte, NC 28262-0675
City of Chicago G.O. Bonds for City Colleges......... 18.30% --
121 North LaSalle Street
Room 204
Chicago, IL 60603
Mellon Bank NA....................................... 11.32% --
P.O. Box 710
Pittsburgh, PA 15230-0710
Sovereign Bank....................................... 8.72% --
C/O Chase Enterprises
280 Trumbull Street
Hartford, CT 06103
EVEREN Clearing Corp................................. 5.81% --
111 East Kilbourn Ave.
Milwaukee, WI 53202
</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 May 19, 2000, the trustees
and officers of the Trust as a group beneficially owned less than 1% of the
outstanding shares of each class of each Portfolio of the Trust.
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 thereof. Such
election, or any revocation thereof, must be made in writing and sent by the
shareholder to the AFS at P.O. Box 0843, Houston, Texas 77001-0843. 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, allocated based upon such
class's pro rata share of the total shares outstanding which relate to the
Portfolio, less (b) Trust expenses accrued for the applicable dividend period
B-30
<PAGE> 205
attributable to the Portfolio, such as custodian fees and accounting expenses,
allocated based upon such class' pro rata of the net assets of the 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, 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
B-31
<PAGE> 206
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 (or of another AIM Fund). Shareholders
receiving a distribution in the form of additional shares will be treated as
receiving a distribution in an amount equal to the fair market value of the
shares received, determined as of the reinvestment date.
Ordinarily, shareholders are required to take distributions by the
Portfolio into account in the year in which the distributions are made. However,
distributions declared in October, November or December of any year and payable
to shareholders of record on a specified date in such a month will be deemed to
have been received by the shareholders (and made by the Portfolio) on December
31 of such calendar year if such distributions are actually made in January of
the following year. Shareholders will be advised annually as to the U.S. federal
income tax consequences of distributions made (or deemed made) during the year
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 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 Portfolio 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 (taxable at a maximum rate of
20% for noncorporate shareholders) 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.
B-32
<PAGE> 207
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 May 23,
2000. 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.
B-33
<PAGE> 208
FINANCIAL STATEMENTS
FS
<PAGE> 209
SCHEDULE OF INVESTMENTS
February 29, 2000
(Unaudited)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
U.S. TREASURY SECURITIES - 22.99%
U.S. TREASURY BILLS(a) - 11.02%
5.04% 03/30/00 $100,000 $ 99,594,000
- -------------------------------------------------------------------------
5.07% 03/30/00 200,000 199,183,167
- -------------------------------------------------------------------------
5.12% 03/30/00 90,000 89,628,800
- -------------------------------------------------------------------------
5.69% 04/27/00 50,000 49,549,937
- -------------------------------------------------------------------------
5.35% 05/25/00 50,000 49,368,993
- -------------------------------------------------------------------------
5.70% 08/03/00 50,000 48,773,993
- -------------------------------------------------------------------------
5.84% 03/01/01 50,000 47,047,556
- -------------------------------------------------------------------------
583,146,446
- -------------------------------------------------------------------------
U.S. TREASURY NOTES - 11.97%
6.75% 04/30/00 50,000 50,109,315
- -------------------------------------------------------------------------
6.38% 05/15/00 30,000 30,055,060
- -------------------------------------------------------------------------
6.25% 05/31/00 25,000 25,048,290
- -------------------------------------------------------------------------
5.38% 06/30/00 75,000 74,993,804
- -------------------------------------------------------------------------
6.13% 07/31/00 55,000 55,121,616
- -------------------------------------------------------------------------
8.75% 08/15/00 50,000 50,708,459
- -------------------------------------------------------------------------
6.25% 08/31/00 50,000 50,152,662
- -------------------------------------------------------------------------
4.50% 09/30/00 50,000 49,541,567
- -------------------------------------------------------------------------
6.13% 09/30/00 50,000 50,026,378
- -------------------------------------------------------------------------
4.00% 10/31/00 75,000 73,934,428
- -------------------------------------------------------------------------
5.75% 11/15/00 50,000 49,819,979
- -------------------------------------------------------------------------
4.63% 11/30/00 75,000 74,116,153
- -------------------------------------------------------------------------
633,627,711
- -------------------------------------------------------------------------
Total U.S. Treasury Securities (Cost $1,216,774,157) 1,216,774,157
- -------------------------------------------------------------------------
Total Investments (excluding Repurchase Agreements) 1,216,774,157
- -------------------------------------------------------------------------
REPURCHASE AGREEMENTS(b) - 78.21%
Barclays Capital, Inc.(c)
5.77% 03/01/00 240,000 240,000,000
- -------------------------------------------------------------------------
Bear, Stearns & Co. Inc.(d)
5.77% -- 150,000 150,000,000
- -------------------------------------------------------------------------
Chase Securities Inc.(e)
5.77% 03/01/00 240,000 240,000,000
- -------------------------------------------------------------------------
CIBC Oppenheimer Corp.(f)
5.77% 03/01/00 240,000 240,000,000
- -------------------------------------------------------------------------
Credit Suisse First Boston Corp.(g)
5.80% 03/01/00 200,000 200,000,000
- -------------------------------------------------------------------------
Deutsche Bank Securities, Inc.(h)
5.77% -- 800,000 800,000,000
- -------------------------------------------------------------------------
Dresdner Kleinwort Benson NA LLC(i)
5.77% 03/01/00 240,000 240,000,000
- -------------------------------------------------------------------------
</TABLE>
FS-15
<PAGE> 210
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
REPURCHASE AGREEMENTS(b) - (Continued)
First Union Capital Markets(j)
5.77% 03/01/00 $150,000 $ 150,000,000
- ----------------------------------------------------------------------------------
Salomon Smith Barney, Inc.(k)
5.76% 03/01/00 448,193 448,192,966
- ----------------------------------------------------------------------------------
Schroders & Co., Inc.(l)
5.77% 03/01/00 240,000 240,000,000
- ----------------------------------------------------------------------------------
Societe Generale Cowen Securities Corp.(m)
5.77% 03/01/00 250,000 250,000,000
- ----------------------------------------------------------------------------------
Warburg Dillon Read LLC(n)
5.77% 03/01/00 700,000 700,000,000
- ----------------------------------------------------------------------------------
WestDeutsche Landesberg Girozentrale(o)
5.77% 03/01/00 240,000 240,000,000
- ----------------------------------------------------------------------------------
Total Repurchase Agreements (Cost $4,138,192,966) 4,138,192,966
- ----------------------------------------------------------------------------------
TOTAL INVESTMENTS - 101.20% (Cost
$5,354,967,123) 5,354,967,123
- ----------------------------------------------------------------------------------
LIABILITIES LESS OTHER ASSETS - (1.20)% (63,705,913)
- ----------------------------------------------------------------------------------
NET ASSETS - 100.00% $5,291,261,210
- ----------------------------------------------------------------------------------
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
(a) U.S. Treasury bills are traded on a discount basis. In such cases the
interest rate shown represents the rate of discount paid or received at the
time of purchase by the Portfolio.
(b) Collateral on repurchase agreements, including the Portfolio's pro-rata
interest in joint repurchase agreements, is taken into possession by the
Portfolio upon entering into the repurchase agreement. The collateral is
marked to market daily to ensure its market value is at least 102% of the
sales price of the repurchase agreement. The investments in some repurchase
agreements are through participation in joint accounts with other mutual
funds, private accounts and certain non-registered investment companies
managed by the investment advisor or its affiliates.
(c) Repurchase agreement entered into 02/29/00 with a maturing value of
$240,038,467. Collateralized by $229,976,000 U.S. Government obligations,
0% to 13.125% due 04/20/00 to 08/15/22 with an aggregate market value at
02/29/00 of $244,603,870.
(d) 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 $439,862,000 U.S. Government
obligations, 0% to 9.25% due 05/15/04 to 02/15/27 with an aggregate market
value at 02/29/00 of $153,914,549.
(e) Repurchase agreement entered into 02/29/00 with a maturing value of
$240,038,467. Collateralized by $252,383,000 U.S. Government obligations,
5.50% to 6.875% due 11/30/00 to 05/15/08 with an aggregate market value at
02/29/00 of $244,800,308.
(f) Repurchase agreement entered into 02/29/00 with a maturing value of
$240,038,467. Collateralized by $242,174,000 U.S. Government obligations,
4.50% to 14.25% due 08/15/00 to 08/15/28 with an aggregate market value at
02/29/00 of $244,999,870.
(g) Repurchase agreement entered into 02/29/00 with a maturing value of
$200,032,222. Collateralized by $498,102,715 U.S. Government obligations,
0% to 8.75% due 02/15/10 to 05/15/17 with an aggregate market value at
02/29/00 of $207,772,331.
(h) 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 $803,375,000 U.S. Government
obligations, 0% to 10.375% due 06/08/00 to 08/15/29 with an aggregate
market value at 02/29/00 of $816,000,927.
(i) Repurchase agreement entered into 02/29/00 with a maturing value of
$240,038,467. Collateralized by $222,020,000 U.S. Government obligations,
3.625% to 12.50% due 01/15/08 to 05/15/30 with an aggregate market value at
02/29/00 of $244,806,713.
(j) Repurchase agreement entered into 02/29/00 with a maturing value of
$150,024,042. Collateralized by $138,456,000 U.S. Government obligations,
4.625% to 11.25% due 12/31/00 to 02/15/15 with an aggregate market value at
02/29/00 of $153,000,681.
(k) Joint repurchase agreement entered into 02/29/00 with a maturing value of
$500,080,000. Collateralized by $1,248,055,000 U.S. Government obligations,
0% due 11/15/01 to 08/15/21 with an aggregate market value at 02/29/00 of
$510,176,897.
(l) Repurchase agreement entered into 02/29/00 with a maturing value of
$240,038,467. Collateralized by $235,553,000 U.S. Government obligations,
0% to 10.75% due 03/02/00 to 08/15/29 with an aggregate market value at
02/29/00 of $244,802,276.
(m) Repurchase agreement entered into 02/29/00 with a maturing value of
$250,040,069. Collateralized by $190,057,000 U.S. Government obligations,
9.875% to 12.00% due 08/15/13 to 11/15/15 with an aggregate market value at
02/29/00 of $255,151,205.
(n) Repurchase agreement entered into 02/29/00 with a maturing value of
$700,112,194. Collateralized by $723,100,000 U.S. Government obligations,
0% due 04/27/00 to 06/29/00 with an aggregate market value at 02/29/00 of
$714,003,653.
(o) Repurchase agreement entered into 02/29/00 with a maturing value of
$240,038,467. Collateralized by $214,272,000 U.S. Government obligations,
5.375% to 13.25% due 11/30/00 to 05/15/14 with an aggregate market value at
02/29/00 of $244,800,395.
See Notes to Financial Statements.
FS-16
<PAGE> 211
STATEMENT OF ASSETS AND LIABILITIES
February 29, 2000
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase agreements, at value (amortized cost) $1,216,774,157
- -----------------------------------------------------------------------------------------------------
Repurchase agreements 4,138,192,966
- -----------------------------------------------------------------------------------------------------
Interest receivable 8,834,769
- -----------------------------------------------------------------------------------------------------
Investment for deferred compensation plan 119,214
- -----------------------------------------------------------------------------------------------------
Other assets 158,290
- -----------------------------------------------------------------------------------------------------
Total assets 5,364,079,396
- -----------------------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 47,047,556
- -----------------------------------------------------------------------------------------------------
Dividends 24,624,673
- -----------------------------------------------------------------------------------------------------
Deferred compensation 119,213
- -----------------------------------------------------------------------------------------------------
Accrued administrative services fees 24,332
- -----------------------------------------------------------------------------------------------------
Accrued advisory fees 261,253
- -----------------------------------------------------------------------------------------------------
Accrued distribution fees 553,158
- -----------------------------------------------------------------------------------------------------
Accrued transfer agent fees 44,493
- -----------------------------------------------------------------------------------------------------
Accrued trustees' fees 4,471
- -----------------------------------------------------------------------------------------------------
Accrued operating expenses 139,037
- -----------------------------------------------------------------------------------------------------
Total liabilities 72,818,186
- -----------------------------------------------------------------------------------------------------
NET ASSETS $5,291,261,210
=====================================================================================================
NET ASSETS:
Institutional Class $3,156,815,643
=====================================================================================================
Private Investment Class $ 415,681,345
=====================================================================================================
Personal Investment Class $ 283,793,734
=====================================================================================================
Cash Management Class $ 922,455,618
=====================================================================================================
Reserve Class $ 131,289,696
=====================================================================================================
Resource Class $ 381,225,174
=====================================================================================================
SHARES OF BENEFICIAL INTEREST, $.01 PAR VALUE PER SHARE:
Institutional Class 3,156,588,528
=====================================================================================================
Private Investment Class 415,658,564
=====================================================================================================
Personal Investment Class 283,767,232
=====================================================================================================
Cash Management Class 922,388,465
=====================================================================================================
Reserve Class 131,286,270
=====================================================================================================
Resource Class 381,194,489
=====================================================================================================
NET ASSET VALUE PER SHARE:
Net asset value, offering and redemption price per share $ 1.00
=====================================================================================================
</TABLE>
See Notes to Financial Statements.
FS-17
<PAGE> 212
STATEMENT OF OPERATIONS
For the six months ended February 29, 2000
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $143,990,882
- --------------------------------------------------------------------
EXPENSES:
Advisory fees 1,556,337
- --------------------------------------------------------------------
Custodian fees 139,371
- --------------------------------------------------------------------
Administrative services fees 147,587
- --------------------------------------------------------------------
Trustees' fees 12,239
- --------------------------------------------------------------------
Transfer agent fees 486,393
- --------------------------------------------------------------------
Distribution fees (see Note 2) 4,161,025
- --------------------------------------------------------------------
Other 336,182
- --------------------------------------------------------------------
Total expenses 6,839,134
- --------------------------------------------------------------------
Less: Fee waivers (1,311,267)
- --------------------------------------------------------------------
Net expenses 5,527,867
- --------------------------------------------------------------------
Net investment income 138,463,015
- --------------------------------------------------------------------
Net realized gain on sales of investments 21,543
- --------------------------------------------------------------------
Net increase in net assets resulting from operations $138,484,558
====================================================================
</TABLE>
See Notes to Financial Statements.
FS-18
<PAGE> 213
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended February 29, 2000 and year ended August 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
FEBRUARY 29, AUGUST 31,
2000 1999
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 138,463,015 $ 252,566,461
- ----------------------------------------------------------------------------------------
Net realized gain on sales of investments 21,543 233,481
- ----------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 138,484,558 252,799,942
- ----------------------------------------------------------------------------------------
Distributions to shareholders from net investment income:
Institutional Class (80,040,984) (154,878,876)
- ----------------------------------------------------------------------------------------
Private Investment Class (16,651,896) (16,111,371)
- ----------------------------------------------------------------------------------------
Personal Investment Class (6,772,908) (16,331,172)
- ----------------------------------------------------------------------------------------
Cash Management Class (24,321,773) (46,789,257)
- ----------------------------------------------------------------------------------------
Reserve Class (2,798,542) (1,139,360)
- ----------------------------------------------------------------------------------------
Resource Class (7,876,912) (17,316,425)
- ----------------------------------------------------------------------------------------
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) 87,492,561 59,979,434
- ----------------------------------------------------------------------------------------
Net increase in net assets 87,514,104 59,512,942
- ----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 5,203,747,106 5,144,234,164
- ----------------------------------------------------------------------------------------
End of period $5,291,261,210 $5,203,747,106
========================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $5,290,883,548 $5,203,390,987
========================================================================================
Undistributed net realized gain on sales of investments 377,662 356,119
========================================================================================
$5,291,261,210 $5,203,747,106
========================================================================================
</TABLE>
See Notes to Financial Statements.
FS-19
<PAGE> 214
NOTES TO FINANCIAL STATEMENTS
February 29, 2000
(Unaudited)
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:
<TABLE>
<CAPTION>
Net Assets RATE
- ------------------------------------------------------------------------
<S> <C>
First $300 million 0.15%
- ------------------------------------------------------------------------
Over $300 million to $1.5 billion 0.06%
- ------------------------------------------------------------------------
Over $1.5 billion 0.05%
- ------------------------------------------------------------------------
</TABLE>
FS-20
<PAGE> 215
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 six months ended February 29, 2000,
AIM was paid $147,587 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 six months ended February 29,
2000, AFS was paid $404,304 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. Currently, FMC has elected to waive a portion of its compensation
payable by the Fund such that the compensation paid pursuant to the Plan with
respect to the Private Investment Class, the Personal Investment Class, the
Cash Management Class, the Reserve Class, and the Resource Class equals 0.30%,
0.50%, 0.08%, 0.80% and 0.16%, respectively, maximum annual rate of the average
daily net assets attributable to such class. During the six months ended
February 29, 2000, the Private Investment Class, the Personal Investment Class,
the Cash Management Class, the Reserve Class and the Resource Class paid
$1,009,204, $713,303, $377,093, $503,175 and $246,983, respectively, as
compensation under the Plan. FMC waived fees of $1,311,267 for the same period.
Certain officers and trustees of the Trust are officers of AIM, FMC and AFS.
During the six months ended February 29, 2000, the Portfolio paid legal fees
of $3,626 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-21
<PAGE> 216
NOTE 4-SHARE INFORMATION
Changes in shares outstanding during the six months ended February 29, 2000 and
the year ended August 31, 1999 were as follows:
<TABLE>
<CAPTION>
FEBRUARY 29, 2000 AUGUST 31, 1999
------------------------------ --------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Sold:
Institutional Class 6,283,277,548 $6,283,277,548 18,697,189,201 $18,697,189,201
- -----------------------------------------------------------------------------------------------------------
Private Investment Class 2,584,222,725 2,584,222,725 1,543,792,773 1,543,792,773
- -----------------------------------------------------------------------------------------------------------
Personal Investment Class 1,411,836,186 1,411,836,186 3,783,262,789 3,783,262,789
- -----------------------------------------------------------------------------------------------------------
Cash Management Class 2,235,128,555 2,235,128,555 6,593,996,488 6,593,996,488
- -----------------------------------------------------------------------------------------------------------
Reserve Class* 508,822,886 508,822,886 339,249,182 339,249,182
- -----------------------------------------------------------------------------------------------------------
Resource Class 1,692,139,653 1,692,139,653 2,625,595,247 2,625,595,247
- -----------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends:
Institutional Class 15,672,444 15,672,444 35,404,120 35,404,120
- -----------------------------------------------------------------------------------------------------------
Private Investment Class 2,347,517 2,347,517 5,531,007 5,531,007
- -----------------------------------------------------------------------------------------------------------
Personal Investment Class 5,478,587 5,478,587 14,908,717 14,908,717
- -----------------------------------------------------------------------------------------------------------
Cash Management Class 8,074,772 8,074,772 18,450,756 18,450,756
- -----------------------------------------------------------------------------------------------------------
Reserve Class* 2,695,906 2,695,906 740,689 740,689
- -----------------------------------------------------------------------------------------------------------
Resource Class 7,086,902 7,086,902 16,749,204 16,749,204
- -----------------------------------------------------------------------------------------------------------
Reacquired:
Institutional Class (6,306,344,777) (6,306,344,777) (18,556,477,426) (18,556,477,426)
- -----------------------------------------------------------------------------------------------------------
Private Investment Class (2,586,077,466) (2,586,077,466) (1,494,418,811) (1,494,418,811)
- -----------------------------------------------------------------------------------------------------------
Personal Investment Class (1,418,454,425) (1,418,454,425) (3,919,007,542) (3,919,007,542)
- -----------------------------------------------------------------------------------------------------------
Cash Management Class (2,181,105,504) (2,181,105,504) (6,685,798,097) (6,685,798,097)
- -----------------------------------------------------------------------------------------------------------
Reserve Class* (500,205,852) (500,205,852) (220,016,541) (220,016,541)
- -----------------------------------------------------------------------------------------------------------
Resource Class (1,677,103,096) (1,677,103,096) (2,739,172,322) (2,739,172,322)
- -----------------------------------------------------------------------------------------------------------
Net increase 87,492,561 $ 87,492,561 59,979,434 $ 59,979,434
===========================================================================================================
</TABLE>
* The Reserve Class commenced sales on January 4, 1999.
FS-22
<PAGE> 217
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Cash Management
Class outstanding during the six months ended February 29, 2000 and each of the
years in the five-year period ended August 31, 1999.
<TABLE>
<CAPTION>
AUGUST 31,
FEBRUARY 29, -----------------------------------------------
2000 1999 1998 1997 1996 1995
------------ -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------- -------- -------- -------- -------- -------- -------
Income from investment operations:
Net investment income 0.03 0.05 0.05 0.05 0.05 0.05
- ----------------------------------------------------- -------- -------- -------- -------- -------- -------
Less distributions:
Dividends from net investment income (0.03) (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 $ 1.00
===================================================== -------- -------- -------- -------- -------- -------
Total return(a) 2.59% 4.89% 5.56% 5.39% 5.48% 5.57%
===================================================== -------- -------- -------- -------- -------- -------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $922,456 $860,354 $933,791 $829,243 $789,627 $81,219
===================================================== -------- -------- -------- -------- -------- -------
Ratio of expenses to average net assets:
Including fee waivers and/or expense reimbursements 0.18%(b) 0.17% 0.17% 0.17% 0.17% 0.18%
===================================================== -------- -------- -------- -------- -------- -------
Excluding fee waivers and/or expense reimbursements 0.20%(b) 0.19% 0.19% 0.19% 0.19% 0.20%
===================================================== -------- -------- -------- -------- -------- -------
Ratio of net investment income to average net assets 5.16%(b) 4.77% 5.42% 5.25% 5.25% 5.42%
===================================================== -------- -------- -------- -------- -------- -------
</TABLE>
(a) Not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $947,913,368.
FS-23
<PAGE> 218
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Institutional Class
outstanding during the six months ended February 29, 2000 and each of the years
in the five-year period ended August 31, 1999.
<TABLE>
<CAPTION>
AUGUST 31,
FEBRUARY 29, ----------------------------------------------------------
2000 1999 1998 1997 1996 1995
------------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------- ---------- ---------- ---------- ---------- ---------- ----------
Income from investment
operations:
Net investment income 0.03 0.05 0.05 0.05 0.05 0.06
- ----------------------- ---------- ---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net
investment income (0.03) (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 $ 1.00
======================= ========== ========== ========== ========== ========== ==========
Total return(a) 2.64% 4.97% 5.64% 5.47% 5.57% 5.66%
======================= ========== ========== ========== ========== ========== ==========
Ratios/supplemental data:
Net assets, end of
period (000s omitted) $3,156,816 $3,164,199 $2,988,375 $3,408,010 $2,335,441 $2,669,637
======================= ========== ========== ========== ========== ========== ==========
Ratio of expenses to
average net assets 0.10%(b) 0.09% 0.08% 0.09% 0.09% 0.10%
======================= ========== ========== ========== ========== ========== ==========
Ratio of net investment
income to average net
assets 5.24%(b) 4.85% 5.50% 5.35% 5.43% 5.53%
======================= ========== ========== ========== ========== ========== ==========
</TABLE>
(a)Not annualized for periods less than one year.
(b)Ratios are annualized and based on average net assets of $3,071,339,856.
FS-24
<PAGE> 219
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Personal Investment
Class outstanding during the six months ended February 29, 2000 and each of the
years in the five-year period ended August 31, 1999.
<TABLE>
<CAPTION>
AUGUST 31,
FEBRUARY 29, ------------------------------------------------
2000 1999 1998 1997 1996 1995
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------- -------- -------- -------- -------- -------- --------
Income from investment
operations:
Net investment income 0.02 0.04 0.05 0.05 0.05 0.05
- ----------------------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income (0.02) (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 $ 1.00
- ----------------------- -------- -------- -------- -------- -------- --------
Total return(a) 2.38% 4.45% 5.12% 4.95% 5.04% 5.13%
- ----------------------- -------- -------- -------- -------- -------- --------
Ratios/supplemental
data:
Net assets, end of
period (000s omitted) $283,794 $284,932 $405,801 $322,971 $192,947 $114,527
- ----------------------- -------- -------- -------- -------- -------- --------
Ratio of expenses to
average net assets:
Including fee waivers
and/or expense
reimbursements 0.60%(b) 0.59% 0.58% 0.60% 0.59% 0.60%
- ----------------------- -------- -------- -------- -------- -------- --------
Excluding fee waivers
and/or expense
reimbursements 0.85%(b) 0.84% 0.83% 0.86% 0.92% 0.90%
- ----------------------- -------- -------- -------- -------- -------- --------
Ratio of net investment
income to average net
assets 4.74%(b) 4.35% 5.01% 4.85% 4.91% 5.03%
======================= ======== ======== ======== ======== ======== ========
</TABLE>
(a) Not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $286,888,943.
FS-25
<PAGE> 220
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Private Investment
Class outstanding during the six months ended February 29, 2000 and each of the
years in the five-year period ended August 31, 1999.
<TABLE>
<CAPTION>
AUGUST 31,
FEBRUARY 29, -----------------------------------------------
2000 1999 1998 1997 1996 1995
------------ -------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------------------ -------- -------- ------- -------- -------- --------
Income from investment operations:
Net investment income 0.02 0.05 0.05 0.05 0.05 0.05
- ------------------------------------------------------ -------- -------- ------- -------- -------- --------
Less distributions:
Dividends from net investment income (0.02) (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 $ 1.00
====================================================== ======== ======== ======= ======== ======== ========
Total return(a) 2.48% 4.66% 5.33% 5.16% 5.25% 5.34%
====================================================== ======== ======== ======= ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $415,681 $415,184 360,307 $463,441 $352,537 $394,585
====================================================== ======== ======== ======= ======== ======== ========
Ratio of expenses to average net assets:
Including fee waivers and/or expense reimbursements 0.40%(b) 0.39% 0.38% 0.39% 0.39% 0.40%
====================================================== ======== ======== ======= ======== ======== ========
Excluding fee waivers and/or expense reimbursements 0.60%(b) 0.59% 0.58% 0.59% 0.59% 0.60%
====================================================== ======== ======== ======= ======== ======== ========
Ratio of net investment income to average net assets 4.94%(b) 4.55% 5.20% 5.05% 5.14% 5.23%
====================================================== ======== ======== ======= ======== ======== ========
</TABLE>
(a) Not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $676,499,481.
FS-26
<PAGE> 221
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Reserve Class
outstanding during the six months ended February 29, 2000 and period January 4,
1999 (date sales commenced) through August 31, 1999.
<TABLE>
<CAPTION>
FEBRUARY 29, AUGUST 31,
2000 1999
------------ ----------
<S> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00
- --------------------------------------------- -------- --------
Income from investment operations:
Net investment income 0.02 0.03
- --------------------------------------------- -------- --------
Less distributions:
Dividends from net investment income (0.02) (0.03)
- --------------------------------------------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00
============================================= ======== ========
Total return(a) 2.23% 2.63%
============================================= ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $131,290 $119,976
============================================= ======== ========
Ratio of expenses to average net assets:
Including fee waivers and/or expense
reimbursements 0.90%(b) 0.89%(c)
============================================= ======== ========
Excluding fee waivers and/or expense
reimbursements 1.10%(b) 1.09%(c)
============================================= ======== ========
Ratio of net investment income to average net
assets 4.44%(b) 2.09%(c)
============================================= ======== ========
</TABLE>
(a) Not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $126,484,923.
(c) Annualized.
FS-27
<PAGE> 222
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Resource Class
outstanding during the six months ended February 29, 2000 and 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.
<TABLE>
<CAPTION>
AUGUST 31,
FEBRUARY 29, -------------------------------------
2000 1999 1998 1997 1996
------------ -------- -------- -------- -------
<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 0.03 0.05 0.05 0.05 0.03
- ----------------------- -------- -------- -------- -------- -------
Less distributions:
Dividends from net
investment income (0.03) (0.05) (0.05) (0.05) (0.03)
- ----------------------- -------- -------- -------- -------- -------
Net asset value, end of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======================= ======== ======== ======== ======== ========
Total return(a) 2.55% 4.80% 5.47% 5.30% 2.43%
======================= ======== ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of
period (000s omitted) $381,225 $359,101 $455,961 $237,123 $33,339
======================= ======== ======== ======== ======== ========
Ratio of expenses to
average net assets:
Including fee waivers
and/or expense
reimbursements 0.26%(b) 0.25% 0.24% 0.25% 0.25%(c)
======================= ======== ======== ======== ======== ========
Excluding fee waivers
and/or expense
reimbursements 0.30%(b) 0.29% 0.28% 0.29% 0.29%(c)
======================= ======== ======== ======== ======== ========
Ratio of net investment
income to average net
assets 5.08%(b) 4.69% 5.34% 5.19% 5.07%(c)
======================= ======== ======== ======== ======== ========
</TABLE>
(a) Not annualized for periods less than one year.
(b) Ratios are annualized based on average net assets of $310,424,636.
(c) Annualized
FS-28
<PAGE> 223
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.
/s/ KPMG LLP
KPMG LLP
October 1, 1999
Houston, Texas
FS-1
<PAGE> 224
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-2
<PAGE> 225
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-3
<PAGE> 226
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-4
<PAGE> 227
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-5
<PAGE> 228
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-6
<PAGE> 229
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-7
<PAGE> 230
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> 231
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-9
<PAGE> 232
TREASURY PORTFOLIO
------------------------------------------------------------------------
Cash Management Class
Treasury Portfolio seeks to maximize current income consistent with the
preservation of capital and the maintenance of liquidity.
PROSPECTUS
JUNE 1, 2000
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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
- --Registered Trademark-- --Registered Trademark--
<PAGE> 233
------------------
TREASURY PORTFOLIO
------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 4
Advisor Compensation 4
OTHER INFORMATION 4
- - - - - - - - - - - - - - - - - - - - - - - - -
Suitability for Investors 4
Dividends and Distributions 4
FINANCIAL HIGHLIGHTS 5
- - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - -
Distribution and Service (12b-1) Fees A-1
Purchasing Shares A-1
Redeeming Shares A-1
Pricing of Shares A-2
Taxes A-2
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM
LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La
Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with
DISCIPLINE are registered service marks and AIM Bank Connection and AIM Internet
Connect 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.
<PAGE> 234
------------------
TREASURY PORTFOLIO
------------------
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 investment
objective of the fund may be changed by the Board of Trustees without
shareholder approval.
The fund attempts to meet its 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 or are sold, and the proceeds are reinvested in securities with
different interest rates.
The following factors could reduce the fund's income and/or share price:
- - sharply rising or falling interest rates; and
- - downgrades of credit ratings or defaults of any of the fund's holdings.
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.
1
<PAGE> 235
------------------
TREASURY PORTFOLIO
------------------
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.
[GRAPH]
<TABLE>
<CAPTION>
Annual
Year Ended Total
December 31 Return
- ----------- ------
<S> <C>
1994 .................................. 4.07%
1995 .................................. 5.86%
1996 .................................. 5.32%
1997 .................................. 5.48%
1998 .................................. 5.39%
1999 .................................. 4.91%
</TABLE>
The Cash Management Class shares' year-to-date total return as of March 31, 2000
was 1.36%.
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).
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 SINCE INCEPTION
December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash Management Class 4.91% 5.39% -- 5.05% 08/18/93
- ----------------------------------------------------------------------------------
</TABLE>
Cash Management Class shares' seven-day yield on December 31, 1999 was 4.70%.
For the current seven-day yield, call (800) 877-7745.
2
<PAGE> 236
------------------
TREASURY PORTFOLIO
------------------
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>
SHAREHOLDER FEES
- - - - - - - - - - - - - - - - - - - - - - - - -
(fees paid directly from
your investment) CASH MANAGEMENT CLASS
- -----------------------------------------------
<S> <C>
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
- -----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- - - - - - - - - - - - - - - - - - - - - - - - -
(expenses that are deducted
from fund assets) CASH MANAGEMENT CLASS
- -----------------------------------------------
<S> <C>
Management Fees 0.06%
Distribution and/or
Service (12b-1) Fees 0.10
Other Expenses 0.03
Total Annual Fund
Operating Expenses(1) 0.19
- -----------------------------------------------
</TABLE>
(1) The distributor has agreed to waive 0.02% of the Rule 12b-1 distribution
plan fee. The waiver may be terminated at any time. Total Annual Fund
Operating Expenses, net of this agreement, are 0.17%.
You should also consider the effect of any account fees charged by the financial
institution managing your 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>
3
<PAGE> 237
------------------
TREASURY PORTFOLIO
------------------
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 120
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.
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.
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
The fund generally declares dividends on each business day and pays any
dividends monthly.
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.
4
<PAGE> 238
------------------
TREASURY PORTFOLIO
------------------
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).
The information for the period September 1, 1999 through February 29, 2000 is
unaudited. The information for the years ended August 31, 1999, 1998, 1997, 1996
and 1995 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
-----------------------------------------------------------------------
FOR THE PERIOD
SEPTEMBER 1, 1999
THROUGH YEAR ENDED AUGUST 31,
FEBRUARY 29, 2000 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income 0.03 0.05 0.05 0.05 0.05 0.05
Less distributions:
Dividends from net investment income (0.03) (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 $ 1.00
Total return(a) 2.59% 4.89% 5.56% 5.39% 5.48% 5.57%
- ------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $922,456 $860,354 $933,791 $829,243 $789,627 $81,219
Ratio of expenses to average net assets:
Including fee waivers and/or expense
reimbursements 0.18%(b) 0.17% 0.17% 0.17% 0.17% 0.18%
Excluding fee waivers and/or expense
reimbursements 0.20%(b) 0.19% 0.19% 0.19% 0.19% 0.20%
Ratio of net investment income to average
net assets 5.16%(b) 4.77% 5.42% 5.25% 5.25% 5.42%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $947,913,368.
5
<PAGE> 239
------------------
TREASURY PORTFOLIO
------------------
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 and service fees of 0.10% per annum to Fund
Management Company (the distributor) for the sale and distribution of its shares
and 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 0843,
Houston, Texas 77001-0843 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 your order. Subsequent purchases of shares of the fund 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 your institution.
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.
REDEMPTIONS BY THE FUND
If the fund determines that you have not provided a correct Social Security or
other tax ID number on your account application, the fund may, at its
discretion, redeem the account and distribute the proceeds to you.
A-1
<PAGE> 240
------------------
TREASURY PORTFOLIO
------------------
SHAREHOLDER INFORMATION (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
- 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. 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.
A-2
<PAGE> 241
------------------
TREASURY PORTFOLIO
------------------
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
- ---------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P.O. Box 0843
Houston, TX 77001-0843
BY TELEPHONE: (800) 877-7745
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
</TABLE>
- ---------------------------------------------------------
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
- ----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com INVEST WITH DISCIPLINE
- --Registered Trademark-- --Registered Trademark--
<PAGE> 242
TREASURY PORTFOLIO
------------------------------------------------------------------------
INSTITUTIONAL CLASS
Treasury Portfolio seeks to maximize current income consistent with the
preservation of capital and the maintenance of liquidity.
PROSPECTUS
JUNE 1, 2000
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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
<PAGE> 243
------------------
TREASURY PORTFOLIO
------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 4
Advisor Compensation 4
OTHER INFORMATION 4
- - - - - - - - - - - - - - - - - - - - - - - - - -
Suitability for Investors 4
Dividends and Distributions 4
FINANCIAL HIGHLIGHTS 5
- - - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - - -
Purchasing Shares A-1
Redeeming Shares A-1
Pricing of Shares A-1
Taxes A-2
STATEMENT OF ADDITIONAL INFORMATION B-1
- - - - - - - - - - - - - - - - - - - - - - - - - -
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM
LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La
Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with
DISCIPLINE are registered service marks and AIM Bank Connection and AIM Internet
Connect 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.
<PAGE> 244
------------------
TREASURY PORTFOLIO
------------------
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 investment
objective of the fund may be changed by the Board of Trustees without
shareholder approval.
The fund attempts to meet its 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 or are sold, and the proceeds are reinvested in securities with
different interest rates.
The following factors could reduce the fund's income and/or share price:
- - sharply rising or falling interest rates; and
- - downgrades of credit ratings or defaults of any of the fund's holdings.
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.
1
<PAGE> 245
------------------
TREASURY PORTFOLIO
------------------
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.
[GRAPH]
<TABLE>
<CAPTION>
Annual
Year Ended Total
December 31 Returns
- ----------- -------
<S> <C>
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%
1999 .................................... 5.00%
</TABLE>
The Institutional Class shares' year-to-date total return as of March 31, 2000
was 1.38%.
During the periods shown in the bar chart, the highest quarterly return was
2.03% (quarters ended March 31, 1990 and June 30, 1990) and the lowest quarterly
return was 0.77% (quarter ended June 30, 1993).
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 SINCE INCEPTION
December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Institutional Class 5.00% 5.48% 5.29% 6.25% 04/12/84
- ---------------------------------------------------------------------------
</TABLE>
Institutional Class shares' seven-day yield on December 31, 1999 was 4.78%. For
the current seven-day yield, call (800) 659-1005.
2
<PAGE> 246
------------------
TREASURY PORTFOLIO
------------------
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>
SHAREHOLDER FEES
- - - - - - - - - - - - - - - - - - - - - - - - - -
(fees paid directly from
your investment) INSTITUTIONAL CLASS
- -------------------------------------------------
<S> <C>
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
- -------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- - - - - - - - - - - - - - - - - - - - - - - - - -
(expenses that are deducted
from fund assets) INSTITUTIONAL CLASS
- -------------------------------------------------
<S> <C>
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 your 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>
3
<PAGE> 247
------------------
TREASURY PORTFOLIO
------------------
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 120
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.
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.
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
The fund generally declares dividends on each business day and pays any
dividends monthly.
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.
4
<PAGE> 248
------------------
TREASURY PORTFOLIO
------------------
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).
The information for the period September 1, 1999 through February 29, 2000 is
unaudited. The information for the years ended August 31, 1999, 1998, 1997, 1996
and 1995 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
----------------------------------------------------------------------------------------
FOR THE PERIOD
SEPTEMBER 1, 1999
THROUGH YEAR ENDED AUGUST 31,
FEBRUARY 29, 2000 1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income 0.03 0.05 0.05 0.05 0.05 0.06
Less distributions:
Dividends from net investment
income (0.03) (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 $ 1.00
Total return(a) 2.64% 4.97% 5.64% 5.47% 5.57% 5.66%
- ----------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s
omitted) $3,156,816 $3,164,199 $2,988,375 $3,408,010 $2,335,441 $2,669,637
Ratio of expenses to average net
assets 0.10%(b) 0.09% 0.08% 0.09% 0.09% 0.10%
Ratio of net investment income to
average net assets 5.24%(b) 4.85% 5.50% 5.35% 5.43% 5.53%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $3,071,339,856.
5
<PAGE> 249
------------------
TREASURY PORTFOLIO
------------------
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 0843,
Houston, Texas 77001-0843 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 your order. Subsequent purchases of
shares of the fund 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.
REDEMPTIONS BY THE FUND
If the fund determines that you have not provided a correct Social Security or
other tax ID number on your account application, the fund may, at its
discretion, redeem the account and distribute the proceeds to you.
- --------------------------------------------------------------------------------
THE FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
- 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
A-1
<PAGE> 250
------------------
TREASURY PORTFOLIO
------------------
SHAREHOLDER INFORMATION (continued)
- --------------------------------------------------------------------------------
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. 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.
A-2
<PAGE> 251
------------------
TREASURY PORTFOLIO
------------------
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
- ------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P. O. Box 0843
Houston, TX 77001-0843
BY TELEPHONE: (800) 659-1005
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
</TABLE>
- ------------------------------------------------------
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
- -----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com INVEST WITH DISCIPLINE
- --Registered Trademark-- --Registered Trademark--
<PAGE> 252
TREASURY PORTFOLIO
------------------------------------------------------------------------
PERSONAL INVESTMENT CLASS
Treasury Portfolio seeks to maximize current income consistent with the
preservation of capital and the maintenance of liquidity.
PROSPECTUS
JUNE 1, 2000
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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
<PAGE> 253
------------------
TREASURY PORTFOLIO
------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 4
Advisor Compensation 4
OTHER INFORMATION 4
- - - - - - - - - - - - - - - - - - - - - - - - - -
Suitability for Investors 4
Dividends and Distributions 4
FINANCIAL HIGHLIGHTS 5
- - - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - - -
Distribution and Service (12b-1) Fees A-1
Purchasing Shares A-1
Redeeming Shares A-1
Pricing of Shares A-2
Taxes A-2
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM
LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La
Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with
DISCIPLINE are registered service marks and AIM Bank Connection and AIM Internet
Connect 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.
<PAGE> 254
------------------
TREASURY PORTFOLIO
------------------
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 investment
objective of the fund may be changed by the Board of Trustees without
shareholder approval.
The fund attempts to meet its 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 or are sold, and the proceeds are reinvested in securities with
different interest rates.
The following factors could reduce the fund's income and/or share price:
- - sharply rising or falling interest rates; and
- - downgrades of credit ratings or defaults of any of the fund's holdings.
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.
1
<PAGE> 255
------------------
TREASURY PORTFOLIO
------------------
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.
[GRAPH]
<TABLE>
<CAPTION>
Annual
Year Ended Total
December 31 Returns
- ----------- -------
<S> <C>
1992.................................... 3.43%
1993.................................... 2.68%
1994.................................... 3.63%
1995.................................... 5.42%
1996.................................... 4.88%
1997.................................... 5.04%
1998.................................... 4.95%
1999.................................... 4.48%
</TABLE>
The Personal Investment Class shares' year-to-date total return as of March 31,
2000 was 1.25%.
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%
(quarters ended March 30, 1993 and December 31, 1993).
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 SINCE INCEPTION
December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Personal Investment Class 4.48% 4.95% -- 4.34% 08/08/91
- ------------------------------------------------------------------------------------------------------
</TABLE>
Personal Investment Class shares' seven-day yield on December 31, 1999 was
4.28%. For the current seven-day yield, call (800) 877-4744.
2
<PAGE> 256
------------------
TREASURY PORTFOLIO
------------------
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>
SHAREHOLDER FEES
- - - - - - - - - - - - - - - - - - - - - - - - - -
(fees paid directly from
PERSONAL
your investment) INVESTMENT CLASS
- -----------------------------------------------
<S> <C>
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
- -----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- - - - - - - - - - - - - - - - - - - - - - - - - -
(expenses that are deducted
PERSONAL
from fund assets) INVESTMENT CLASS
- -----------------------------------------------
<S> <C>
Management Fees 0.06%
Distribution and/or
Service (12b-1) Fees 0.75
Other Expenses 0.03
Total Annual Fund
Operating Expenses(1) 0.84
- -----------------------------------------------
</TABLE>
(1) The distributor has agreed to waive 0.25% of the Rule 12b-1 distribution
plan fee. The waiver may be terminated at any time. Total Annual Fund
Operating Expenses, net of this agreement, are 0.59%.
You should also consider the effect of any account fees charged by the financial
institution managing your 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>
3
<PAGE> 257
------------------
TREASURY PORTFOLIO
------------------
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 120
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.
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.
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
The fund generally declares dividends on each business day and pays any
dividends monthly.
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.
4
<PAGE> 258
------------------
TREASURY PORTFOLIO
------------------
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).
The information for the period September 1, 1999 through February 29, 2000 is
unaudited. The information for the years ended August 31, 1999, 1998, 1997, 1996
and 1995 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
- ---------------------------------------------------------------------------------------------------------------------------------
FOR THE PERIOD
SEPTEMBER 1, 1999
THROUGH YEAR ENDED AUGUST 31,
FEBRUARY 29, 2000 1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income 0.02 0.04 0.05 0.05 0.05 0.05
Less distributions:
Dividends from net investment income (0.02) (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 $ 1.00
Total return(a) 2.38% 4.45% 5.12% 4.95% 5.04% 5.13%
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $283,794 $284,932 $405,801 $322,971 $192,947 $114,527
Ratio of expenses to average net assets:
Including fee waivers and/or expense
reimbursements 0.60%(b) 0.59% 0.58% 0.60% 0.59% 0.60%
Excluding fee waivers and/or expense
reimbursements 0.85%(b) 0.84% 0.83% 0.86% 0.92% 0.90%
Ratio of net investment income to average
net assets 4.74%(b) 4.35% 5.01% 4.85% 4.91% 5.03%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $286,888,943.
5
<PAGE> 259
------------------
TREASURY PORTFOLIO
------------------
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 and service fees of 0.75% per annum to
Fund Management Company (distributor) for the sale and distribution of its
shares and 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 0843,
Houston, Texas 77001-0843 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 your order. Subsequent purchases of shares of the fund 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 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.
REDEMPTIONS BY THE FUND
If the fund determines that you have not provided a correct Social Security or
other tax ID number on your account application, the fund may, at its
discretion, redeem the account and distribute the proceeds to you.
A-1
<PAGE> 260
------------------
TREASURY PORTFOLIO
------------------
SHAREHOLDER INFORMATION (continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY
TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
- 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. 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.
A-2
<PAGE> 261
------------------
TREASURY PORTFOLIO
------------------
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
- ---------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P.O. Box 0843
Houston, TX 77001-0843
BY TELEPHONE: (800) 877-4744
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
</TABLE>
- ---------------------------------------------------------
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
- -----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com INVEST WITH DISCIPLINE
- --Registered Trademark-- --Registered Trademark--
<PAGE> 262
TREASURY PORTFOLIO
------------------------------------------------------------------------
Private Investment Class
Treasury Portfolio seeks to maximize current income consistent with the
preservation of capital and the maintenance of liquidity.
PROSPECTUS
JUNE 1, 2000
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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
<PAGE> 263
------------------
TREASURY PORTFOLIO
------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 4
Advisor Compensation 4
OTHER INFORMATION 4
- - - - - - - - - - - - - - - - - - - - - - - - -
Suitability for Investors 4
Dividends and Distributions 4
FINANCIAL HIGHLIGHTS 5
- - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - -
Distribution and Service (12b-1) Fees A-1
Purchasing Shares A-1
Redeeming Shares A-1
Pricing of Shares A-2
Taxes A-2
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM
LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La
Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with
DISCIPLINE are registered service marks and AIM Bank Connection and AIM Internet
Connect 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.
<PAGE> 264
------------------
TREASURY PORTFOLIO
------------------
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 investment
objective of the fund may be changed by the Board of Trustees without
shareholder approval.
The fund attempts to meet its 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 or are sold, and the proceeds are reinvested in securities with
different interest rates.
The following factors could reduce the fund's income and/or share price:
- - sharply rising or falling interest rates; and
- - downgrades of credit ratings or defaults of any of the fund's holdings.
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.
1
<PAGE> 265
------------------
TREASURY PORTFOLIO
------------------
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.
[GRAPH]
<TABLE>
<CAPTION>
Return (%)
----------
<S> <C>
1992.................................... 3.53%
1993.................................... 2.85%
1994.................................... 3.84%
1995.................................... 5.63%
1996.................................... 5.09%
1997.................................... 5.25%
1998.................................... 5.16%
1999.................................... 4.68%
</TABLE>
The Private Investment Class shares' year-to-date total return as of March 31,
2000 was 1.30%.
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%
(quarters ended March 31, 1993 and December 31, 1993).
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 SINCE INCEPTION
December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Private Investment Class 4.68% 5.16% -- 4.50% 11/22/91
- ------------------------------------------------------------------------------------------------------
</TABLE>
Private Investment Class shares' seven-day yield on December 31, 1999 was 4.48%.
For the current seven-day yield, call (800) 877-7748.
2
<PAGE> 266
------------------
TREASURY PORTFOLIO
------------------
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>
SHAREHOLDER FEES
- - - - - - - - - - - - - - - - - - - - - - - - -
(fees paid directly from PRIVATE
your investment) INVESTMENT CLASS
- -----------------------------------------------
<S> <C>
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
- -----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- - - - - - - - - - - - - - - - - - - - - - - - -
(expenses that are deducted PRIVATE
from fund assets) INVESTMENT CLASS
- -----------------------------------------------
<S> <C>
Management Fees 0.06%
Distribution and/or
Service (12b-1) Fees 0.50
Other Expenses 0.03
Total Annual Fund
Operating Expenses(1) 0.59
- -----------------------------------------------
</TABLE>
(1) The distributor has agreed to waive 0.20% of the Rule 12b-1 distribution
plan fee. The waiver may be terminated at any time. Total Annual Fund
Operating Expenses, net of this agreement, are 0.39%.
You should also consider the effect of any account fees charged by the financial
institution managing your 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>
3
<PAGE> 267
------------------
TREASURY PORTFOLIO
------------------
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 120
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.
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.
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
The fund generally declares dividends on each business day and pays any
dividends monthly.
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.
4
<PAGE> 268
------------------
TREASURY PORTFOLIO
------------------
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).
The information for the period September 1, 1999 through February 29, 2000 is
unaudited. The information for the years ended August 31, 1999, 1998, 1997, 1996
and 1995 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
SEPTEMBER 1, 1999
THROUGH YEAR ENDED AUGUST 31,
FEBRUARY 29, 2000 1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income 0.02 0.05 0.05 0.05 0.05 0.05
Less distributions:
Dividends from net investment income (0.02) (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 $ 1.00
Total return(a) 2.48% 4.66% 5.33% 5.16% 5.25% 5.34%
- ------------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Net assets, end of period (000s omitted) $415,681 $415,184 $360,307 $463,441 $352,537 $394,585
Ratio of expenses to average net assets:
Including fee waivers and/or expense
reimbursements 0.40%(b) 0.39% 0.38% 0.39% 0.39% 0.40%
Excluding fee waivers and/or expense
reimbursements 0.60%(b) 0.59% 0.58% 0.59% 0.59% 0.60%
Ratio of net investment income to average net
assets 4.94%(b) 4.55% 5.20% 5.05% 5.14% 5.23%
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $676,499,481.
5
<PAGE> 269
------------------
TREASURY PORTFOLIO
------------------
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 and service fees of 0.50% per annum to
Fund Management Company (distributor) for the sale and distribution of its
shares and 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 0843,
Houston, Texas 77001-0843 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 your order. Subsequent purchases of shares of the fund 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 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.
REDEMPTIONS BY THE FUND
If the fund determines that you have not provided a correct Social Security or
other tax ID number on your account application, the fund may, at its
discretion, redeem the account and distribute the proceeds to you.
- --------------------------------------------------------------------------------
THE FUND AND ITS AGENTS RESERVES THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
- WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
- --------------------------------------------------------------------------------
A-1
<PAGE> 270
------------------
TREASURY PORTFOLIO
------------------
SHAREHOLDER INFORMATION (CONTINUED)
- --------------------------------------------------------------------------------
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. 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.
A-2
<PAGE> 271
------------------
TREASURY PORTFOLIO
------------------
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
- ---------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P.O. Box 0843
Houston, TX 77001-0843
BY TELEPHONE: (800) 877-7748
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
</TABLE>
- ---------------------------------------------------------
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
- ----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com INVEST WITH DISCIPLINE
- --Registered Trademark-- --Registered Trademark--
<PAGE> 272
TREASURY PORTFOLIO
------------------------------------------------------------------------
Reserve Class
Treasury Portfolio seeks to maximize current income consistent with the
preservation of capital and the maintenance of liquidity.
PROSPECTUS
JUNE 1, 2000
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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
<PAGE> 273
------------------
TREASURY PORTFOLIO
------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 4
Advisor Compensation 4
OTHER INFORMATION 4
- - - - - - - - - - - - - - - - - - - - - - - - - -
Suitability for Investors 4
Dividends and Distributions 4
FINANCIAL HIGHLIGHTS 5
- - - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - - -
Distribution and Service (12b-1) Fees A-1
Purchasing Shares A-1
Redeeming Shares A-1
Pricing of Shares A-2
Taxes A-2
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM
LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La
Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with
DISCIPLINE are registered service marks and AIM Bank Connection and AIM Internet
Connect 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.
<PAGE> 274
------------------
TREASURY PORTFOLIO
------------------
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 investment
objective of the fund may be changed by the Board of Trustees without
shareholder approval.
The fund attempts to meet its 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 or are sold, and the proceeds are reinvested in securities with
different interest rates.
The following factors could reduce the fund's income and/or share price:
- - sharply rising or falling interest rates; and
- - downgrades of credit ratings or defaults of any of the fund's holdings.
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.
1
<PAGE> 275
------------------
TREASURY PORTFOLIO
------------------
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.
[GRAPH]
<TABLE>
<CAPTION>
Annual
Year Ended Total
December 31 Return
- ----------- ------
<S> <C>
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%
1999 .................................... 5.00%
</TABLE>
The returns shown are those of the fund's Institutional Class shares, which are
not offered in this prospectus. Reserve Class shares would have lower annual
returns because, although the shares are invested in the same portfolio of
securities, the Reserve Class has higher expenses.
The Institutional Class and the Reserve Class shares' year-to-date total
return as of March 31, 2000 was 1.38% and 1.18%, respectively.
During the periods shown in the bar chart, Institutional Class' highest
quarterly return was 2.03% (quarter ended March 31, 1990 and June 30, 1990) and
its lowest quarterly return was 0.77% (quarter ended June 30, 1993).
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 SINCE INCEPTION
December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Institutional Class 5.00% 5.48% 5.29% 6.25% 04/12/84
- ---------------------------------------------------------------------------
Reserve Class -- -- -- -- 01/04/99
- ---------------------------------------------------------------------------
</TABLE>
Institutional Class and Reserve Class shares' seven-day yield on December 31,
1999 was 4.78% and 3.98%, respectively. For the current seven-day yield of
Reserve Class shares, call (800) 417-8837.
2
<PAGE> 276
------------------
TREASURY PORTFOLIO
------------------
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>
SHAREHOLDER FEES
- - - - - - - - - - - - - - - - - - - - - - - - -
(fees paid directly from
your investment) RESERVE CLASS
- -----------------------------------------------
<S> <C>
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
- -----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- - - - - - - - - - - - - - - - - - - - - - - - -
(expenses that are deducted
from fund assets) RESERVE CLASS
- -----------------------------------------------
<S> <C>
Management Fees 0.06%
Distribution and/or
Service (12b-1) Fees 1.00
Other Expenses 0.03
Total Annual Fund
Operating Expenses(1) 1.09
- -----------------------------------------------
</TABLE>
(1) The distributor has agreed to waive 0.20% of the Rule 12b-1 distribution
plan fee. The waiver may be terminated at any time. Total Annual Fund
Operating Expenses, net of this agreement, are 0.89%.
You should also consider the effect of any account fees charged by the financial
institution managing your 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>
3
<PAGE> 277
------------------
TREASURY PORTFOLIO
------------------
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 120
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.
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.
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
The fund generally declares dividends on each business day and pays any
dividends monthly.
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.
4
<PAGE> 278
------------------
TREASURY PORTFOLIO
------------------
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).
The information for the period September 1, 1999 through February 29, 2000 is
unaudited. The information for the period January 4, 1999 through August 31,
1999 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 FOR THE PERIOD
SEPTEMBER 1, 1999 JANUARY 4, 1999
THROUGH THROUGH
FEBRUARY 29, AUGUST 31,
2000 1999
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00
Income from investment operations:
Net investment income 0.02 0.03
Less distributions:
Dividends from net investment income (0.02) (0.03)
Net asset value, end of period $ 1.00 $ 1.00
Total return(a) 2.23% 2.63%
- ------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $131,290 $119,976
Ratio of expenses to average net assets:
Including fee waivers and/or expense reimbursements 0.90%(b) 0.89%(c)
Excluding fee waivers and/or expense reimbursements 1.10%(b) 1.09%(c)
Ratio of net investment income to average net assets 4.44%(b) 2.09%(c)
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $126,484,923.
(c) Annualized.
5
<PAGE> 279
------------------
TREASURY PORTFOLIO
------------------
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 and service fees of 1.00% per annum to Fund
Management Company (distributor) for the sale and distribution of its shares and
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 0843,
Houston, Texas 77001-0843 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 your order. Subsequent purchases of shares of the fund 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 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.
REDEMPTIONS BY THE FUND
If the fund determines that you have not provided a correct Social Security or
other tax ID number on your account application, the fund may, at its
discretion, redeem the account and distribute the proceeds to you.
- --------------------------------------------------------------------------------
THE FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
- WITHDRAW ALL OR ANY PART OF THE OFFERING MADE BY THIS PROSPECTUS.
- --------------------------------------------------------------------------------
A-1
<PAGE> 280
------------------
TREASURY PORTFOLIO
------------------
SHAREHOLDER INFORMATION (continued)
- --------------------------------------------------------------------------------
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. 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.
A-2
<PAGE> 281
------------------
TREASURY PORTFOLIO
------------------
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
- ------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P.O. Box 0843
Houston, TX 77001-0840
BY TELEPHONE: (800) 417-8837
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
</TABLE>
- ------------------------------------------------------
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
- -----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com INVEST WITH DISCIPLINE
- --Registered Trademark-- --Registered Trademark--
<PAGE> 282
TREASURY PORTFOLIO
------------------------------------------------------------------------
Resource Class
Treasury Portfolio seeks to maximize current income consistent with the
preservation of capital and the maintenance of liquidity.
PROSPECTUS
JUNE 1, 2000
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.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
[AIM LOGO APPEARS HERE] INVEST WITH DISCIPLINE
--Registered Trademark-- --Registered Trademark--
<PAGE> 283
------------------
TREASURY PORTFOLIO
------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT OBJECTIVE AND STRATEGIES 1
- - - - - - - - - - - - - - - - - - - - - - - - - -
PRINCIPAL RISKS OF INVESTING IN THE FUND 1
- - - - - - - - - - - - - - - - - - - - - - - - - -
PERFORMANCE INFORMATION 2
- - - - - - - - - - - - - - - - - - - - - - - - - -
Annual Total Returns 2
Performance Table 2
FEE TABLE AND EXPENSE EXAMPLE 3
- - - - - - - - - - - - - - - - - - - - - - - - - -
Fee Table 3
Expense Example 3
FUND MANAGEMENT 4
- - - - - - - - - - - - - - - - - - - - - - - - - -
The Advisor 4
Advisor Compensation 4
OTHER INFORMATION 4
- - - - - - - - - - - - - - - - - - - - - - - - - -
Suitability for Investors 4
Dividends and Distributions 4
FINANCIAL HIGHLIGHTS 5
- - - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDER INFORMATION A-1
- - - - - - - - - - - - - - - - - - - - - - - - - -
Distribution and Service (12b-1) Fees A-1
Purchasing Shares A-1
Redeeming Shares A-1
Pricing of Shares A-2
Taxes A-2
OBTAINING ADDITIONAL INFORMATION Back Cover
- - - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
The AIM Family of Funds, The AIM Family of Funds and Design (i.e., the AIM
logo), AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investor, AIM
LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La
Familia AIM de Fondos and Design, Invierta con DISCIPLINA and Invest with
DISCIPLINE are registered service marks and AIM Bank Connection and AIM Internet
Connect 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.
<PAGE> 284
------------------
TREASURY PORTFOLIO
------------------
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 investment
objective of the fund may be changed by the Board of Trustees without
shareholder approval.
The fund attempts to meet its 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 or are sold, and the proceeds are reinvested in securities with
different interest rates.
The following factors could reduce the fund's income and/or share price:
- - sharply rising or falling interest rates; and
- - downgrades of credit ratings or defaults of any of the fund's holdings.
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.
1
<PAGE> 285
------------------
TREASURY PORTFOLIO
------------------
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.
[GRAPH]
<TABLE>
<CAPTION>
Annual
Year Ended Total
December 31 Return
- ----------- ------
<S> <C>
1997 .................................... 5.39%
1998 .................................... 5.31%
1999 .................................... 4.83%
</TABLE>
The Resource Class shares' year-to-date total return as of March 31, 2000 was
1.34%.
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
1.13% (quarter ended March 31, 1999).
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 SINCE INCEPTION
December 31, 1999) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Resource Class 4.83% -- -- 5.19% 03/16/96
- ---------------------------------------------------------------------------
</TABLE>
Resource Class share's seven-day yield on December 31, 1999 was 4.62%. For the
current seven-day yield, call (800) 825-6858.
2
<PAGE> 286
------------------
TREASURY PORTFOLIO
------------------
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>
SHAREHOLDER FEES
- - - - - - - - - - - - - - - - - - - - - - - - -
(fees paid directly from
your investment) RESOURCE CLASS
- -----------------------------------------------
<S> <C>
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
- -----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
- - - - - - - - - - - - - - - - - - - - - - - - -
(expenses that are deducted
from fund assets) RESOURCE CLASS
- -----------------------------------------------
<S> <C>
Management Fees 0.06%
Distribution and/or Service
(12b-1) Fees 0.20
Other Expenses 0.03
Total Annual Fund Operating
Expenses(1) 0.29
- -----------------------------------------------
</TABLE>
(1) The distributor has agreed to waive 0.04% of the Rule 12b-1 distribution
plan fee. The waiver may be terminated at any time. Total Annual Fund
Operating Expenses, net of this agreement, are 0.25%.
You should also consider the effect of any account fees charged by the financial
institution managing your 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>
3
<PAGE> 287
------------------
TREASURY PORTFOLIO
------------------
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 120
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.
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.
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
The fund generally declares dividends on each business day and pays any
dividends monthly.
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.
4
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TREASURY PORTFOLIO
------------------
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).
The information for the period September 1, 1999 through February 29, 2000 is
unaudited. The information for the years ended August 31, 1999, 1998, 1997 and
for the period ended August 31, 1996 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 FOR THE PERIOD
SEPTEMBER 1, 1999 MARCH 12, 1996
THROUGH THROUGH
FEBRUARY 29, YEAR ENDED AUGUST 31, AUGUST 31,
2000 1999 1998 1997 1996
- ---------------------------------------------------------------------------------------------------------------------
<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 0.03 0.05 0.05 0.05 0.03
Less distributions:
Dividends from net investment income (0.03) (0.05) (0.05) (0.05) (0.03)
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Total return(a) 2.55% 4.80% 5.47% 5.30% 2.43%
- ---------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
- ---------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s
omitted) $381,225 $359,101 $455,961 $237,123 $33,339
Ratio of expenses to average net
assets:
Including fee waivers and/or expense
reimbursements 0.26%(b) 0.25% 0.24% 0.25% 0.25%(c)
Excluding fee waivers and/or expense
reimbursements 0.30%(b) 0.29% 0.28% 0.29% 0.29%(c)
Ratio of net investment income to
average net assets 5.08%(b) 4.69% 5.34% 5.19% 5.07%(c)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Not annualized for periods less than one year.
(b) Ratios are annualized based on average net assets of $310,424,636.
(c) Annualized.
5
<PAGE> 289
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TREASURY PORTFOLIO
------------------
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 and service fees of 0.20% per annum to Fund
Management Company (distributor) for the sale and distribution of its shares and
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 0843,
Houston, Texas 77001-0843 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 your order. Subsequent purchases of shares of the fund 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 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.
REDEMPTIONS BY THE FUND
If the fund determines that you have not provided a correct Social Security or
other tax ID number on your account application, the fund may, at its
discretion, redeem the account and distribute the proceeds to you.
A-1
<PAGE> 290
------------------
TREASURY PORTFOLIO
------------------
SHAREHOLDER INFORMATION (continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE FUND AND ITS AGENTS RESERVE THE RIGHT AT ANY TIME TO:
- REJECT OR CANCEL ANY PART OF ANY PURCHASE ORDER;
- MODIFY ANY TERMS OR CONDITIONS OF PURCHASE OF SHARES OF THE FUND; OR
- 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. 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.
A-2
<PAGE> 291
------------------
TREASURY PORTFOLIO
------------------
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
- ------------------------------------------------------
<TABLE>
<S> <C>
BY MAIL: A I M Fund Services, Inc.
P. O. Box 0843
Houston, TX 77001-0843
BY TELEPHONE: (800) 825-6858
BY E-MAIL: [email protected]
ON THE INTERNET: http://www.aimfunds.com
(prospectuses and annual
and semiannual reports
only)
</TABLE>
- ------------------------------------------------------
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
- -----------------------------------
[AIM LOGO APPEARS HERE] www.aimfunds.com INVEST WITH DISCIPLINE
- --Registered Trademark-- --Registered Trademark--
<PAGE> 292
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 JUNE 1, 2000
RELATING TO THE PROSPECTUS OF EACH OF THE FOLLOWING CLASSES OF THE
TREASURY PORTFOLIO:
CASH MANAGEMENT CLASS PROSPECTUS DATED JUNE 1, 2000,
INSTITUTIONAL CLASS PROSPECTUS DATED JUNE 1, 2000,
PERSONAL INVESTMENT CLASS PROSPECTUS DATED JUNE 1, 2000,
PRIVATE INVESTMENT CLASS PROSPECTUS DATED JUNE 1, 2000,
RESERVE CLASS PROSPECTUS DATED JUNE 1, 2000
AND RESOURCE CLASS PROSPECTUS DATED JUNE 1, 2000
B-1
<PAGE> 293
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Introduction................................................ B-3
General Information about the Trust......................... B-3
The Trust and Its Shares............................... B-3
Portfolio Transactions and Brokerage........................ B-5
General Brokerage Policy............................... B-5
Allocation of Portfolio Transactions................... B-6
Section 28(e) Standards................................ B-6
Share Purchases and Redemptions............................. B-7
Purchases and Redemptions.............................. B-7
Redemptions by the Portfolio........................... B-7
Net Asset Value Determination.......................... B-7
Distribution Agreement................................. B-8
Distribution Plan...................................... B-9
Banking Regulations.................................... B-10
Performance Information................................ B-10
Investment Program and Restrictions......................... B-12
Investment Program..................................... B-12
Investment Policies.................................... B-12
Investment Restrictions................................ B-14
Management.................................................. B-16
Trustees and Officers.................................. B-16
Remuneration of Trustees............................... B-18
Investment Advisor..................................... B-20
Administrative Services................................ B-21
Expenses............................................... B-21
Transfer Agent and Custodian........................... B-22
Legal Matters.......................................... B-22
Reports................................................ B-22
Sub-Accounting......................................... B-22
Principal Holders of Securities........................ B-23
Dividends, Distributions and Tax Matters.................... B-30
Dividends and Distributions............................ B-30
Tax Matters............................................ B-30
Qualification as a Regulated Investment Company........ B-30
Excise Tax on Regulated Investment Companies........... B-31
Portfolio Distributions................................ B-31
Sale or Redemption of Shares........................... B-32
Foreign Shareholders................................... B-32
Effect of Future Legislation; Local Tax
Considerations........................................ B-33
Financial Statements........................................ FS
</TABLE>
B-2
<PAGE> 294
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 June 1,
2000, the Institutional Class Prospectus dated June 1, 2000, the Personal
Investment Class Prospectus dated June 1, 2000, the Private Investment Class
Prospectus dated June 1, 2000, the Reserve Class Prospectus dated June 1, 2000
and the Resource Class Prospectus dated June 1, 2000 (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 Government 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 Government TaxAdvantage Portfolio and the
Government & Agency Portfolio are offered pursuant to separate prospectuses and
separate statements of additional information.
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 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.
B-3
<PAGE> 295
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. 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 further 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 also 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 office with the Trust. The Declaration of Trust
provides for indemnification by the Trust of the trustees, the officers,
employees or agents of the Trust, if it is determined that such person acted in
good faith and reasonably believed: (1) in the case of conduct in his or her
official capacity for the Trust, that his or her conduct was in the Trust's best
interests, (2) in all other cases, that his or her conduct was at least not
opposed to the Trust's best interests and (3) in a criminal proceeding, that he
or she had no reason to believe that his or her conduct was unlawful. Such
person may not be indemnified against any liability to the Trust or to the
Trust's shareholders to which he or she 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. 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. 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.
B-4
<PAGE> 296
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 or spread (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.
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 or account 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.
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ALLOCATION OF PORTFOLIO TRANSACTIONS
AIM and its affiliates manage numerous 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, the Portfolio
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.
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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 0843, Houston, Texas
77001-0843. 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 or her 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.
NET ASSET VALUE DETERMINATION
The net asset value per share of each class 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,
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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 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 has established 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. Mail addressed to FMC should be sent to P. O. Box
4497, Houston, Texas 77210-4497. 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 the 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.
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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 Portfolio's 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 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 of customer cash account balances in the shares of these
classes; (vii) providing periodic statements showing a customer's account
balance and integrating such statements with those of other transactions and
balances in the customer's other accounts serviced by such firm; (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.
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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 or her 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 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
On November 12, 1999, the Gramm-Leach-Bliley Act of 1999 was signed into
law. This Act removed the regulatory barriers previously established between
banks and bank holding companies, and insurance companies and broker-dealers.
Various provisions of this Act became effective immediately, and others will
become effective through November 2000. While the ultimate effect of such
legislation is unclear, financial holding companies and their affiliated bank
and financial subsidiaries will be able to participate in the distribution of
mutual fund shares.
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.
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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 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 increasing the Portfolio's yield and total return.
For the seven-day period ended February 29, 2000, the current and effective
yields for the Private Investment Class were 5.33% and 5.47%, respectively. For
the seven-day period ended February 29, 2000, the current and effective yields
for the Institutional Class were 5.63% and 5.78%, respectively. For the
seven-day period ended February 29, 2000, the current and effective yields for
the Cash Management Class were 5.55% and 5.70%, respectively. For the seven-day
period ended February 29, 2000, the current and effective yields for the
Personal Investment Class were 5.13% and 5.26%, respectively. For the seven-day
period ended February 29, 2000, the current and effective yields for the Reserve
Class were 4.83% and 4.94%, respectively. For the seven-day period ended
February 29, 2000, the current and effective yields for the Resource Class were
5.47% and 5.62%, 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:
- iMoneyNet, Inc., formerly IBC Financial Data, Inc., 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 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.
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INVESTMENT PROGRAM AND RESTRICTIONS
INVESTMENT PROGRAM
Information concerning the Portfolio's investment objective is set forth in
each Prospectus under the heading "Investment Objective and Strategies." 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.
Set forth in this section is a description of the Portfolio's investment
policies, strategies and practices. The investment objective of the Portfolio is
non-fundamental and may be changed by the Board of Trustees without shareholder
approval. The Portfolio's investment policies, strategies and practices are also
non-fundamental. The Board of Trustees of the Trust reserves the right to change
any of these non-fundamental investment policies, strategies or practices
without shareholder approval. However, shareholders will be notified before any
material change in the investment policies becomes effective. The Portfolio has
adopted certain investment restrictions, some of which are fundamental and
cannot be changed without shareholder approval. See "Investment Program and
Restrictions -- Investment Restrictions" in this Statement of Additional
Information. Any percentage limitations with respect to assets of the Portfolio
will be applied at the time of purchase. A later change in percentage resulting
from changes in asset values will not be considered a violation of the
percentage limitations. The percentage limitations applicable to borrowings and
reverse repurchase agreements will be applied in accordance with applicable
provisions of the 1940 Act and the rules and regulations promulgated thereunder
which specifically limit the Portfolio's borrowing abilities.
The Portfolio seeks to achieve its objective by investing in high grade
money market instruments. The money market instruments in which the Portfolio
invests are considered to carry very little risk and accordingly may not have as
high a yield as that available on money market instruments of lesser quality.
The Portfolio invests exclusively in direct obligations of the U.S. Treasury,
which include Treasury bills, notes and bonds and repurchase agreements relating
to such securities. The Portfolio may enter into repurchase agreements with
respect to U.S. Treasury securities. The Portfolio will only invest in
securities denominated in U.S. dollars.
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 Trustees) 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.
REVERSE REPURCHASE AGREEMENTS. The Portfolio may 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 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 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
B-12
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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.
ILLIQUID SECURITIES. The Portfolio will invest no more than 10% of its net
assets in illiquid securities.
INTERFUND LOANS. The Portfolio may lend up to 33 1/3% of its total assets
to another AIM Fund, on such terms and conditions as the SEC may require in an
exemptive order. An application for exemptive relief has been filed with the SEC
on behalf of the Portfolio and the other AIM Funds. The Portfolio may also
borrow from another AIM Fund to satisfy redemption requests or to cover
unanticipated cash shortfalls due to a delay in the delivery of cash to the
Portfolio's custodian or improper delivery instructions by a broker effectuating
a transaction. It is anticipated that the Portfolio would not participate as a
borrower in the interfund lending facility because it would rarely need to
borrow cash to meet redemptions; however, it is anticipated that the Portfolio
will be a lender to other AIM Funds under the interfund lending facility.
INVESTMENT IN OTHER INVESTMENT COMPANIES. The Portfolio may invest in other
investment companies to the extent permitted by the 1940 Act, and rules and
regulations thereunder, and if applicable, exemptive orders granted by the SEC.
The following restrictions apply to investments in other investment companies
other than Affiliated Money Market Funds (defined below): (i) the Portfolio may
not purchase more than 3% of the total outstanding voting stock of another
investment company; (ii) the Portfolio may not invest more than 5% of its total
assets in securities issued by another investment company; and (iii) the
Portfolio may not invest more than 10% of its total assets in securities issued
by other investment companies other than Affiliated Money Market Funds. With
respect to the Portfolio's purchase of shares of another investment company,
including Affiliated Money Market Funds, the Portfolio will indirectly bear its
proportionate share of the advisory fees and other operating expenses of such
investment company. The Portfolio has obtained an exemptive order from the SEC
allowing it to invest uninvested cash balances and cash collateral received in
connection with securities lending in money market funds that have AIM or an
affiliate of AIM as an investment adviser (the "Affiliated Money Market Funds"),
provided that, with respect to uninvested cash balances, investments in
Affiliated Money Market Funds do not exceed 25% of the total assets of the
Portfolio.
LENDING OF PORTFOLIO SECURITIES. Consistent with applicable regulatory
requirements the Portfolio may lend its portfolio securities (principally to
broker-dealers) to the extent of one-third of its total assets. Such loans would
be callable at any time and would be continuously secured by collateral equal to
no less than the market value, determined daily, of the loaned securities. Such
collateral will be cash or debt securities issued or guaranteed by the U.S.
Government or any of its agencies. The Portfolio would continue to receive the
income on loaned securities and would, at the same time, earn interest on the
loan collateral or on the investment of the loan collateral if it were cash. Any
cash collateral pursuant to these loans would be invested in short-term money
market instruments or affiliated money market funds. Where voting or consent
rights with respect to loaned securities pass to the borrower, the Portfolio
will follow the policy of calling the loan, in whole or in part as may be
appropriate, to permit the exercise of such voting or consent rights if the
matters involved are expected to have a material effect on the Portfolio's
investment in the loaned securities. Lending securities entails a risk of loss
to the Portfolio if and to the extent that the market value of the securities
loaned were to increase and the lender did not increase the collateral
accordingly.
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.
B-13
<PAGE> 305
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, 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.
MARGIN TRANSACTIONS, SHORT SALES AND OPTIONS. The Portfolio does not intend
to engage in short sales or to purchase or sell put or call options. The
Portfolio will not purchase any security on margin, except that it may obtain
such short-term credits as may be necessary for the clearance of purchases and
sales of portfolio securities.
ELIGIBLE SECURITIES. The Trust will invest only 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
Fundamental Restrictions
Fundamental restrictions may be changed only by a vote of the lesser of (i)
67% or more of the Portfolio's shares present at a meeting if the holders of
more than 50% of the outstanding shares are present in person or represented by
proxy, or (ii) more than 50% of the Portfolio's outstanding shares. Any
investment restriction that involves a maximum or minimum percentage of
securities or assets shall not be considered to be violated unless an excess
over or a deficiency under the percentage occurs immediately after, and is
caused by, an acquisition or disposition of securities or utilization of assets
by the Portfolio.
(1) The Portfolio is a "diversified company" as defined in the 1940
Act. The Portfolio will not 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, and the rules and regulations promulgated
thereunder, as such statute, rules and regulations are amended from time to
time or are interpreted from time to time by the SEC staff (collectively,
the "1940 Act Laws and Interpretations") or except to the extent that the
Portfolio may be permitted to do so by exemptive order or similar relief
(collectively, with the 1940 Act Laws and Interpretations, the "1940 Act
Laws, Interpretations and Exemptions"). In complying with this restriction,
however, the Portfolio may purchase securities or other investment
companies to the extent permitted by the 1940 Act Laws, Interpretations and
Exemptions.
(2) The Portfolio may not borrow money or issue senior securities,
except as permitted by the 1940 Act Laws, Interpretations and Exemptions.
(3) The Portfolio may not underwrite the securities of other issuers.
This restriction does not prevent the Portfolio from engaging in
transactions involving the acquisition, disposition or resale of its
portfolio securities, regardless of whether the Portfolio may be considered
to be an underwriter under the Securities Act of 1933.
(4) The Portfolio will not make investments that will result in the
concentration (as that term may be defined or interpreted by the 1940 Act
Laws, Interpretations and Exemptions) of its investments in the securities
of issuers primarily engaged in the same industry. This restriction does
not limit the Portfolio's investments in (i) obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities, (ii)
tax-exempt obligations issued by governments or political subdivisions of
governments, or (iii) bank instruments. In complying with this restriction,
the Portfolio will not consider a bank-issued guaranty or financial
guaranty insurance as a separate security.
(5) The Portfolio may not purchase real estate or sell real estate
unless acquired as a result of ownership of securities or other
instruments. This restriction does not prevent the Portfolio from investing
in issuers that invest, deal, or otherwise engage in transactions in real
estate or interests therein, or investing in securities that are secured by
real estate or interests therein.
B-14
<PAGE> 306
(6) The Portfolio may not purchase physical commodities or sell
physical commodities unless acquired as a result of ownership of securities
or other instruments. This restriction does not prevent the Portfolio from
engaging in transactions involving futures contracts and options thereon or
investing in securities that are secured by physical commodities.
(7) The Portfolio may not make personal loans or loans of its assets
to persons who control or are under common control with the Portfolio,
except to the extent permitted by 1940 Act Laws, Interpretations and
Exemptions. This restriction does not prevent the Portfolio from, among
other things, purchasing debt obligations, entering into repurchase
agreements, loaning its assets to broker-dealers or institutional
investors, or investing in loans, including assignments and participation
interests.
(8) The Portfolio may, notwithstanding any other fundamental
investment policy or limitation, invest all of its assets in the securities
of a single open-end management investment company with substantially the
same fundamental investment objectives, policies and restrictions as the
Portfolio.
The investment restrictions set forth above provide the Portfolio with the
ability to operate under new interpretations of the 1940 Act or pursuant to
exemptive relief from the SEC without receiving prior shareholder approval of
the change. Even though the Portfolio has this flexibility, the Board of
Trustees of the Trust has adopted non-fundamental restrictions for the Portfolio
relating to certain of these restrictions which the advisor must follow in
managing the Portfolio. Any changes to these non-fundamental restrictions, which
are set forth below, require the approval of the Board of Trustees.
NON-FUNDAMENTAL RESTRICTIONS
The following non-fundamental investment restrictions apply to the
Portfolio. They may be changed without approval of the Portfolio's voting
securities.
(1) In complying with the fundamental restriction regarding issuer
diversification, the Portfolio will not, with respect to 100% of its total
assets, purchase the securities of any issuer (other than securities issued
or guaranteed by the U.S. Government or any of its agencies or
instrumentalities), if, as a result, (i) more than 5% of the Portfolio's
total assets would be invested in the securities of that issuer, except as
permitted by Rule 2a-7 under the 1940 Act, or (ii) the Portfolio would hold
more than 10% of the outstanding voting securities of that issuer. The
Portfolio may (i) purchase securities of other investment companies as
permitted by Section 12(d)(1) of the 1940 Act and (ii) invest its assets in
securities of other money market funds and lend money to other investment
companies and their series portfolios that have AIM or an affiliate of AIM
as an investment advisor (an "AIM Advised Fund"), subject to the terms and
conditions of any exemptive orders issued by the SEC.
(2) In complying with the fundamental restriction regarding borrowing
money and issuing senior securities, the Portfolio may borrow money in an
amount not exceeding 33-1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings). The Portfolio may
borrow from banks, broker-dealers or an AIM Advised Fund. The Portfolio may
not borrow for leveraging, but may borrow for temporary or emergency
purposes, in anticipation of or in response to adverse market conditions,
or for cash management purposes. The Portfolio may not purchase additional
securities when any borrowings from banks exceed 5% of the Portfolio's
total assets.
(3) In complying with the fundamental restriction regarding industry
concentration, the Portfolio may invest up to 25% of its total assets in
the securities of issuers whose principal business activities are in the
same industry.
(4) In complying with the fundamental restriction with regard to
making loans, the Portfolio may lend up to 33-1/3% of its total assets and
may lend money to another AIM Advised Fund, on such terms and conditions as
the SEC may require in an exemptive order.
(5) Notwithstanding the fundamental restriction on investing all
assets in an open-end fund, the Portfolio may not invest all of its assets
in the securities of a single open-end management investment company with
the same fundamental investment objectives, policies and restrictions as
the Portfolio.
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<PAGE> 307
MANAGEMENT
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 (81) Trustee and Director and Chairman, A I M Management Group Inc.,
Chairman 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 (56) 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 Formerly Director, Cortland Trust Inc. (investment
Six Blythewood Road company), CF & I Steel Corp., Monumental Life
Baltimore, MD 21210 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, President and Chief Operating Officer,
Baltimore, MD 21201 Mercantile-Safe Deposit & Trust Co., and President,
Mercantile Bankshares.
- -----------------------------------------------------------------------------------------------------------------------
JACK M. FIELDS (48) 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 (63) Trustee Partner, Kramer Levin Naftalis & Frankel, LLP (law
919 Third Avenue 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 and Chief
Executive Officer, Managed Products, 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.
B-16
<PAGE> 308
<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
New York, NY 10118
- -----------------------------------------------------------------------------------------------------------------------
LEWIS F. PENNOCK (57) Trustee Partner, Pennock & Cooper (law firm).
6363 Woodway, Suite 825
Houston, TX 77057
- -----------------------------------------------------------------------------------------------------------------------
LOUIS S. SKLAR (60) Trustee Executive Vice President, Development and Operations,
The Williams Tower, Hines Interests Limited Partnership (real estate
50th Floor development).
2800 Post Oak Blvd.
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 (41) 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 (45) 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 and Sklar and Dr. Mathai-Davis. The
Audit Committee is responsible for: (i) considering management's recommendations
of independent accountants for each Portfolio and evaluating such accountants'
performance, costs and financial stability; (ii) with AIM, reviewing and
coordinating audit plans prepared by the Portfolios' independent accountants and
management's internal audit staff; and (iii) reviewing financial statements
contained in periodic reports to shareholders with the Portfolios' independent
accountants and management.
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: (i) overseeing AIM's
investment-related
B-17
<PAGE> 309
compliance systems and procedures to ensure their continued adequacy; and (ii)
considering and acting, on an interim basis between meetings of the full Board,
on investment-related matters requiring Board consideration, including dividends
and distributions, brokerage policies and pricing matters.
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: (i) considering
and nominating individuals to stand for election as independent trustees as long
as the Trust maintains a distribution plan pursuant to Rule 12b-1 under the 1940
Act; (ii) reviewing from time to time the compensation payable to the
independent trustees; and (iii) making recommendations to the Board regarding
matters related to compensation, including deferred compensation plans and
retirement plans for the independent trustees.
The Nominating and Compensation Committee will consider nominees
recommended by a shareholder to serve as trustees, provided (i) that such person
is a shareholder of record at the time he or she submits such names and is
entitled to vote at the meeting of shareholders at which the trustees will be
elected, and (ii) that the Nominating and Compensating Committee or the Board,
as applicable, shall make the final determination of persons to be nominated.
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. The trustees of the
Trust who do not serve as officers of the Trust are compensated for their
services according to a fee schedule which recognizes the fact that they also
serve as directors or trustees of certain other regulated investment companies
managed, administered or distributed by AIM or its affiliates. Each such trustee
receives a fee, allocated among such investment companies 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 37,485 103,500
Owen Daly II...................................... 5,724 122,898 103,500
Edward K. Dunn, Jr................................ 5,724 55,565 103,500
Jack Fields....................................... 5,695 15,826 101,500
Carl Frischling(4)................................ 5,694 97,791 103,500
Robert H. Graham.................................. 0 0 0
John F. Kroeger(5)................................ 506 40,461 0
Prema Mathai-Davis................................ 5,344 11,870 101,500
Lewis F. Pennock.................................. 5,694 45,766 103,500
Ian W. Robinson(6)................................ 3,551 94,442 25,000
Louis S. Sklar.................................... 5,694 90,232 101,500
</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 with respect of such retirement benefits was $35,554.
Data reflects compensation for the calendar year ended December 31, 1999.
(3) Each trustee serves as a trustee or director of a total of 12 registered
investment companies advised by AIM. Data reflects compensation for the
calendar year ended December 31, 1999.
(4) The Trust paid the law firm of Kramer Levin Naftalis & Frankel, LLP $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.
B-18
<PAGE> 310
(5) Mr. Kroeger was a trustee until June 11, 1998, when he resigned. On that
date, he became a consultant to the Trust. 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 (for purposes of this paragraph only, 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, a trustee becomes eligible to
retire and receive full benefits under the Plan when he or she 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 or her
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 all benefits under the Plan, 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 the retainer amount reflected
below various years of service. The estimated credited years of service for
Messrs. Crockett, Daly, Dunn, Fields, Frischling, Kroeger, Pennock, Robinson and
Sklar and Dr. Mathai-Davis are 13, 13, 2, 3, 23, 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 and Sklar and Dr. Mathai-Davis (for
purposes of this paragraph only, the "Deferring Trustees") have each executed a
Deferred Compensation Agreement (collectively, the "Compensation Agreements").
Pursuant to the Compensation 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
Compensation 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 or her
deferral account, the balance of the deferral account will be distributed to his
or her designated beneficiary in a single lump sum payment as soon as
practicable after such Deferring Trustee's death. The Compensation 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.
B-19
<PAGE> 311
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, manages or administers over 120 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."
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 and certain other employees to (a) pre-clear all personal securities
transactions subject to the Code of Ethics; (b) file reports regarding such
transactions; (c) 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 (subject to a de minimis
exception), and (iii) transactions involving securities being considered for
investment by an AIM Fund (subject to the de minimis exception); and (d) abide
by certain other provisions of the Code of Ethics. The de minimis exception
under the Code of Ethics covers situations where there is no material conflict
of interest because of the large market capitalization of a security and the
relatively small number of shares involved in a personal transaction. The Code
of Ethics also generally prohibits AIM employees from purchasing securities in
initial public offerings. Personal trading reports are periodically reviewed by
AIM, and the Board of Trustees reviews quarterly and annual reports (which
summarize any significant violations of the Code of Ethics). Sanctions for
violating the Code of Ethics may include censure, monetary penalties, suspension
or termination of employment.
The Trust has entered into a Master Investment Advisory Agreement, dated
June 1, 2000 (the "Advisory Agreement") with AIM. A prior investment advisory
agreement with similar terms to the Advisory Agreement was in effect prior to
June 1, 2000. The Advisory Agreement will remain in effect until June 30, 2001
and continue from year to year only if such continuance 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 advisory services with respect to the Portfolio,
AIM receives a monthly fee which is calculated by applying the following annual
rates to the average daily net assets of the Portfolio:
<TABLE>
<CAPTION>
NET ASSETS RATE
---------- ----
<S> <C>
First $300 million.......................................... 0.15%
Over $300 million to $1.5 billion........................... 0.06%
Over $1.5 billion........................................... 0.05%
</TABLE>
Pursuant to an advisory agreement in effect prior to June 1, 2000 which
provided for the same level of compensation to AIM as the Advisory Agreement,
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
B-20
<PAGE> 312
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.
In addition, if the Portfolio engages in securities lending, AIM will
provide the Portfolio investment advisory services and related administrative
services. The Advisory Agreement describes the administrative services to be
rendered by AIM if the Portfolio engages in securities lending activities, as
well as the compensation AIM may receive for such administrative services.
Services to be provided include: (a) overseeing participation in the securities
lending program to ensure compliance with all applicable regulatory and
investment guidelines; (b) assisting the securities lending agent or principal
(the agent) in determining which specific securities are available for loan; (c)
monitoring the agent to ensure that securities loans are effected in accordance
with AIM's instructions and with procedures adopted by the Board; (d) preparing
appropriate periodic reports for, and seeking appropriate approvals from, the
Board with respect to securities lending activities; (e) responding to agent
inquiries; and (f) performing such other duties as may be necessary.
AIM's compensation for advisory services rendered in connection with
securities lending is included in the advisory fee schedule. As compensation for
the related administrative services AIM will provide, a lending fund will pay
AIM a fee equal to 25% of the net monthly interest or fee income retained or
paid to the fund from such activities. AIM currently intends to waive such fee,
and has agreed to seek Board approval prior to its receipt of all or a portion
of such fee.
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 her 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 prior
administrative services agreements which provided for the same level of
reimbursement to AIM as the Administrative Services Agreements, 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
B-21
<PAGE> 313
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 0843, Houston, Texas 77001-0843, 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. As transfer agent, AFS processes orders
for purchases, redemptions and exchanges of shares; prepares and transmits
payments for dividends and distributions declared by the Portfolio; maintains
shareholder accounts; and provides shareholders with information regarding the
Portfolio and its accounts.
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. BONY maintains the portfolio securities owned by the
Portfolio, administers the purchases and sales of portfolio securities, collects
interest and other distributions made on securities held by the Portfolio and
performs other ministerial duties.
LEGAL MATTERS
The law firm of Ballard Spahr Andrews & Ingersoll, LLP, Philadelphia,
Pennsylvania serves as counsel to the Trust, and passes upon legal matters for
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(R) Remote, a personal computer application software product, may
receive sub-accounting services via such software.
B-22
<PAGE> 314
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 May 19, 2000, and the percentage of such shares owned
by such shareholders as of such date are as follows:
CASH MANAGEMENT CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
Ferris, Baker Watts, Inc........................... 46.63% --
1700 Pennsylvania Ave.
Washington, DC 20006
Fund Services Advisors, Inc........................ 12.41% --
1875 Century Park East -- Suite 1345
Los Angeles, CA 90067
Gardnyr Michael Capital, Inc....................... 9.29% --
2281 Lee Rd Ste 104
Winter Park, FL 32789
Investment Resources............................... 9.28% --
Independence Plaza
1050 Seventeenth Street, Ste. 1620
Denver, CO 80265
Mayor And City Council 416A1....................... 7.00% --
100 Guilford Ave
Baltimore, MD 21202
</TABLE>
INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
A I M Advisors, Inc................................ 35.34%(b) 35.34%(b)
AIM Fund of Funds Account
Money Market Portfolio Admin.
11 Greenway Plaza, Ste 100
Houston, TX 77046
Gardnyr Michael Capital, Inc....................... 12.85% --
2281 Lee Rd, Ste 104
Winter Park, FL 32789
Waukesha County.................................... 12.32% --
Finance Division, Dept Of Admin.
1320 Pewaukee Road, Ste 310
Waukesha, WI 53188 3878
Kenosha County Wisconsin........................... 6.19% --
1010 56th Street
Kenosha, WI 53140 3738
</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) Represents shares held in a cash management account for the benefit of
certain AIM Funds. AIM has the power to direct the disposition of such
shares, and thus is deemed to be a beneficial owner of the shares. Shares
have been acquired in accordance with an exemptive order issued by the SEC.
B-23
<PAGE> 315
PERSONAL INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
SunTrust Equitable Securities...................... 100% --
P.O. Box 4418, MC 3907
Atlanta, GA 30302
</TABLE>
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
Fund Services Advisors, Inc........................ 78.83% --
1875 Century Park East, Suite 1345
Los Angeles, CA 90067
Huntington Capital Corp............................ 7.69% --
41 S High St, Ninth Floor
Columbus, OH 43287
</TABLE>
RESERVE CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
First National Banker's Bank....................... 100% --
PO Drawer 80579
Baton Rouge, LA 70898
</TABLE>
RESOURCE CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
SunTrust Equitable Securities...................... 46.37% --
P.O. Box 4418, MC 3907
Atlanta, GA 30302
City of Chicago G.O. Bonds for City Colleges....... 37.25% --
121 North LaSalle Street
Room 204
Chicago, IL 60603
Sovereign Bank..................................... 9.85% --
C/O Chase Enterprises
280 Trumbull Street
Hartford, CT 06103
</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-24
<PAGE> 316
GOVERNMENT 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 Government
TaxAdvantage Portfolio as of May 19, 2000 and the percentage of such shares
owned by such shareholders as of such date are as follows:
INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
Bank of America N.A................................ 38.16% --
1401 Elm Street 11th Floor
P.O. Box 831000
Dallas, TX 75202 2911
Frost National Bank TX............................. 18.76% --
Muir & Co
C/O Frost
P.O. Box 2479
San Antonio, TX 78298 2479
First Trust / Var & Co............................. 12.40% --
Funds Control Suite 0404
180 East Fifth Street
St. Paul, MN 55101
First National Bank Of Maryland.................... 8.94% --
Trust Operations Mailstop 109-751
P.O. Box 1596
Baltimore, MD 21203
PaineWebber SSB.................................... 6.04% --
1000 Harbor Blvd 6th Floor
Mutual Fund Operations
State Street Custodial Accounts
Weehawken, NJ 07087-6790
</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-25
<PAGE> 317
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
Bank of New York................................... 45.16% --
One Wall Street
5th Floor
Stif/Master Note
New York, NY 10286
CIBC World Markets................................. 25.67% --
200 Liberty Street
World Financial Center
New York, NY 10281
Huntington Capital Corp............................ 14.87% --
41 S High St., Ninth Floor
Columbus, OH 43287
Frost National Bank TX............................. 5.84% --
Muir & Co
C/O Frost
P.O. Box 2479
San Antonio, TX 78298 2479
First Union Securities, Inc........................ 5.11% --
Money Market Funds
8739 Research Dr., Capital Markets
Charlotte, NC 28262-0675
</TABLE>
RESOURCE CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
EVEREN Clearing Corp............................... 100% --
111 East Kilbourn Ave.
Milwaukee, WI 53202
</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-26
<PAGE> 318
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 May 19, 2000 and the percentage of such shares owned by such
shareholders as of such date are as follows:
CASH MANAGEMENT CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
Bank of New York................................... 40.44% --
One Wall Street
5th Floor
Stif/Master Note
New York, NY 10286
Bank of Oklahoma................................... 14.99% --
P.O. Box 2180
Tulsa, OK 74101
Chase Bank of Texas................................ 13.10% --
600 Travis St., 8th Fl
8-CBT-39
Houston, TX 77252-8009
Fund Services Advisors, Inc........................ 7.90% --
1875 Century Park East -- Suite 1345
Los Angeles, CA 90067
Huntington Capital Corp............................ 6.60% --
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.
B-27
<PAGE> 319
INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
City of New York Deferred Compensation Plan.......... 8.78% --
40 Rector Street 3rd Floor
New York, NY 10006
Trust Company Bank................................... 8.30% --
Center 3139
P.O. Box 105504
Atlanta, GA 30348
State Street Bank & Trust............................ 6.16% --
108 Myrtle Street
North Quincy, MA 02171
Weststar Bank Trust Dept............................. 5.59% --
P.O. Box 1156
Bartlesville, OK 75004 1156
Trustmark National Bank.............................. 5.45% --
Trust Department
248 East Capitol
Jackson, MS 39205
Star Trust........................................... 5.38% --
425 Walnut St.
Mall Location 7155
Cincinnati, OH 45202
Texas Commerce Bank National Association, as Custo... 5.38% --
1585 Broadway
New York, NY 10036
Chase Bank of Texas, National Association............ 5.38% --
600 Travis, 9th Floor
Houston, TX 77002
</TABLE>
PERSONAL INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
Cullen/Frost Discount Brokers........................ 85.29% --
P.O. Box 2358
San Antonio, TX 78299
Kinco & Co. C/O Rnb Securities....................... 6.55% --
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.
B-28
<PAGE> 320
PRIVATE INVESTMENT CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
Bank of New York..................................... 36.88% --
One Wall Street
5th Floor
Stif/Master Note
New York, NY 10286
Huntington Capital Corp.............................. 12.86% --
41 S. High St., Ninth Floor
Columbus, OH 43287
Cullen/Frost Discount Brokers........................ 10.18% --
P.O. Box 2358
San Antonio, TX 78299
Bank One Trust Company............................... 7.81% --
1111 Polaris Parkway
Columbus, OH 43240
Zions First National Bank (NV)....................... 6.67% --
P.O. Box 30880
Salt Lake City, UT 84130
New Haven Savings Bank Trust Department.............. 5.07% --
P.O. Box 302
Trust Department
New Haven, CT 06502
</TABLE>
RESERVE CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
Bank of New York..................................... 99.92% --
440 Mamoroneck, 5th Fl.
Harrison, NY 10286
</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-29
<PAGE> 321
RESOURCE CLASS
<TABLE>
<CAPTION>
PERCENT
OWNED OF PERCENT OWNED
NAME AND ADDRESS RECORD OF RECORD AND
OF RECORD OWNER ONLY(a) BENEFICIALLY
---------------- --------- -------------
<S> <C> <C>
First Union Subaccounts.............................. 48.93% --
8739 Research Drive
Capital Markets
Charlotte, NC 28262-0675
City of Chicago G.O. Bonds for City Colleges......... 18.30% --
121 North LaSalle Street
Room 204
Chicago, IL 60603
Mellon Bank NA....................................... 11.32% --
P.O. Box 710
Pittsburgh, PA 15230-0710
Sovereign Bank....................................... 8.72% --
C/O Chase Enterprises
280 Trumbull Street
Hartford, CT 06103
EVEREN Clearing Corp................................. 5.81% --
111 East Kilbourn Ave.
Milwaukee, WI 53202
</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 May 19, 2000, the trustees
and officers of the Trust as a group beneficially owned less than 1% of the
outstanding shares of each class of each Portfolio of the Trust.
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 thereof. Such
election, or any revocation thereof, must be made in writing and sent by the
shareholder to the AFS at P.O. Box 0843, Houston, Texas 77001-0843. 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, allocated based upon such
class' pro rata share of the total shares outstanding which relate to the
Portfolio, less (b) Trust expenses accrued for the applicable dividend period
B-30
<PAGE> 322
attributable to the Portfolio, such as custodian fees and accounting expenses,
allocated based upon each such class' pro rata of the net assets of the
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.
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 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
B-31
<PAGE> 323
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.
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 (or of another AIM Fund). 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 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 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 Portfolio 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 (taxable at a maximum rate of
20% for noncorporate shareholders) 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.
B-32
<PAGE> 324
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; 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 May 23,
2000. 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.
B-33
<PAGE> 325
FINANCIAL STATEMENTS
FS
<PAGE> 326
SCHEDULE OF INVESTMENTS
February 29, 2000
(Unaudited)
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
<S> <C> <C> <C>
U.S. TREASURY BILLS(a) - 96.11%
5.14% 03/02/00 $ 5,000 $ 4,999,286
- ------------------------------------------------------------------------------
4.93% 03/16/00 20,000 19,958,917
- ------------------------------------------------------------------------------
5.00% 03/30/00 20,000 19,919,444
- ------------------------------------------------------------------------------
5.22% 04/06/00 10,000 9,947,800
- ------------------------------------------------------------------------------
5.26% 04/13/00 5,000 4,968,586
- ------------------------------------------------------------------------------
5.29% 04/20/00 10,000 9,926,528
- ------------------------------------------------------------------------------
5.33% 04/20/00 5,000 4,962,986
- ------------------------------------------------------------------------------
5.36% 04/27/00 10,000 9,915,133
- ------------------------------------------------------------------------------
5.71% 04/27/00 10,000 9,909,671
- ------------------------------------------------------------------------------
5.58% 05/11/00 6,000 5,933,970
- ------------------------------------------------------------------------------
Total U.S. Treasury Bills (Cost $100,442,321) 100,442,321
- ------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 96.11% (Cost $100,442,321) 100,442,321
- ------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES -- 3.89% 4,070,373
- ------------------------------------------------------------------------------
NET ASSETS -- 100.00% $104,512,694
==============================================================================
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
(a) U.S. Treasury bills are traded on a discount basis. In such cases the
interest rate shown represents the rate of discount paid or received at the
time of purchase by the Portfolio.
See Notes to Financial Statements.
FS-29
<PAGE> 327
STATEMENT OF ASSETS AND LIABILITIES
February 29, 2000
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at value (amortized cost) $100,442,321
- ----------------------------------------------------------------------
Cash 4,495,750
- ----------------------------------------------------------------------
Investment for deferred compensation plan 35,588
- ----------------------------------------------------------------------
Other assets 32,037
- ----------------------------------------------------------------------
Total assets 105,005,696
- ----------------------------------------------------------------------
LIABILITIES:
Payables for:
Dividends 415,215
- ----------------------------------------------------------------------
Deferred compensation 35,588
- ----------------------------------------------------------------------
Accrued administrative services fees 3,962
- ----------------------------------------------------------------------
Accrued distribution fees 8,920
- ----------------------------------------------------------------------
Accrued transfer agent fees 8,017
- ----------------------------------------------------------------------
Accrued trustees' fees 1,210
- ----------------------------------------------------------------------
Accrued operating expenses 20,090
- ----------------------------------------------------------------------
Total liabilities 493,002
- ----------------------------------------------------------------------
NET ASSETS $104,512,694
======================================================================
NET ASSETS:
Institutional Class $ 53,788,531
======================================================================
Private Investment Class $ 50,724,161
======================================================================
Cash Management Class $ 1
======================================================================
Resource Class $ 1
======================================================================
SHARES OF BENEFICIAL INTEREST, $.01 PAR VALUE PER SHARE:
Institutional Class 53,791,599
======================================================================
Private Investment Class 50,738,890
======================================================================
Cash Management Class 1
======================================================================
Resource Class 1
======================================================================
NET ASSET VALUE PER SHARE:
Net asset value, offering and redemption price per share $ 1.00
======================================================================
</TABLE>
See Notes to Financial Statements.
FS-30
<PAGE> 328
STATEMENT OF OPERATIONS
For the six months ended February 29, 2000
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $3,051,199
- -----------------------------------------------------------------
EXPENSES:
Advisory fees 123,553
- -----------------------------------------------------------------
Custodian fees 5,323
- -----------------------------------------------------------------
Administrative services fees 24,863
- -----------------------------------------------------------------
Trustees' fees 3,927
- -----------------------------------------------------------------
Transfer agent fees 17,658
- -----------------------------------------------------------------
Distribution fees (see Note 2) 116,935
- -----------------------------------------------------------------
Filing fees 20,592
- -----------------------------------------------------------------
Other 28,606
- -----------------------------------------------------------------
Total expenses 341,457
- -----------------------------------------------------------------
Less: Fee waivers and reimbursements (212,040)
- -----------------------------------------------------------------
Net expenses 129,417
- -----------------------------------------------------------------
Net investment income 2,921,782
- -----------------------------------------------------------------
Net realized gain (loss) on sales of investments (49,828)
- -----------------------------------------------------------------
Net increase in net assets resulting from operations $2,871,954
=================================================================
</TABLE>
See Notes to Financial Statements.
FS-31
<PAGE> 329
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended February 29, 2000 and year ended August 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
FEBRUARY 29, AUGUST 31,
2000 1999
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 2,921,782 $ 6,402,815
- ------------------------------------------------------------------------------
Net realized gain (loss) on sales of investments (49,828) (10,840)
- ------------------------------------------------------------------------------
Net increase in net assets resulting from
operations 2,871,954 6,391,975
- ------------------------------------------------------------------------------
Distributions to shareholders from net investment
income:
Institutional Class (1,830,000) (4,317,947)
- ------------------------------------------------------------------------------
Private Class (1,068,890) (2,084,868)
- ------------------------------------------------------------------------------
Cash Management Class (5,288) --
- ------------------------------------------------------------------------------
Resource Class (17,604) --
- ------------------------------------------------------------------------------
Share transactions-net (see Note 4) (29,330,768) (10,323,072)
- ------------------------------------------------------------------------------
Net increase (decrease) in net assets (29,380,596) (10,333,912)
- ------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 133,893,290 144,227,202
- ------------------------------------------------------------------------------
End of period $104,512,694 $133,893,290
==============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $104,530,491 $133,861,259
- ------------------------------------------------------------------------------
Undistributed net realized gain (loss) on sales
of investments (17,797) 32,031
- ------------------------------------------------------------------------------
$104,512,694 $133,893,290
==============================================================================
</TABLE>
See Notes to Financial Statements.
FS-32
<PAGE> 330
NOTES TO FINANCIAL STATEMENTS
February 29, 2000
(Unaudited)
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, 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 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 among the classes.
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, AIM receives a monthly fee with respect to the Portfolio calculated
by applying a monthly rate, based upon the following annual rates, to the
average daily net assets of the Portfolio:
<TABLE>
<CAPTION>
NET ASSETS RATE
- -------------------------------------------------------------------------------
<S> <C>
First $250 million 0.20%
- -------------------------------------------------------------------------------
Over $250 million to $500 million 0.15%
- -------------------------------------------------------------------------------
Over $500 million 0.10%
- -------------------------------------------------------------------------------
</TABLE>
During the six months ended February 29, 2000, AIM waived advisory fees of
$123,553 and reimbursed fees of $30,284.
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 six months ended February 29, 2000,
AIM was paid $24,863 for such services.
FS-33
<PAGE> 331
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 six months ended February 29,
2000, AFS was paid $9,637 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, the 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. Currently, FMC has elected to waive a portion of its compensation
payable by the Fund such that the compensation paid pursuant to the Plan with
respect to the Private Investment Class, the Personal Investment Class, the
Cash Management Class, the Reserve Class, and the Resource Class equals 0.25%,
0.50%, 0.08%, 0.80% and 0.16%, respectively, maximum annual rate of the average
daily net assets attributable to such class. During the six months ended
February 29, 2000, the Private Investment Class, the Cash Management Class and
the Resource Class paid $58,027, $91 and $614, respectively, as compensation
under the Plan. FMC waived fees of $58,203 for the same period.
Certain officers and trustees of the Trust are officers of AIM, FMC and AFS.
During the six months ended February 29, 2000, the Fund paid legal fees of
$1,092 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 six months ended February 29, 2000 and
the year ended August 31, 1999 were as follows:
<TABLE>
<CAPTION>
FEBRUARY 29, 2000 AUGUST 31, 1999
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Sold:
Institutional Class 424,416,166 $ 424,416,166 606,748,092 $ 606,748,092
- ---------------------------------------------------------------------------------
Private Investment
Class 520,894,207 520,894,207 605,044,466 605,044,466
- ---------------------------------------------------------------------------------
Cash Management Class* 10,364,472 10,364,472 -- --
- ---------------------------------------------------------------------------------
Resource Class* 35,063,662 35,063,662 -- --
- ---------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Institutional Class 139,788 139,788 477,705 477,705
- ---------------------------------------------------------------------------------
Private Investment
Class 568,852 568,852 1,198,839 1,198,839
- ---------------------------------------------------------------------------------
Cash Management Class* 4,671 4,671 -- --
- ---------------------------------------------------------------------------------
Resource Class* 8,800 8,800 -- --
- ---------------------------------------------------------------------------------
Reacquired:
Institutional Class (459,259,946) (459,259,946) (631,780,898) (631,780,898)
- ---------------------------------------------------------------------------------
Private Investment
Class (516,089,837) (516,089,837) (592,011,276) (592,011,276)
- ---------------------------------------------------------------------------------
Cash Management Class* (10,369,142) (10,369,142) -- --
- ---------------------------------------------------------------------------------
Resource Class* (35,072,461) (35,072,461) -- --
- ---------------------------------------------------------------------------------
Net increase (decrease) (29,330,768) $ (29,330,768) (10,323,072) $ (10,323,072)
=================================================================================
</TABLE>
* The Cash Management Class and the Resource Class commenced sales on December
30, 1999.
FS-34
<PAGE> 332
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Cash Management
Class outstanding during the period December 30, 1999 (date sales commenced)
through February 29, 2000.
<TABLE>
<S> <C>
Net asset value, beginning of period $1.00
- ---------------------------------------------------- -----
Income from investment operations:
Net investment income 0.01
- ---------------------------------------------------- -----
Less distributions:
Dividends from net investment income (0.01)
- ---------------------------------------------------- -----
Net asset value, end of period $1.00
- ---------------------------------------------------- -----
Total return(a) 0.81%
- ---------------------------------------------------- -----
Ratios/Supplemental data:
Net assets, end of period (000's omitted) $ 0
- ---------------------------------------------------- -----
Ratio of expenses to average net assets:
Including fee waivers and/or expense reimbursements 0.19%(b)
- ---------------------------------------------------- -----
Excluding fee waivers and/or expense reimbursements 0.46%(b)
- ---------------------------------------------------- -----
Ratio of net investment income to average net assets 4.76%(b)
- ---------------------------------------------------- -----
</TABLE>
(a)Not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $668,058.
FS-35
<PAGE> 333
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Institutional Class
outstanding during the six months ended February 29, 2000 and each of the years
in the five-year period ended August 31, 1999.
<TABLE>
<CAPTION>
AUGUST 31,
FEBRUARY 29, -----------------------------------------------
2000 1999 1998 1997 1996 1995
------------ ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------- ------- ------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.02 0.04 0.05 0.05 0.05 0.05
- ---------------------------------------------------- ------- ------- -------- ------- -------- --------
Less distributions:
Dividends from net investment income (0.02) (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 $ 1.00
==================================================== ======= ======= ======== ======== ======== ========
Total return(a) 2.45% 4.51% 5.30% 5.13% 5.19% 5.35%
==================================================== ======= ======= ======== ======== ======== ========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $53,789 $88,517 $113,084 $258,251 $407,218 $394,376
==================================================== ======= ======= ======== ======== ======== ========
Ratio of expenses to average net assets:
Including fee waivers and/or expense
reimbursements 0.11%(b) 0.19% 0.20% 0.20% 0.20% 0.20%
==================================================== ==== ==== ===== ===== ===== =====
Excluding fee waivers and/or expense
reimbursements 0.36%(b) 0.35% 0.28% 0.23% 0.23% 0.23%
==================================================== ==== ==== ==== ==== ==== ====
Ratio of net investment income to average net assets 4.84%(b) 4.42% 5.05% 5.00% 5.06% 5.21%
==================================================== ==== ==== ==== ==== ==== ====
</TABLE>
(a) Not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $76,062,395.
FS-36
<PAGE> 334
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Private Investment
Class outstanding during the six months ended February 29, 2000 and 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.
<TABLE>
<CAPTION>
AUGUST 31,
FEBRUARY 29, ------------------------------------------
2000 1999 1998 1997 1996 1995
------------ ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------- ------- ------- ------- ------- ------- ------
Income from investment operations:
Net investment income 0.02 0.04 0.05 0.05 0.05 0.04
- ---------------------------------------------------- ------- ------- ------- ------- ------- ------
Less distributions:
Dividends from net investment income (0.02) (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 $ 1.00
==================================================== ======= ======= ======= ======= ======= ======
Total return(a) 2.32% 4.25% 5.04% 4.87% 4.93% 3.69%
==================================================== ======= ======= ======= ======= ======= ======
Ratios/supplemental data:
Net assets, end of period (000s omitted) $50,724 $45,377 $31,143 $39,312 $49,978 $5,423
- ---------------------------------------------------- ------- ------- ------- ------- ------- ------
Ratio of expenses to average net assets:
Including fee waivers and/or expense
reimbursements 0.36%(b) 0.43% 0.45% 0.45% 0.45% 0.45%(c)
- ---------------------------------------------------- ------ ------ ------ ------ ------ ------
Excluding fee waivers and/or expense
reimbursements 0.86%(b) 0.85% 0.78% 0.74% 0.85% 1.02%(c)
- ---------------------------------------------------- ------ ------ ------ ------ ------ ------
Ratio of net investment income to average net assets 4.59%(b) 4.18% 4.80% 4.75% 4.72% 5.21%(c)
==================================================== ====== ====== ====== ====== ====== ======
</TABLE>
(a) Not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $46,676,621.
(c) Annualized.
FS-37
<PAGE> 335
NOTE 5-FINANCIAL HIGHLIGHTS
Shown below are the financial highlights for a share of the Resource Class
outstanding during the period December 30, 1999 (dates sales commenced) through
February 29, 2000.
<TABLE>
<S> <C>
Net asset value, beginning of period $1.00
- ---------------------------------------------------- -----
Income from investment operations:
Net investment income 0.01
- ---------------------------------------------------- -----
Less distributions:
Dividends from net investment income (0.01)
- ---------------------------------------------------- -----
Net asset value, end of period $1.00
==================================================== =====
Total return(a) 0.81%
==================================================== =====
Ratios/Supplemental data:
Net assets, end of period (000's omitted) $ 0
==================================================== =====
Ratio of expenses to average net assets:
Including fee waivers and/or expense reimbursements 0.27%(b)
==================================================== =====
Excluding fee waivers and/or expense reimbursements 0.56%(b)
==================================================== =====
Ratio of net investment income to average net assets 4.68%(b)
==================================================== =====
</TABLE>
(a) Not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $2,262,511.
FS-38
<PAGE> 336
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.
/s/ KPMG LLP
KPMG LLP
October 1, 1999
Houston, Texas
FS-1
<PAGE> 337
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-2
<PAGE> 338
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-3
<PAGE> 339
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-4
<PAGE> 340
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-5
<PAGE> 341
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-6
<PAGE> 342
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-7
<PAGE> 343
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-8
<PAGE> 344
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> 345
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-10
<PAGE> 346
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-11
<PAGE> 347
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-12
<PAGE> 348
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-13
<PAGE> 349
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-14
<PAGE> 350
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.
(3) - (a) 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) Amendment No. 1, dated May 10, 2000, to the Registrant's
Amended and Restated Agreement and Declaration of Trust is
filed herewith electronically.
(c) Form of Amendment No. 2 to the Registrant's Amended and
Restated Agreement and Declaration of Trust is filed herewith
electronically.
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.
C-1
<PAGE> 351
- (b) Amendment to the By-Laws of Registrant, adopted December
2, 1993, was filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 28 on November 13,
1995.
- (c) Second Amendment to the By-Laws of Registrant, dated March
14, 1995, was filed as an Exhibit to Registrants
Post-Effective Amendment No. 29 on December 18, 1996.
(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, were 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, was
filed electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 33 on November 8, 1999, and is
hereby incorporated by reference.
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.
(3) - Form of Master Investment Advisory Agreement between A I M
Advisors, Inc. and Registrant with respect to the Government &
Agency Portfolio, the Government TaxAdvantage Portfolio and
the Treasury Portfolio was filed electronically as an Exhibit
to Registrant's Post-Effective Amendment No. 34 on March 31,
2000, 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-2
<PAGE> 352
- (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
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 was filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 33 on November 8,
1999, and is hereby incorporated by reference.
f(1) - Retirement Plan for Eligible Directors/Trustees, effective
March 8, 1994, as restated September 18, 1995, was filed
electronically as an Exhibit to Registrant's Post-Effective
Amendment No. 33 on November 8, 1999, and is hereby
incorporated by reference.
(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.
C-3
<PAGE> 353
(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 was filed
electronically as an Exhibit to Registrant's Post-Effective
Amendment No. 33 on November 8, 1999, and is hereby
incorporated by reference.
- (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 was filed
electronically as an Exhibit to Registrant's Post-Effective
Amendment No. 33 on November 8, 1999, and is hereby
incorporated by reference.
(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 was filed electronically as an Exhibit
to Registrant's Post-Effective Amendment No. 33 on November 8,
1999, and is hereby incorporated by reference.
- (b) Form of Memorandum of Agreement, between Registrant and
A I M Advisors, Inc. was filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 33 on November 8,
1999, and is hereby incorporated by reference.
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.
C-4
<PAGE> 354
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) Amendment No. 2, dated December 18, 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. 33 on November 8, 1999, and is
hereby incorporated by reference.
(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
was filed electronically as an Exhibit to Registrant's
Post-Effective Amendment No. 33 on November 8, 1999, and is
hereby incorporated by reference.
o(1) - (a) 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. was filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 33 on November 8,
1999, and is hereby incorporated by reference.
(b) The A I M Management Group Code of Ethics, as amended
February 24, 2000, relating to A I M Management Group Inc. and
A I M Advisors, Inc. was filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 34 on March 31,
2000, and is hereby incorporated by reference.
(2) - Code of Ethics of Short-Term Investments Trust, effective as
of May 5, 1993, was filed electronically as an Exhibit to
Registrant's Post-Effective Amendment No. 33 on November 8,
1999, and is hereby incorporated by reference.
C-5
<PAGE> 355
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 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.
C-6
<PAGE> 356
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 (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:
<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 and Director Chairman & Trustee
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
</TABLE>
- --------------------------
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
C-7
<PAGE> 357
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ------------------ -------------------------- --------------------
<S> <C> <C>
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
Assistant Treasurer
Nicholas D. White Assistant Vice President None
Nancy L. Martin Assistant General Counsel & Assistant Secretary
Assistant Secretary
Ofelia M. Mayo Assistant General Counsel & Assistant Secretary
Assistant Secretary
Samuel D. Sirko Assistant General Counsel & Assistant Secretary
Assistant Secretary
Kathleen J. Pflueger Secretary Assistant Secretary
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> 358
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment
to its Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the city of Houston, Texas on the 24th day of May,
2000.
Registrant: SHORT-TERM INVESTMENTS TRUST
By: /s/ ROBERT H. GRAHAM
---------------------------
Robert H. Graham, President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/ CHARLES T. BAUER Chairman & Trustee May 24, 2000
- ---------------------------------
(Charles T. Bauer)
/s/ ROBERT H. GRAHAM Trustee & President May 24, 2000
- --------------------------------- (Principal Executive Officer)
(Robert H. Graham)
/s/ BRUCE L. CROCKETT Trustee May 24, 2000
- ---------------------------------
(Bruce L. Crockett)
/s/ OWEN DALY II Trustee May 24, 2000
- ---------------------------------
(Owen Daly II)
/s/ EDWARD K. DUNN, JR. Trustee May 24, 2000
- ---------------------------------
(Edward K. Dunn, Jr.)
/s/ JACK FIELDS Trustee May 24, 2000
- ---------------------------------
(Jack Fields)
/s/ CARL FRISCHLING Trustee May 24, 2000
- ---------------------------------
(Carl Frischling)
/s/ PREMA MATHAI-DAVIS Trustee May 24, 2000
- ---------------------------------
(Prema Mathai-Davis)
/s/ LEWIS F. PENNOCK Trustee May 24, 2000
- ---------------------------------
(Lewis F. Pennock)
/s/ LOUIS S. SKLAR Trustee May 24, 2000
- ---------------------------------
(Louis S. Sklar)
/s/ DANA R. SUTTON Vice President & May 24, 2000
- --------------------------------- Treasurer (Principal Financial
(Dana R. Sutton) and Accounting Officer)
</TABLE>
<PAGE> 359
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
a(3)(b) Amendment No. 1, dated May 10, 2000, to the Registrant's
Amended and Restated Agreement and Declaration of Trust
a(3)(c) Form of Amendment No. 2 to the Registrant's Amended and
Restated Agreement and Declaration of Trust
j(1) Consent of Ballard Spahr Andrews & Ingersoll, LLP
j(2) Consent of KPMG LLP
</TABLE>
<PAGE> 1
EXHIBIT a(3)(b)
AMENDMENT NO. 1
TO
AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST
OF
SHORT-TERM INVESTMENTS TRUST
This Amendment No. 1 to the Amended and Restated Agreement and
Declaration of Trust of Short-Term Investments Trust (this "Amendment") amends,
effective as of May 10, 2000, the Amended and Restated Agreement and Declaration
of Trust of Short-Term Investments Trust dated as of November 5, 1998 (the
"Restated Agreement").
Under Section 9.7 of the Restated Agreement, this Amendment may be
executed by a duly authorized officer of the Trust.
NOW, THEREFORE, the Restated Agreement is hereby amended as follows:
1. Unless defined herein, each capitalized term used in this Amendment
shall have the meaning given it in the Restated Agreement.
2. A new Section 1.2(j) is hereby added to the Restated Agreement to
read in full as follows:
"(j) 'fund complex' has the meaning specified in
Regulation 14A under the Securities Exchange Act of
1934, as amended from time to time;"
With the addition of new Section 1.2(j) above, existing
Sections 1.2(j) through 1.2(z) are hereby renumbered as Sections 1.2(k) through
1.2(aa), respectively.
3. Section 2.6(a) is hereby amended and restated in its entirety to
read as follows:
"(a) Subject to the provisions of paragraph (c) below, all
Class B Shares other than those purchased through the
reinvestment of dividends and distributions shall
automatically convert to Class A Shares at the end of
the month which is eight (8) years after the date on
which a shareholder's order to purchase such shares
was accepted."
4. The first sentence of Section 4.3 is hereby amended and restated in
its entirety to read as follows:
"The Board of Trustees or any committee thereof shall act by
majority vote of those present at a meeting duly called
(including a meeting by telephonic or other electronic means,
unless the 1940 Act requires that a particular action be taken
only at a meeting of the Trustees in person) at which a quorum
required by the Bylaws is present or by written consent of at
least seventy-five percent (75%) of
<PAGE> 2
the Trustees or committee, as the case may be, without a
meeting, provided that the writing or writings are filed with
the minutes of proceedings of the Board or committee."
5. A new Section 4.7 is hereby added to the Restated Agreement to read
in full as follows:
"Section 4.7. Independent or Disinterested Trustee. A Trustee
who is not an interested person of the Trust shall be deemed
to be independent and disinterested under the Delaware Act and
other applicable Delaware law when making any determinations
or taking any action as a Trustee. Service by a person as a
trustee or a director of one or more trusts, corporations or
other entities of a fund complex shall not be considered in
determining whether a trustee is independent or disinterested
under the Delaware Act and other applicable Delaware law."
6. All references in the Restated Agreement to "this Agreement" shall
mean the Restated Agreement as amended by this Amendment.
7. Except as specifically amended by this Amendment, the Restated
Agreement is hereby confirmed and remains in full force and effect.
IN WITNESS WHEREOF, the undersigned, a duly authorized officer of the
Trust, has executed this Amendment as of May 10, 2000.
------------------------
Name: Robert H. Graham
Title: President
2
<PAGE> 1
EXHIBIT a(3)(c)
AMENDMENT NO. 2
TO
AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST
OF
SHORT-TERM INVESTMENTS TRUST
THIS AMENDMENT NO. 2 TO AMENDED AND RESTATED AGREEMENT AND DECLARATION
OF TRUST OF SHORT-TERM INVESTMENTS TRUST (the "Amendment") is entered into this
1ST day of June, 2000, among Charles T. Bauer, Bruce L. Crockett, Owen Daly II,
Edward K. Dunn, Jr., Jack Fields, Carl Frischling, Robert H. Graham, Prema
Mathai-Davis, Lewis F. Pennock, and Louis S. Sklar, as Trustees, and each person
who became or becomes a Shareholder in accordance with the terms set forth in
that certain Amended and Restated Agreement and Declaration of Trust of
Short-Term Investments Trust, a Delaware business trust (the "Trust"), entered
into as of May 5, 1993 (the "Agreement").
WHEREAS, the Trustees of the Trust desire to amend Schedule A to the
Agreement in order to change the name of Treasury TaxAdvantage Portfolio to
Government TaxAdvantage Portfolio; and
WHEREAS, the Shareholders of Treasury TaxAdvantage Portfolio approved
of such change by a vote taken in accordance with the terms of the Agreement at
a special meeting held on this date; and
WHEREAS, Board of Trustees resolved to amend the Agreement as
hereinafter set forth at a meeting of the Board held on February 3, 2000.
NOW, THEREFORE, the Agreement is hereby amended as set forth below:
Schedule A of the Agreement is hereby deleted in its entirety and
replaced with the following:
1
<PAGE> 2
"SCHEDULE A
SHORT-TERM INVESTMENTS TRUST
PORTFOLIOS AND CLASSES THEREOF
Government & Agency Portfolio
-----------------------------
Cash Management Class
Institutional Class
Personal Investment Class
Private Investment Class
Reserve Class
Resource Class
Government TaxAdvantage Portfolio
---------------------------------
Cash Management Class
Institutional Class
Personal Investment Class
Private Investment Class
Reserve Class
Resource Class
Treasury Portfolio
------------------
Cash Management Class
Institutional Class
Personal Investment Class
Private Investment Class
Reserve Class
Resource Class
All other terms and provisions of the Agreement not amended herein
shall remain in full force and effect.
2
<PAGE> 3
I, Robert H. Graham, hereby certify that I am the duly authorized
President of the Trust and that this First Amendment to Amended and Restated
Agreement and Declaration of Trust of Short-Term Investments Trust was duly
approved by a vote of the Trustees of the Trust held on February 3, 2000.
Dated: June 1, 2000
ATTEST:
By:
- -------------------------------- -----------------------------
Assistant Secretary President
3
<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 Fund - Legal
Matters" in the Statements of Additional Information for the Government and
Agency Portfolio, the Government TaxAdvantage Portfolio and the Treasury
Portfolio, all of which are included in Post-Effective Amendment No. 35 to the
Registration Statement under the Securities Act of 1933, as amended (No.
2-58287), and Amendment No. 36 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
May 22, 2000
<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 Government 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 LLP
KPMG LLP
Houston, Texas
May 24, 2000
