<PAGE>
As filed with the Securities and Exchange Commission on September 4, 1996
1933 Act Registration No. 33-66240
1940 Act Registration No. 811-7892
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 _____
Pre-Effective Amendment No. [_]
Post-Effective Amendment No. 6 [X]
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [_]
Amendment No. 7 [X]
(Check appropriate box or boxes.)
SHORT-TERM INVESTMENTS CO.
(Exact Name of Registrant as Specified in Charter)
11 Greenway Plaza, Suite 1919, Houston, TX 77046-1173
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (713) 626-1919
Charles T. Bauer
11 Greenway Plaza, Suite 1919, Houston, TX 77046-1173
(Name and Address of Agent for Service)
Copy to:
P. Michelle Grace, Esquire Martha J. Hayes, Esquire
A I M Advisors, Inc. Ballard Spahr Andrews & Ingersoll
11 Greenway Plaza, Suite 1919 1735 Market Street, 51st Floor
Houston, Texas 77046-1173 Philadelphia, Pennsylvania 19103-7599
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Amendment
It is proposed that this filing will become effective (check appropriate box)
[X] immediately upon filing pursuant to paragraph (b)
[_] on (date) pursuant to paragraph (b)
[_] 60 days after filing pursuant to paragraph (a)(1)
[X] 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
(continued on next page)
<PAGE>
If appropriate, check the following box:
[_] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant continues its election to register an indefinite number of its shares
of Common Stock pursuant to Rule 24f-2 under the Investment Company Act of 1940
and accordingly, filed its Rule 24f-2 Notice for the fiscal year ended August
31, 1995, on October 26, 1995.
<PAGE>
SHORT-TERM INVESTMENTS CO.
Registration Statement on Form N-1A
CROSS REFERENCE SHEET
(as required by Rule 495)
Note: The Registrant currently offers two portfolios of investments:
the Prime Portfolio and the Liquid Assets Portfolio. The Prime Portfolio is
composed of five classes of shares, four of which are offered pursuant to
separate Prospectuses and Statements of Additional Information: the Personal
Investment Class, the Private Investment Class, the Cash Management Class and
the Resource Class; and one of which, the Institutional Class, is offered
pursuant to a combined Prospectus and Statement of Additional Information. The
Liquid Assets Portfolio consists of four classes of shares which are offered
pursuant to separate Prospectuses and Statements of Additional Information: the
Institutional Class, the Private Investment Class, the MSTC Cash Reserves Class
and the Cash Management Class.
I. LIQUID ASSETS PORTFOLIO - MSTC CASH RESERVES CLASS
Part A - Prospectus
<TABLE>
<CAPTION>
Item No. Prospectus Location
- ---------- -------------------
<C> <S> <C>
1. Cover Page................................. Cover Page
2. Synopsis................................... Summary; Table of Fees and Expenses
3. Condensed Financial Information............ Not Applicable
4. General Description of Registrant.......... Cover Page; General Information; Investment Program
5. Management of the Fund..................... Management of the Fund; General Information
5A. Management's Discussion of Fund Performance Not Applicable
6. Capital Stock and Other Securities......... General Information; Dividends; Taxes
7. Purchase of Securities Being Offered....... Purchase of Shares; Net Asset Value
8 Redemption or Repurchase................... Redemption of Shares
9. Legal Proceedings.......................... Not Applicable
</TABLE>
Part B - Statement of Additional Information
<TABLE>
<CAPTION>
Item No. Statement of Additional Information Location
- -------- --------------------------------------------
<S> <C> <C>
10. Cover Page................................. Cover Page
11. Table of Contents.......................... Table of Contents
12. General Information and History............ General Information About the Fund
</TABLE>
<PAGE>
<TABLE>
<C> <S>
13. Investment Objectives and Policies.... Investment Program and Restrictions
14. Management of the Fund................ General Information About the Fund - Directors and Officers,-Remuneration of
Directors - AIM Funds Retirement Plan for Eligible Directors/Trustees,-
Deferred Compensation Agreement
15. Control Persons and Principal Holders
of Securities........................ General Information About the Fund - Principal Holders of
Securities
16. Investment Advisory and Other Services General Information About the Fund - Investment Advisor, -Administrator,
-Expenses,-Transfer Agent and Custodian
17. Brokerage Allocation.................. Portfolio Transactions
18. Capital Stock and Other Securities.... General Information About the Fund - The Fund and Its Shares
19. Purchase, Redemption and Pricing of
Securities Being Offered............. Purchases and Redemptions
20. Tax Status............................ Tax Matters
21. Underwriters.......................... Purchases and Redemptions - The Distribution Agreement
22. Calculation of Performance Data....... Purchases and Redemptions - Performance Information
23. Financial Statements.................. Financial Statements
</TABLE>
II. All Classes of Registrant
Part C
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C to this Registration Statement.
Part A (Prospectus) of Post-Effective Amendment No. 5 is hereby incorporated by
reference into Post-Effective Amendment No. 6 as if fully set forth herein.
2
<PAGE>
STATEMENT OF
ADDITIONAL INFORMATION
MSTC CASH RESERVES CLASS
OF THE
LIQUID ASSETS PORTFOLIO
OF
SHORT-TERM INVESTMENTS CO.
11 GREENWAY PLAZA
SUITE 1919
HOUSTON, TEXAS 77046-1173
(800) 659-1005
--------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS.
IT SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS,
COPIES OF WHICH MAY BE OBTAINED BY WRITING
FUND MANAGEMENT COMPANY, 11 GREENWAY PLAZA,
SUITE 1919, HOUSTON, TEXAS 77046-1173
OR CALLING (800) 246-3426
--------------------
STATEMENT OF ADDITIONAL INFORMATION DATED SEPTEMBER 4, 1996
RELATING TO THE PROSPECTUS DATED SEPTEMBER 4, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
INTRODUCTION.......................................................... 1
GENERAL INFORMATION ABOUT THE FUND.................................... 1
The Fund and Its Shares............................................... 1
Directors and Officers................................................ 3
Remuneration of Directors............................................. 6
AIM Funds Retirement Plan for Eligible Directors/Trustees............. 7
Deferred Compensation Agreements...................................... 8
Investment Advisor.................................................... 9
Administrator......................................................... 10
Expenses.............................................................. 10
Transfer Agent and Custodian.......................................... 11
Reports............................................................... 11
Fee Waivers........................................................... 11
Principal Holders of Securities....................................... 12
PURCHASES AND REDEMPTIONS............................................. 16
Net Asset Value Determination......................................... 16
The Distribution Agreement............................................ 16
Distribution Plan..................................................... 17
Banking Regulations................................................... 17
Performance Information............................................... 18
Redemptions in Kind................................................... 18
Suspension of Redemption Rights....................................... 19
INVESTMENT PROGRAM AND RESTRICTIONS................................... 19
Eligible Securities................................................... 19
Commercial Paper Ratings.............................................. 19
Bond Ratings.......................................................... 20
Repurchase Agreements................................................. 22
Investment Restrictions............................................... 22
PORTFOLIO TRANSACTIONS................................................ 23
TAX MATTERS........................................................... 24
Qualification as a Regulated Investment Company....................... 25
Excise Tax On Regulated Investment Companies.......................... 26
Portfolio Distributions............................................... 26
Effect of Future Legislation; Local Tax Considerations................ 26
FINANCIAL STATEMENTS.................................................. FS
</TABLE>
i
<PAGE>
INTRODUCTION
The Liquid Assets Portfolio (the "Portfolio") is an investment
portfolio of Short-Term Investments Co. (the "Fund"), a mutual fund. The rules
and regulations of the United States Securities and Exchange Commission (the
"SEC") require all mutual funds to furnish prospective investors certain
information concerning the activities of the fund being considered for
investment. This information is included in a Prospectus dated September 4, 1996
(the "Prospectus"). Copies of the Prospectus and additional copies of this
Statement of Additional Information may be obtained without charge by writing
the distributor of the Portfolio's shares, Fund Management Company ("FMC"), 11
Greenway Plaza, Suite 1919, Houston, Texas 77046-1173 or by calling (800) 246-
3426. Investors must receive a Prospectus before they invest.
This Statement of Additional Information is intended to furnish
prospective investors with additional information concerning the MSTC Cash
Reserves Class of the Portfolio. Some of the information required to be in this
Statement of Additional Information is also included in the Prospectus; thus, in
order to avoid repetition, reference will be made to sections of the Prospectus.
Additionally, the Prospectus and this Statement of Additional Information omit
certain information contained in the registration statement filed with the SEC.
Copies of the registration statement, including items omitted from the
Prospectus and this Statement of Additional Information, may be obtained from
the SEC by paying the charges prescribed under its rules and regulations.
GENERAL INFORMATION ABOUT THE FUND
THE FUND AND ITS SHARES
The Fund is an open-end, diversified series management investment
company which was organized as a corporation under the laws of the State of
Maryland on May 3, 1993, and had no operations prior to November 4, 1993.
Shares of common stock of the Fund are redeemable at their net asset value at
the option of the shareholder or at the option of the Fund in certain
circumstances. For information concerning the methods of redemption and the
rights of share ownership, investors should consult the Prospectus under the
captions "General Information" and "Redemption of Shares."
The Fund offers on a continuous basis shares representing an interest
in one of two portfolios: the Portfolio and the Prime Portfolio (together, the
"Portfolios"). The Prime Portfolio consists of five classes of shares, each
having different shareholder qualifications and bearing expenses differently.
The Portfolio consists of the following four classes of shares: Institutional
Class, Private Investment Class, Cash Management Class and MSTC Cash Reserves
Class. Each such class has different shareholder qualifications and bears
expenses differently. This Statement of Additional Information and the
associated Prospectus relate solely to shares of the MSTC Cash Reserves Class
(the "Class") of the Portfolio. Shares of the other classes of the Portfolio
and the classes of the Prime Portfolio are offered pursuant to separate
prospectuses and statements of additional information.
As used in the Prospectus, the term "majority of the outstanding
shares" of the Fund, a particular portfolio or a particular class means,
respectively, the vote of the lesser of (i) 67% or more of the shares of the
Fund, such portfolio or such class present at a meeting of the Fund's
shareholders, if the holders of more than 50% of the outstanding shares of the
Fund, such portfolio or such class are present or represented by proxy, or (ii)
more than 50% of the outstanding shares of the Fund, such portfolio or such
class.
Shareholders of the Fund do not have cumulative voting rights, and
therefore the holders of more than 50% of the outstanding shares of the Fund
voting together for election of directors can elect all of the members of the
Board of Directors of the Fund. In such event, the remaining holders cannot
elect any members of the Board of Directors of the Fund.
1
<PAGE>
The Board of Directors may classify or reclassify any unissued shares
of any class or classes in addition to those already authorized by setting or
changing in any one or more respects, from time to time, prior to the issuance
of such shares, the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications, or terms or
conditions of redemption, of such shares. Any such classification or
reclassification will comply with the provisions of the Investment Company Act
of 1940 (the "1940 Act").
The Charter of the Fund authorizes the issuance of 50 billion shares
with a par value of $.001 each, of which 19 billion shares represent an interest
in the portfolio (or class thereof) and 22 billion shares represent an interest
in the Prime Portfolio (or class thereof). A share of a portfolio (or class)
represents an equal proportionate interest in such portfolio (or class) with
each other share of that portfolio (or class) and is entitled to a proportionate
interest in the dividends and distributions from that portfolio (or class).
Additional information concerning the rights of share ownership is set forth in
the Prospectus.
The assets received by the Fund for the issue or sale of shares of
each of the Portfolios and all income, earnings, profits, losses and proceeds
therefrom, subject only to the rights of creditors, are allocated to that
Portfolio, and constitute the underlying assets of that portfolio. The
underlying assets of the Portfolios are segregated and each portfolio is charged
with the expenses with respect to that portfolio and with a share of the general
expenses of the Fund. While the expenses of the Fund are allocated to the
separate books of account of each of the Portfolios, certain expenses may be
legally chargeable against the assets of the entire Fund.
The Charter provides that no director or officer of the Fund shall be
liable to the Fund or its shareholders for money damages, except (i) to the
extent that it is proved that such director or officer actually received an
improper benefit or profit in money, property or services, for the amount of the
benefit or profit in money, property or services actually received, or (ii) to
the extent that a judgment or other final adjudication adverse to such director
or officer is entered in a proceeding based on a finding in the proceeding that
such director's or officer's action, or failure to act, was the result of active
and deliberate dishonesty and was material to the cause of action adjudicated in
the proceeding. The foregoing shall not be construed to protect or purport to
protect any director or officer of the Fund against any liability to the Fund or
its shareholders to which such director 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 such office. The Fund shall indemnify
and advance expenses to its currently acting and its former directors to the
fullest extent that indemnification of directors is permitted by the Maryland
General Corporation Law. The Fund shall indemnify and advance expenses to its
officers to the same extent as its directors and to such further extent as is
consistent with law. The Board of Directors may by By-Law, resolution or
agreement make further provision for indemnification of directors, officers,
employees and agents of the Fund to the fullest extent permitted by the Maryland
General Corporation Law.
As described in the Prospectus, the Fund will not normally hold annual
shareholders' meetings. At such time as less than a majority of the directors
have been elected by the shareholders, the directors then in office will call a
shareholders' meeting for the election of directors. Upon written request by
ten or more shareholders, who have been such for at least six months and who
hold shares constituting 1% of the outstanding shares, stating that such
shareholders wish to communicate with the other shareholders for the purpose of
obtaining the signatures necessary to demand a meeting to consider removal of a
director, the Fund has undertaken to provide a list of shareholders or to
disseminate appropriate materials (at the expense of the requesting
shareholders).
Except as otherwise disclosed in the Prospectus and in this Statement
of Additional Information, the directors shall continue to hold office and may
appoint their successors.
2
<PAGE>
DIRECTORS AND OFFICERS
The directors and officers of the Fund and their principal occupations
during the last five years are set forth below. Unless otherwise indicated, the
address of each director and officer is 11 Greenway Plaza, Suite 1919, Houston,
Texas 77046.
*CHARLES T. BAUER, Director and Chairman (77)
Director, Chairman and Chief Executive Officer, AIM Management Group
Inc.; and Chairman of the Board of Directors, AIM Advisors, Inc., AIM
Capital Management, Inc., AIM Distributors, Inc., AIM Fund Services, Inc., AIM
Institutional Fund Services, Inc. and Fund Management Company.
BRUCE L. CROCKETT, Director (52)
906 Frome Lane
McLean, VA 22102
Formerly, Director, President and Chief Executive Officer, COMSAT
Corporation (Includes COMSAT World Systems, COMSAT Mobile Communications, COMSAT
Video Enterprises, COMSAT RSI and COMSAT International Ventures). Previously,
President and Chief Operating Officer, COMSAT Corporation; President, World
Systems Division, COMSAT Corporation; and Chairman, Board of Governors of
INTELSAT (each of the COMSAT companies listed above is an international
communication, information and entertainment-distribution services company).
OWEN DALY II, Director (71)
Six Blythewood Road
Baltimore, MD 21210
Director, Cortland Trust Inc. (investment company). Formerly,
Director, CF & I Steel Corp., Monumental Life Insurance Company and Monumental
General Insurance Company; and Chairman of the Board of Equitable
Bancorporation.
**CARL FRISCHLlNG, Director (59)
919 Third Avenue
New York, NY 10022
Partner, Kramer, Levin, Naftalis & Frankel (law firm). Formerly,
Partner, Reid & Priest (law firm); and, prior thereto, Partner, Spengler Carlson
Gubar Brodsky & Frischling (law firm).
*ROBERT H. GRAHAM, Director and President (49)
Director, President and Chief Operating Officer, AIM Management Group
Inc.; Director and President, AIM Advisors, Inc.; and Director and Senior Vice
President, AIM Capital Management, Inc., AIM Distributors, Inc.; AIM Fund
Services, Inc., AIM Institutional Fund Services, Inc. and Fund Management
Company.
- -----------------------
* A director who is an "interested person" of the Fund and AIM Advisors, Inc.
as defined in the 1940 Act.
** A director who is an "interested person" of the Fund as defined in the 1940
Act.
3
<PAGE>
JOHN F. KROEGER, Director (72)
37 Pippins Way
Morristown, NJ 07960
Trustee, Flag Investors International Fund, Inc.; and Director, Flag
Investors Emerging Growth Fund, Inc., Flag Investors Telephone Income Fund,
Inc., Flag Investors Equity Partners Fund, Inc., Total Return U.S. Treasury
Fund, Inc., Flag Investors Intermediate Term Income Fund, Inc., Managed
Municipal Fund, Inc., Flag Investors Value Builder Fund, Inc., Flag Investors
Maryland Intermediate Tax-Free Income Fund, Inc., Flag Investors Real Estate
Securities Fund, Inc., Alex. Brown Cash Reserve Fund, Inc. and North American
Government Bond Fund, Inc. (investment companies). Formerly, Consultant,
Wendell & Stockel Associates, Inc. (consulting firm).
LEWIS F. PENNOCK, Director (53)
6363 Woodway, Suite 825
Houston, TX 77057
Attorney in private practice in Houston, Texas.
IAN W. ROBINSON, Director (73)
183 River Drive
Tequesta, FL 33469
Formerly, Executive Vice President and Chief Financial Officer, Bell
Atlantic Management Services, Inc. (provider of centralized management services
to telephone companies); Executive Vice President, Bell Atlantic Corporation
(parent of seven telephone companies); and Vice President and Chief Financial
Officer, Bell Telephone Company of Pennsylvania and Diamond State Telephone
Company.
LOUIS S. SKLAR, Director (57)
Transco Tower, 50th Floor
2800 Post Oak Blvd.
Houston, TX 77056
Executive Vice President, Development and Operations, Hines Interests
Limited Partnership (real estate development).
***JOHN J. ARTHUR, Senior Vice President and Treasurer (51)
Senior Vice President and Treasurer, AIM Advisors, Inc.; and Vice
President and Treasurer, AIM Management Group Inc., AIM Capital
Management, Inc., AIM Distributors, Inc., AIM Fund Services, Inc., AIM
Institutional Fund Services, Inc. and Fund Management Company.
GARY T. CRUM, Senior Vice President (49)
Director and President, AIM Capital Management, Inc.; Director and
Senior Vice President, AIM Management Group Inc., and AIM Advisors, Inc.;
and Director, AIM Distributors, Inc.
- --------------------
*** Mr. Arthur and Ms. Relihan are married to each other.
4
<PAGE>
***CAROL F. RELIHAN, Senior Vice President and Secretary (41)
Senior Vice President, General Counsel and Secretary, AIM Advisors,
Inc.; Vice President, General Counsel and Secretary, AIM Management Group
Inc.; Vice President and General Counsel, Fund Management Company; and Vice
President, AIM Capital Management, Inc., AIM Distributors, Inc., AIM Fund
Services, Inc. and AIM Institutional Fund Services, Inc.
DANA R. SUTTON, Vice President and Assistant Treasurer (37)
Vice President and Fund Controller, AIM Advisors, Inc.; and
Assistant Vice President and Assistant Treasurer, Fund Management Company.
MELVILLE B. COX, Vice President (52)
Vice President and Chief Compliance Officer, AIM Advisors, Inc., AIM
Capital Management, Inc., AIM Distributors, Inc., AIM Fund Services, Inc., AIM
Institutional Fund Services, Inc. and Fund Management Company. Formerly, Vice
President, Charles Schwab & Co., Inc.; Assistant Secretary, Charles Schwab
Family of Funds and Schwab Investments; Chief Compliance Officer, Charles Schwab
Investment Management, Inc.; and Vice President, Integrated Resources Life
Insurance Co. and Capitol Life Insurance Co.
KAREN DUNN KELLEY, Vice President (36)
Senior Vice President, AIM Capital Management, Inc.; and Vice
President, AIM Advisors, Inc.
J. ABBOTT SPRAGUE, Vice President (41)
Director and President, AIM Institutional Fund Services, Inc. and Fund
Management Company; Director and Senior Vice President, AIM Advisors, Inc.; and
Senior Vice President, AIM Management Group Inc.
The Board of Directors has an Audit Committee, an Investments
Committee, and a Nominating and Compensation Committee.
The members of the Audit Committee are Messrs. Daly, Kroeger
(Chairman), Pennock and Robinson. The Audit Committee is responsible for meeting
with the Portfolio's auditors to review audit procedures and results and to
consider any matters arising from an audit to be brought to the attention of the
directors as a whole with respect to the Portfolio's fund accounting or its
internal accounting controls, or for considering such matters as may from time
to time be set forth in a charter adopted by the Board of Directors and such
Committee.
The members of the Investments Committee are Messrs. Bauer, Crockett,
Daly (Chairman), Kroeger and Pennock. The Investments Committee is responsible
for reviewing portfolio compliance, brokerage allocation, portfolio investment
pricing issues, interim dividend and distribution issues, or considering such
matters as may from time to time be set forth in a charter adopted by the Board
of Directors and such Committee.
The members of the Nominating and Compensation Committee are Messrs.
Crockett, Daly, Kroeger, Pennock (Chairman) and Sklar. The Nominating and
Compensation Committee is responsible for considering and nominating individuals
to stand for election as directors who are not interested persons as long as the
Fund maintains a distribution plan pursuant to rule 12b-1 under the 1940 Act,
reviewing from time to time the
- ------------------
*** Mr. Arthur and Ms. Relihan are married to each other.
5
<PAGE>
compensation payable to the Dis-Interested Directors (as defined hereinafter),
or considering such matters as may from time to time be set forth in a charter
adopted by the board and such Committee.
All of the Fund's directors also serve as directors or trustees of
some or all of the other investment companies managed or advised by AIM
Advisors, Inc. ("AIM") or distributed and administered by FMC. Most of the
Fund's executive officers hold similar offices with some or all of such
investment companies.
REMUNERATION OF DIRECTORS
Each director is reimbursed for expenses incurred in connection with
each meeting of the Board of Directors or any committee thereof. Each Director
who is not also an officer of the Fund is compensated for his or her services
according to a fee schedule which recognizes the fact that such director also
serves as a director or trustee of other AIM Funds. Each such director receives
a fee, allocated among the AIM Funds for which he serves as a director or
trustee, which consists of an annual retainer component and a meeting fee
component.
Set forth below is information regarding compensation paid or accrued
during the fiscal year ended August 31, 1995 for each director of the Fund:
6
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR AGGREGATE RETIREMENT TOTAL
COMPENSATION BENEFITS COMPENSATION
FROM FUND(1) ACCRUED FROM ALL AIM FUNDS(3)
BY ALL AIM FUNDS(2)
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Charles T. Bauer $ -0- $ -0- $ -0-
- -----------------------------------------------------------------------------------
Bruce L. Crockett 2,091 3,655 57,750
- -----------------------------------------------------------------------------------
Owen Daly II 2,096 18,662 58,125
- -----------------------------------------------------------------------------------
Carl Frischling 2,091 11,323 57,250
- -----------------------------------------------------------------------------------
Robert H. Graham -0- -0- -0-
- -----------------------------------------------------------------------------------
John F. Kroeger 2,096 22,313 58,125
- -----------------------------------------------------------------------------------
Lewis F. Pennock 2,096 5,067 58,125
- -----------------------------------------------------------------------------------
Ian W. Robinson 2,071 15,381 56,750
- -----------------------------------------------------------------------------------
Louis S. Sklar 2,071 6,632 57,250
- -----------------------------------------------------------------------------------
- ----------------------
</TABLE>
(1) The total amount of compensation deferred by all Directors of the Fund
during the fiscal year ended August 31, 1995, including interest earned
thereon, was $8,448.
(2) During the fiscal year ended August 31, 1995, the total amount of expenses
allocated to the Fund in respect of such retirement benefits was $4,583.
Data reflect compensation earned for the calendar year ended December 31,
1995.
(3) Messrs. Bauer, Daly, Graham, Kroeger and Pennock each serves as a Director
or Trustee of a total of 11 AIM Funds. Messrs. Crockett, Frischling,
Robinson and Sklar each serves as a Director or Trustee of a total of 10
AIM Funds. Data reflect compensation earned for the calendar year ended
December 31, 1995.
AIM FUNDS RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES
Under the terms of the AIM Funds Retirement Plan for Eligible
Directors/Trustees (the "Plan"), each director (who is not a employee of any of
the AIM Funds, AIM Management Group Inc. or any of their affiliates) may be
entitled to certain benefits upon retirement from the Board of Directors.
Pursuant to the Plan, the normal retirement date is the date on which the
eligible director has attained age 65 and has completed at least five years of
continuous service with one or more of the regulated investment companies
managed, administered or distributed by AIM or its affiliates (the "Applicable
AIM Funds"). Each eligible director is entitled to receive an annual benefit
from the Applicable AIM Funds commencing on the first day of the calendar
quarter coincident with or following his date of retirement equal to 75% of the
retainer paid or accrued by the Applicable AIM Funds for such director during
the twelve-month period immediately preceding the director's retirement
(including amounts deferred under a separate agreement between the Applicable
AIM Funds and the director) for the number of such Director's years of service
(not in excess of 10 years of service) completed with respect to any of the AIM
Funds. Such benefit is payable to each eligible director in quarterly
installments. If an eligible director dies after attaining the normal
retirement date but before receipt of any benefits under the Plan commences, the
director's surviving spouse (if any) shall receive a quarterly survivor's
benefit equal to 50%
7
<PAGE>
of the amount payable to the deceased director, for no more than ten years
beginning the first day of the calendar quarter following the date of the
director's death. Payments under the Plan are not secured or funded by any AIM
Fund.
Set forth below is a table that shows the estimated annual benefits payable
to an eligible director upon retirement assuming various compensation and years
of service classifications. The estimated credited years of service for Messrs.
Crockett, Daly, Frischling, Kroeger, Pennock, Robinson and Sklar are 8, 9, 18,
18, 14, 8 and 6 years, respectively.
ESTIMATED BENEFITS UPON RETIREMENT
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Number of
Years of Annual Compensation
Service With Paid By All AIM Funds
the AIM Fund
$55,000 $60,000 $65,000
===============================================================
10 $41,250 $45,000 $48,750
- ---------------------------------------------------------------
9 $37,125 $40,500 $43,875
- ---------------------------------------------------------------
8 $33,000 $36,000 $39,000
- ---------------------------------------------------------------
7 $28,875 $31,500 $34,125
- ---------------------------------------------------------------
6 $24,750 $27,000 $29,250
- ---------------------------------------------------------------
5 $20,625 $22,500 $24,375
===============================================================
</TABLE>
DEFERRED COMPENSATION AGREEMENTS
Messrs. Daly, Frischling, Kroeger, Robinson and Sklar (for purposes of this
paragraph only, the "deferring directors") have each executed a Deferred
Compensation Agreement (collectively, the "Compensation Agreements"). Pursuant
to the Compensation Agreements, the deferring directors may elect to defer
receipt of 100% of their compensation payable by the Fund, and such amounts are
placed into a deferral account. Currently, the deferring directors may select
various AIM Funds in which all or part of their deferral accounts shall be
deemed to be invested. Distributions from the deferring directors' deferral
accounts will be paid in cash, in generally equal quarterly installments over a
period of ten years beginning on the date the deferring director's retirement
benefits commence under the Plan. The Fund's Board of Directors, in its sole
discretion, may accelerate or extend the distribution of such deferral accounts
after the deferring director's termination of service as a director of the Fund.
If a deferring director dies prior to the distribution of amounts in his
deferral account, the balance of the deferral account will be distributed to his
designated beneficiary in a single lump sum payment as soon as practicable after
such deferring director's death. The Compensation Agreements are not funded and,
with respect to the payments of amounts held in the deferral accounts, the
deferring directors have the status of unsecured creditors of the Fund and of
each other AIM Fund from which they are deferring compensation.
During the fiscal year ended August 31, 1995, directors' fees and expenses in
the amount of $14,116 were allocated to the Portfolio.
8
<PAGE>
During the year ended August 31, 1995, the Portfolio paid legal fees of $1,317
for services rendered by Reid & Priest as counsel to the Board of Directors. In
September 1994, Kramer, Levin, Naftalis & Frankel was appointed as counsel to
the Board of Directors. During the year ended August 31, 1995, the Portfolio
paid legal fees of $4,721 for services rendered by that firm as counsel. A
director of the Fund is a partner of Kramer, Levin, Naftalis & Frankel and was a
partner of the firm of Reid & Priest prior to September 1994.
INVESTMENT ADVISOR
AIM, 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173, acts as the
Portfolio's investment advisor pursuant to a Master Investment Advisory
Agreement dated October 18, 1993 (the "Advisory Agreement").
AIM was organized in 1976 and, together with its affiliates, advises, manages
or administers 43 investment company portfolios. As of June 20, 1996, the total
assets of the investment company portfolios managed or advised by AIM and its
affiliates were approximately $52.8 billion. AIM is a wholly-owned subsidiary
of AIM Management Group Inc. ("AIM Management"), 11 Greenway Plaza, Suite
1919, Houston, Texas 77046-1173. Certain of the directors and officers of AIM
are also executive officers of the Fund and their affiliations are shown under
"Directors and Officers."
AIM and the Fund have adopted a Code of Ethics which requires investment
personnel and certain other employees (a) to pre-clear personal securities
transactions subject to the Code of Ethics, (b) to file reports or duplicate
confirmations regarding such transactions, (c) to refrain from personally
engaging in (i) short-term trading of a security, (ii) transactions involving a
security within seven days of an AIM Fund transaction involving the same
security, and (iii) transactions involving securities being considered for
investment by an AIM Fund and (d) to abide by certain other provisions under the
Code of Ethics. The Code of Ethics also prohibits investment personnel and all
other AIM employees from purchasing securities in an initial public offering.
Personal trading reports are reviewed periodically by AIM, and the Board of
Directors reviews quarterly and annual reports (including information on any
substantial violations of the Code of Ethics). Sanctions for violations of the
Code of Ethics may include censure, monetary penalties, suspension or
termination of employment.
Pursuant to the terms of the Advisory Agreement, AIM manages the investment of
the Portfolio's assets. AIM obtains and evaluates economic, statistical and
financial information to formulate and implement investment policies for the
Portfolio. Any investment program undertaken by AIM will at all times be subject
to the policies and control of the Fund's Board of Directors. AIM shall not be
liable to the Fund or its shareholders for any act or omission by AIM or for any
loss sustained by the Fund or its shareholders except in the case of willful
misfeasance, bad faith, gross negligence or reckless disregard of duty.
As compensation for its services with respect to the Portfolio, AIM receives a
fee at the annual rate of 0.15% of the average daily net assets of the
Portfolio. The Advisory Agreement requires AIM to reduce its fee to the extent
required to satisfy any expense limitations imposed by the securities laws or
regulations thereunder of any state in which the Portfolio's shares are
qualified for sale.
During the period November 4, 1993 (date operations commenced) through August
31, 1994, AIM voluntarily waived fees of $1,500,977, which it was entitled to
receive pursuant to the Advisory Agreement with respect to the Portfolio.
During the fiscal year ended August 31, 1995, AIM received fees pursuant to the
Advisory Agreement in the amount of $1,323,637 with respect to the Portfolio and
AIM voluntarily waived fees of $1,127,509, which it was entitled to receive
pursuant to the Advisory Agreement with respect to the Portfolio.
The Advisory Agreement provides that, upon the request of the Board of
Directors, AIM may perform (or arrange for the performance of) certain
additional services on behalf of the Portfolio which are not required by the
Advisory Agreement. AIM may receive reimbursement or reasonable compensation
for such additional
9
<PAGE>
services, as may be agreed upon by AIM and the Board of Directors, based upon a
finding by the Board of Directors that the provision of such services would be
in the best interest of the Portfolio and its shareholders. The Board of
Directors has made such a finding and, accordingly, the Fund has entered into
the Master Administrative Services Agreement under which AIM will provide the
additional services described below under the caption "Administrator."
The Advisory Agreement will continue in effect until June 30, 1997 and from
year to year thereafter, provided that it is specifically approved at least
annually by the Fund's Board of Directors and the affirmative vote of a majority
of the directors 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 Fund or AIM may terminate the Agreement on 60 days' notice without
penalty. The Advisory Agreement terminates automatically in the event of its
"assignment," as defined in the 1940 Act.
ADMINISTRATOR
AIM also acts as the Portfolio's administrator pursuant to a Master
Administrative Services Agreement dated as of October 18, 1993 between AIM and
the Fund (the "Administrative Services Agreement"). In addition, AIM and AIM
Institutional Fund Services, Inc. ("AIFS") entered into an administrative
services agreement, dated as of September 16, 1994 (the "AIFS Administrative
Services Agreement").
Under the Administrative Services Agreement, AIM has agreed to perform or
arrange for the performance of certain accounting, shareholder servicing and
other administrative services for the Portfolio which are not required to be
performed by AIM under the Advisory Agreement. For such services, AIM would be
entitled to receive from the Fund reimbursement of AIM's costs or such
reasonable compensation as may be approved by the Fund's Board of Directors.
The Administrative Services Agreement provides that such agreement will continue
in effect until June 30, 1997, and shall continue in effect from year to year
thereafter only if such continuance is specifically approved at least annually
by the Fund's Board of Directors, including the directors of the Fund who are
not "interested persons" (as defined in the 1940 Act) of the Fund or AIM (the
"Dis-Interested Directors"), the director of the Fund who are not "interested
persons" (as defined in the 1940 Act) of the Fund or AIM, by votes cast in
person at a meeting called for such purpose. The Administrative Services
Agreement was last approved by the Fund's Board of Directors (including the Dis-
Interested Directors) on May 15, 1996.
Pursuant to the Administrative Services Agreement, AIM was reimbursed for the
fiscal years ended August 31, 1995 and 1994 in the amounts of $97,044 and
$39,492, respectively.
The AIFS Administrative Services Agreement between AIM and AIFS, a registered
transfer agent and wholly-owned subsidiary of AIM, provided that AIFS could
perform certain shareholder services for the Portfolio. For such services, AIFS
was entitled to receive from AIM reimbursement of its costs associated with the
Portfolio. The AIFS Administrative Services Agreement was terminated July 1,
1995. Beginning July 1, 1995, AIFS received fees with respect to the Portfolio
for its provision of shareholder services pursuant to a Transfer Agency and
Service Agreement with the Fund. For the period from August 31, 1994 through
June 30, 1995 and for the period from June 1, 1994 through August 31, 1994, AIFS
or its affiliates received shareholder services fees from AIM with respect to
the Portfolio in the amounts of $38,870 and $5,110, respectively. For the
period July 1, 1995 through August 31, 1995, AIFS received transfer agency fees
from AIM with respect to the Portfolio in the amount of $9,045.
EXPENSES
Expenses of the Fund include, but are not limited to, fees paid to AIM under
the Advisory Agreement, the charges and expenses of any registrar, any custodian
or depositary appointed by the Fund for the safekeeping of cash, portfolio
securities and other property, and any transfer, dividend or accounting agent or
agents appointed by the Fund; brokers' commissions chargeable to the Fund in
connection with portfolio securities transactions to which the Fund is a party;
all taxes, including securities issuance and transfer taxes,
10
<PAGE>
and fees payable by the Fund to federal, state or other governmental agencies;
the costs and expenses of engraving or printing of certificates representing
shares of the Fund; all costs and expenses in connection with the registration
and maintenance of registration of the Fund and shares with the SEC and various
states and other jurisdictions (including filing and legal fees and
disbursements of counsel); the costs and expenses of printing, including
typesetting, and distributing prospectuses and statements of additional
information of the Fund and supplements thereto to the Fund's shareholders; all
expenses of shareholders' and directors' meetings and of preparing, printing and
mailing of prospectuses, proxy statements and reports to shareholders; fees and
travel expenses of directors and director members of any advisory board or
committee; all expenses incident to the payment of any dividend, distribution,
withdrawal or redemption, whether in shares or in cash; charges and expenses of
any outside service used for pricing of the Fund's shares; charges and expenses
of legal counsel, including counsel to Dis-Interested Directors, and of
independent accountants in connection with any matter relating to the Fund;
membership dues of industry associations; interest payable on Fund borrowings;
postage; insurance premiums on property or personnel (including officers and
directors) of the Fund which inure to its benefit; and extraordinary expenses
(including, but not limited to, legal claims and liabilities and litigation
costs and any indemnification related thereto). Except as disclosed under the
caption "Distribution Plan," FMC bears the expenses of printing and distributing
prospectuses and statements of additional information (other than those
prospectuses and statements of additional information distributed to existing
shareholders of the Fund) and any other promotional or sales literature used by
FMC or furnished by FMC to purchasers or dealers in connection with the public
offering of the Fund's shares.
Expenses of the Fund which are not directly attributable to the operations of
either of the Portfolios are prorated among all classes of the Fund based upon
the relative net assets of each class. Expenses of the Fund which are not
directly attributable to a specific class of shares but are directly
attributable to one or both of the Portfolios are prorated among all classes of
such Portfolios based upon the relative net assets of each such class. The
expenses of the Portfolio are deducted from its total income before dividends
are paid. Expenses of the Fund which are directly attributable to a specific
class of shares are charged against the income available for distribution as
dividends to the holders of such shares.
TRANSFER AGENT AND CUSTODIAN
The Bank of New York acts as custodian for the portfolio securities and cash
of the Portfolio. The Bank of New York receives such compensation from the Fund
for its services in such capacity as is agreed to from time to time by The Bank
of New York and the Fund. The address of The Bank of New York is 90 Washington
Street, 11th Floor, New York, New York 10286.
AIM Institutional Fund Services, Inc., 11 Greenway Plaza, Suite 1919,
Houston, Texas 77046-1173 serves as a transfer agent and dividend disbursing
agent for the shares of the Class and receives an annual fee from the Fund for
its services in such capacity in the amount of .007% of average daily net assets
of the Fund, payable monthly. Such compensation may be changed from time to
time as is agreed to by AIFS and the Fund.
REPORTS
The Fund furnishes shareholders with semi-annual reports containing
information about the Fund and its operations, including a schedule of
investments held in the Portfolio and its financial statements. The annual
financial statements are audited by the Fund's independent auditors. The Board
of Directors has selected KPMG Peat Marwick LLP, NationsBank Building, 700
Louisiana, Houston, Texas 77002, as the independent auditors to audit the
financial statements and review the tax returns of the Portfolio.
FEE WAIVERS
AIM or its affiliates may, from time to time, agree to waive voluntarily all
or any portion of its fees or reimburse the Portfolio for certain of its
expenses. Such waivers or reimbursements may be discontinued at any time.
11
<PAGE>
PRINCIPAL HOLDERS OF SECURITIES
PRIME PORTFOLIO
To the best of the knowledge of the Fund, the names and addresses of the
holders of 5% or more of the outstanding shares of each class of the Portfolio
as of August 23, 1996, and the percentage of the Portfolio's outstanding shares
owned by such shareholders as of such date are as follows:
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY*
--------------- -------------
INSTITUTIONAL CLASS
- -------------------
U.S. Bank of Oregon 10.47%
321 Southwest 6th Street
Portland, OR 97208
BZW Barclays Global Investors, N.A. 9.07%
980 9th St., Suite 600
Sacramento, CA 95814
NationsBank of Texas 8.83%
P.O. Box 831000
Dallas, TX 75283-1000
Boatmen's Trust Company 6.26%
100 North Broadway
St. Louis, MO 63101
Trust Company Bank 5.41%
P.O. Box 105504
Atlanta, GA 30348
Frost National Bank 5.12%
P.O. Box 1600
San Antonio, TX 78296
Texas Commerce Bank 5.11%
P.O. Box 2558
Houston, TX 77252-8098
- ----------------------
* The Fund has no knowledge as to whether all or any portion of the shares of
the class owned of record are also owned beneficially.
12
<PAGE>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY*
--------------- -------------
PRIVATE INVESTMENT CLASS
- ------------------------
Huntington Capital Corporation 64.61%**
41 South High Street
Columbus, OH 43287
Var & Co. 12.69%
180 East 5th Street
St. Paul, MN 55101
Frost National Bank 8.87%
P.O. Box 1600
San Antonio, TX 78296
PERSONAL INVESTMENT CLASS
- -------------------------
Bank of New York 70.71%**
440 Mamaroneck Ave.
Harrison, NY 10528
Cullen/Frost Discount Brokers 27.49%
P.O. Box 2358
San Antonio, TX 78299
CASH MANAGEMENT CLASS
- ---------------------
Southwest Bank of Texas, N.A. 20.73%
4295 San Felipe
Houston, Texas 77027
Union Planters National Bank 19.92%
P.O. Box 387
Memphis, TN 38147
Sutter Health 11.21%
P.O. Box 160727
Sacramento, CA 95816-0727
CSCDA Sutter Health c/o 1st Trust 8.51%
101 California Street, Suite 1150
San Francisco, CA 94111
- ------------------------
* The Fund has no knowledge as to whether all or any portion of the shares of
the class owned of record are also owned beneficially.
** A shareholder who holds more than 25% of the outstanding shares of a class
may be presumed to be in "control" of such class of shares, as defined in the
1940 Act.
13
<PAGE>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY*
--------------- -------------
Mellon Bank 15.11%
Three Mellon Center, Rm. 3840
Pittsburgh, PA 15259-0001
Fund Services Associates 5.05%
11835 West Olympic Blvd., Suite 205
Los Angeles, CA 90064
RESOURCE CLASS
- --------------
Mellon Bank 81.59%**
Three Mellon Center, Rm 3840
Pittsburgh, PA 15259-0001
Tulsa & Co. 10.58%
P.O. Box 3688
Tulsa, OK 74101-3688
Huntington Capital Corp. 7.50%
41 S. High St.
9th Floor
Columbus, OH 43287
LIQUID ASSETS PORTFOLIO
To the best of the knowledge of the Fund, the names and addresses of the
holders of 5% or more of the outstanding shares of each class of the Liquid
Assets Portfolio as of August 23, 1996, the percentage of the Liquid Assets
Portfolio's outstanding shares owned by such shareholders as of such date are as
follows:
- --------------------
* The Fund has no knowledge as to whether all or any portion of the shares of
the class owned of record are also owned beneficially.
** A shareholder who holds more than 25% of the outstanding shares of a class
may be presumed to be in "control" of such class of shares, as defined in the
1940 Act.
14
<PAGE>
PERCENT
NAME AND ADDRESS OWNED OF
OF RECORD OWNER RECORD ONLY*
--------------- -----------
INSTITUTIONAL CLASS
- -------------------
Trust Company Bank 12.51%
P.O. Box 105504
Atlanta, GA 30348
Wachovia Bank & Trust 8.95%
P.O. Box 3075
Winston-Salem, NC 27150
Comerica Bank 8.14%
P.O. Box 75000
Detroit, MI 48275-3455
NationsBank 7.06%
1401 Elm St. 11th Floor
P.O. Box 831000
Dallas, TX 75283-1000
BZW Barclays Global Investors 6.32%
980 9th St. Suite 600
Sacramento, CA 95814
Mellon Bank 6.04%
152 0600 Two Mellon Bank Center
Pittsburgh, PA 15259-0001
PRIVATE INVESTMENT CLASS
- ------------------------
Mellon Bank 100%**
P.O. Box 710
Pittsburgh, PA 15230-0710
CASH MANAGEMENT CLASS
- ---------------------
Fund Services Associates 81.26%**
11835 West Olympic Blvd.
Suite 205
Los Angeles, CA 90064
Intellon Corporation 14.64%
5100 West Silver Springs Blvd.
Ocala, FL 34482
- ------------------
* The Fund has no knowledge as to whether all or any portion of the shares of
the class owned of record are also owned beneficially.
** A shareholder who holds more than 25% of the outstanding shares of a class
may be presumed to be in "control" of such class of shares, as defined in the
1940 Act.
15
<PAGE>
MSTC CASH RESERVES CLASS
- ------------------------
AIM provided the initial capitalization of the MSTC Cash Reserves Class
of the Liquid Assets Portfolio and, accordingly, as of the date of this
Statement of Additional Information, owned all the outstanding shares of common
stock of the MSTC Cash Reserves Class of the Liquid Assets Portfolio. Although
the MSTC Cash Reserves Class of the Liquid Assets Portfolio expects that the
sale of its shares to the public pursuant to the Prospectus will reduce the
percentage of such shares owned by AIM to less than 1% of the total shares
outstanding, as long as AIM owns over 25% of the shares of the MSTC Cash
Reserves Class of the Liquid Assets Portfolio that are outstanding, it may be
presumed to be in "control" of the MSTC Cash Reserves Class of the Liquid Assets
Portfolio, as defined in the 1940 Act.
To the knowledge of the Fund, as of August 23, 1996, the directors and
officers of the Fund beneficially owned less than 1% of any Portfolio's
outstanding shares.
PURCHASES AND REDEMPTIONS
NET ASSET VALUE DETERMINATION
Shares of the Class are sold at the net asset value of such shares.
Shareholders may at any time redeem all or a portion of their shares at net
asset value. The investor's price for purchases and redemptions will be the net
asset value next determined following the receipt of an order to purchase or a
request to redeem shares.
The valuation of the portfolio instruments based upon their amortized cost
and the concomitant maintenance of the net asset value per share of $1.00 for
the Portfolio is permitted in accordance with applicable rules and regulations
of the SEC, including Rule 2a-7 under the 1940 Act, which require the Portfolio
to adhere to certain conditions. These rules require that the Portfolio maintain
a dollar-weighted average portfolio maturity of 90 days or less, purchase only
instruments having remaining maturities of 397 calendar days or less and invest
only in securities determined by the Board of Directors to be "Eligible
Securities" and to present minimal credit risk to the Portfolio.
The Board of Directors is required to establish procedures designed to
stabilize, to the extent reasonably practicable, the Portfolio's price per share
at $1.00 as computed for the purpose of sales and redemptions. Such procedures
include review of the Portfolio's holdings by the Board of Directors, 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 shares. In the event the Board of Directors determines that such a deviation
exists, it will take such corrective action as the Board of Directors deems
necessary and appropriate, 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.
THE DISTRIBUTION AGREEMENT
The Fund has entered into a Master Distribution Agreement dated as of
October 18, 1993 (the "Distribution Agreement") with FMC, a registered broker-
dealer and a wholly-owned subsidiary of AIM, to act as the exclusive distributor
of the shares of the Class. The address of FMC is 11 Greenway Plaza, Suite
1919, Houston, Texas 77046-1173. See "General Information about the Fund --
Directors and Officers" and "General Information about the Fund -- Investment
Advisor" for information as to the affiliation of certain directors and officers
of the Fund with FMC, AIM and AIM Management.
16
<PAGE>
The Distribution Agreement provides that FMC has the exclusive right to
distribute shares 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 Portfolio 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 Class.
The Distribution Agreement will continue in effect until June 30, 1997 and
from year to year thereafter, provided that it is specifically approved at least
annually by the Fund's Board of Directors and the affirmative vote of the
directors 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 Fund or FMC may terminate the Distribution Agreement on 60 days'
written notice, without penalty. The Distribution Agreement will terminate
automatically in the event of its "assignment," as defined in the 1940 Act.
DISTRIBUTION PLAN
The Fund has adopted a Master Distribution Plan (the "Plan") pursuant to
Rule 12b-1 under the 1940 Act. Pursuant to the Plan, the Fund may enter into
Shareholder Service Agreements ("Service Agreements") with selected broker-
dealers, banks, other financial institutions or their affiliates. Since the
Class is intended for exclusive use by Morgan Stanley Trust Company, it is
anticipated that the Fund will enter into only one Service Agreement. Such
firms may receive compensation from the Portfolio for servicing investors as
beneficial owners of the shares of the Class. These services may include among
other things: (i) answering customer inquiries regarding shares of the Class and
the Portfolio; (ii) assisting customers in changing dividend options, account
designations and addresses; (iii) performing sub-accounting; (iv) establishing
and maintaining shareholder accounts and records; (v) processing purchase and
redemption transactions; (vi) automatic investment of customer cash accounting
balances in shares of the Class; (vii) providing periodic statements showing a
customer's account balance and integrating such statements with those of other
transactions and balances in the customer's other accounts serviced by such
firm; (viii) arranging for bank wires; and (ix) such other services as the Fund
may request on behalf of the Class, to the extent such firms are permitted to
engage in such services by applicable statute, rule or regulation. The Plan may
only be used for the purposes specified above and as stated in the Plan.
Expenses may not be carried over from year to year.
FMC is a wholly-owned subsidiary of AIM, which is a wholly-owned subsidiary
of AIM Management. Charles T. Bauer, a Director and Chairman of the Fund and
Robert H. Graham, a Director and President of the Fund, own shares of AIM
Management.
BANKING REGULATIONS
The Glass-Steagall Act and other applicable laws or regulations among other
things, generally prohibit federally chartered or supervised banks from engaging
in the business of underwriting, selling or distributing securities, but permit
banks to make shares of mutual funds available to their customers and to perform
administrative and shareholder servicing functions. However, judicial or
administrative decisions or interpretations of such laws, as well as changes in
either federal or state statutes or regulations relating to the permissible
activities of banks or their subsidiaries or affiliates, could prevent a bank
from continuing to perform all or a part of its servicing activities. If a bank
were prohibited from so acting, shareholder clients of such bank would be
permitted to remain shareholders of the Fund and alternate means for continuing
the servicing of such shareholders would be sought. In such event, changes in
the operation of the Fund might occur and shareholders serviced by such bank
might no longer be able to avail themselves of any automatic investment or other
services then being provided by such bank. It is not expected that shareholders
would suffer any adverse financial consequences as a result of any of these
occurrences.
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and certain banks and financial
institutions may be required to register as dealers pursuant to state law.
17
<PAGE>
In order to permit the sale of the Fund's shares in certain states, the
Fund may from time to time make commitments more restrictive than the
restrictions described herein. These restrictions are not matters of fundamental
policy, and should the Fund determine that any such commitment is no longer in
the best interests of the Fund and its shareholders, it will revoke the
commitment by terminating sales of its shares in the states involved.
PERFORMANCE INFORMATION
As stated under the caption "Yield Information" in the Prospectus, yield
information for the shares of the Class may be obtained by calling your Morgan
Stanley Trust Company Coverage Officer at (800) 688-3705 or the Fund at (800)
246-3426. The current yield quoted will be the net average annualized yield for
an identified period. Current yield will be computed by assuming that an account
was established with a single share (the "Single Share Account") on the first
day of the period. To arrive at the quoted yield, the net change in the value of
that Single Share Account for the period (which would include dividends accrued
with respect to the share, and dividends declared on shares purchased with
dividends accrued and paid, if any, but would not include realized gains and
losses or unrealized appreciation or depreciation) will be multiplied by 365 and
then divided by the number of days in the period, with the resulting figure
carried to the nearest hundredth of one percent. The Portfolio may also furnish
a quotation of effective yield that assumes the reinvestment of dividends for a
365-day year and a return for the entire year equal to the average annualized
yield for the period, which will be computed by compounding the unannualized
current yield for the period by adding 1 to the unannualized current yield,
raising the sum to a power equal to 365 divided by the number of days in the
period, and then subtracting 1 from the result.
The Portfolio may compare the performance of the Class or the performance
of securities in which it may invest to:
. IBC/Donoghue's Money Fund Averages, which are average yields of various
types of money market funds that include the effect of compounding
distributions;
. other mutual funds, especially those with similar investment
objectives. These comparisons may be based on data published by IBC/Donoghue's
Money Fund Report--Registered Trademark--of Holliston, Massachusetts or by
Lipper Analytical Services, Inc., a widely recognized independent service
located in Summit, New Jersey, which monitors the performance of mutual funds;
. yields on other money market securities or averages of other money
market securities as reported by the Federal Reserve Bulletin, by TeleRate, a
financial information network, or by Bloomberg, a financial information firm;
and
. other fixed-income investments such as Certificates of Deposit ("CDs").
The principal value and interest rate of CDs and money market securities
are fixed at the time of purchase whereas the Class' yield will fluctuate.
Unlike some CDs and certain other money market securities, money market mutual
funds are not insured by the FDIC. Investors should give consideration to the
quality and maturity of the portfolio securities of the respective investment
companies when comparing investment alternatives.
The Portfolio may reference the growth and variety of money market mutual
funds and AIM's innovation and participation in the industry.
REDEMPTIONS IN KIND
The Fund will not redeem shares representing an interest in the Portfolio
in kind (i.e., by distributing its portfolio securities).
18
<PAGE>
SUSPENSION OF REDEMPTION RIGHTS
The right of redemption may be suspended or the date of payment upon
redemption may be postponed when (a) trading on the New York Stock Exchange is
restricted, as determined by applicable rules and regulations of the SEC, (b)
the New York Stock Exchange is closed for other than customary weekend or
holiday closings, (c) the SEC has by order permitted such suspension, or (d) an
emergency as determined by the SEC exists making disposition of portfolio
securities or the valuation of the net assets of the Portfolio not reasonably
practicable.
INVESTMENT PROGRAM AND RESTRICTIONS
The Portfolio may lend its portfolio securities in amounts up to 33-1/3% of
its total assets to financial institutions in accordance with the investment
restrictions of the Portfolio. Such loans would involve risks of delay in
receiving additional collateral in the event the value of the collateral
decreased below the value of the securities loaned or of delay in recovering the
securities loaned or even loss of rights in the collateral should the borrower
of the securities fail financially. However, loans will be made only to
borrowers deemed by AIM to be of good standing and only when, in AIM's judgment,
the income to be earned from the loans justifies the attendant risks.
ELIGIBLE SECURITIES
The Fund will invest in "Eligible Securities" as defined in Rule 2a-7 under
the 1940 Act, which the Fund's Board of Directors has determined to present
minimal credit risk.
COMMERCIAL PAPER RATINGS
The following is a description of the factors underlying the commercial
paper ratings of Moody's, S&P and Fitch Investors Service, Inc. ("Fitch").
MOODY'S -- The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Among the factors considered by Moody's in assigning
ratings are the following: (1) evaluation of the management of the issuer; (2)
economic evaluation of the issuer's industry or industries and an appraisal of
speculative-type risks which may be inherent in certain areas; (3) evaluation of
the issuer's products in relation to competition and customer acceptance; (4)
liquidity; (5) amount and quality of long-term debt; (6) trend of earnings over
a period of ten years; (7) financial strength of a parent company and the
relationship which exists with the issuer; and (8) recognition by the management
of obligations which may be present or may arise as a result of public interest
questions and preparations to meet such obligations. These factors are all
considered in determining whether the commercial paper is rated P-1, P-2 or P-3.
S&P -- Commercial paper rated A-1 by S&P has the following characteristics.
Liquidity ratios are adequate to meet cash requirements. Long-term senior debt
is rated "A" or better, although in some cases "BBB" credits may be allowed. The
issuer has access to at least two additional channels of borrowing. Basic
earnings and cash flow have an upward trend with allowance made for unusual
circumstances. Typically, the issuer's industry is well established and the
issuer has a strong position within the industry. The reliability and quality of
management is unquestioned. The relative strength or weakness of the above
factors determine whether the issuer's commercial paper is rated A-1, A-2 or A-
3.
FITCH -- Fitch's short-term ratings apply to debt obligations that are
payable on demand or have original maturities of generally up to three years,
including commercial paper, certificates of deposit, medium-term notes, and
municipal and investment notes. The short-term rating places greater emphasis
than a long-term rating on the existence of liquidity necessary to meet the
issuer's obligations in a timely manner. Fitch short-term ratings are as
follows:
19
<PAGE>
F-1
Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-2
Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated "F-
1."
PLUS(+) AND MINUS (-)
Plus and minus signs are used with a rating symbol to indicate the relative
position of a credit within the rating category.
LOC
The symbol LOC indicates that the rating is based on a letter of credit
issued by a commercial bank.
BOND RATINGS
The following is a description of the factors underlying the bond ratings
of Moody's, S&P and Fitch.
MOODY'S -- The following are the two highest bond ratings of Moody's.
Aaa
Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa
Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as Aaa securities or fluctuation of protective elements may
be of greater amplitude or there may be other elements present which make the
long term risks appear somewhat larger than in Aaa securities.
S&P -- The following are the four highest bond ratings of S&P; the lower
two of which are referred to in the foregoing description of its commercial
paper ratings.
AAA
Bonds rated AAA are the highest grade obligations. They possess the
ultimate degree of protection as to principal and interest. Market values of
bonds rated AAA move with interest rates, and hence provide the maximum safety
on all counts.
AA
Bonds rated AA also qualify as high grade obligations, and in the majority
of instances differ from AAA issues only in small degree. Here, too, prices move
with the long-term money market.
20
<PAGE>
A
Bonds rated A are regarded as upper medium grade. They have considerable
investment strength but are not entirely free from adverse effects of changes in
economic and trade conditions. Interest and principal are regarded as safe. They
predominantly reflect money rates in their market behavior, but to some extent,
also economic conditions.
BBB
The BBB, or medium grade category, is borderline between definitely sound
obligations and those where the speculative element begins to predominate. These
bonds have adequate asset coverage and normally are protected by satisfactory
earnings. Their susceptibility to changing conditions, particularly to
depressions, necessitates constant watching. Market values of these bonds are
more responsive to business and trade conditions than to interest rates. This
group is the lowest which qualifies for commercial bank investment.
FITCH - Fitch investment grade bond ratings provide a guide to investors in
determining the credit risk associated with a particular security. The ratings
represent Fitch's assessment of the issuer's ability to meet the obligations of
a specific debt issue or class of debt in a timely manner.
The rating takes into consideration special features of the issue, its
relationship to other obligations of the issuer, the current and prospective
financial condition and operating performance of the issuer and any guarantor,
as well as the economic and political environment that might affect the issuer's
future financial strength and credit quality.
Fitch ratings do not reflect any credit enhancement that may be provided by
insurance policies or financial guaranties unless otherwise indicated.
Bonds that have the same rating are of similar but not necessarily
identical credit quality since the rating categories do not fully reflect small
differences in the degrees of credit risk.
Fitch ratings are not recommendations to buy, sell or hold any security.
Ratings do not comment on the adequacy of market price, the suitability of any
security for a particular investor, or the tax-exempt nature or taxability of
payments made in respect of any security.
Fitch ratings are based on information obtained from issuers, other
obligors, underwriters, their experts, and other sources Fitch believes to be
reliable. Fitch does not audit or verify the truth or accuracy of such
information. Ratings may be changed, suspended, or withdrawn as a result of
changes in, or the unavailability of, information or for other reasons.
AAA
Bonds rated AAA are considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay interest
and repay principal, which is unlikely to be affected by reasonably foreseeable
events.
AA
Bonds rated AA are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal is
very strong, although not quite as strong as bonds rated "AAA." Because bonds
rated in the "AAA" and "AA" categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is generally
rated "F-1."
21
<PAGE>
REPURCHASE AGREEMENTS
Rule 2a-7 under the 1940 Act provides that a money market fund shall not
invest more than five percent of its total assets in securities issued by the
issuer of the security, provided that such a fund may invest up to 25% percent
of its total assets in the First Tier securities of a single issuer for a period
of up to three business days after the purchase thereof. Under Rule 2a-7, for
purposes of determining the percentage of a fund's total assets that are
invested in securities of an issuer, a repurchase agreement shall be deemed to
be an acquisition of the underlying securities, provided that the obligation of
the seller to repurchase the securities from the money market fund is "fully
collateralized", as such term is defined under Rule 2a-7.
INVESTMENT RESTRICTIONS
As a matter of fundamental policy which may not be changed without the
approval of a majority of the outstanding shares of the Portfolio (as that term
is defined under "General Information about the Fund -- The Fund and its
Shares"), the Portfolio may not:
(1) concentrate 25% or more of the value of its total assets in the
securities of one or more issuers conducting their principal business
activities in the same industry, provided that there is no limitation with
respect to investments in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and bank instruments, such as
CDs, bankers' acceptances, time deposits and bank repurchase agreements;
(2) purchase securities of any one issuer (other than obligations of the
U.S. Government, its agencies or instrumentalities) if, immediately after
such purchase, more than 5% of the value of the Portfolio's total assets
would be invested in such issuer, except as permitted by Rule 2a-7 under
the 1940 Act, as amended from time to time;
(3) borrow money or issue senior securities except (a) for temporary or
emergency purposes (e.g., in order to facilitate the orderly sale of
portfolio securities or to accommodate abnormally heavy redemption
requests), the Portfolio may borrow money from banks or obtain funds by
entering into reverse repurchase agreements, and (b) to the extent that
entering into commitments to purchase securities in accordance with the
Portfolio's investment program may be considered the issuance of senior
securities, provided that the Portfolio will not purchase portfolio
securities while borrowings from banks in excess of 5% of its total assets
are outstanding;
(4) mortgage, pledge or hypothecate any assets except to secure
permitted borrowings and except for reverse repurchase agreements and then
only in an amount up to 33-1/3% of the value of its total assets at the
time of borrowing or entering into a reverse repurchase agreement;
(5) make loans of money or securities other than (a) through the
purchase of debt securities in accordance with the Portfolio's investment
program, (b) by entering into repurchase agreements and (c) by lending
portfolio securities to the extent permitted by law or regulation;
(6) underwrite securities issued by any other person, except to the
extent that the purchase of securities and the later disposition of such
securities in accordance with the Portfolio's investment program may be
deemed an underwriting;
(7) invest in real estate, except that the Portfolio may purchase and
sell securities secured by real estate or interests therein or issued by
issuers which invest in real estate or interests therein;
(8) purchase or sell commodities or commodity futures contracts,
purchase securities on margin, make short sales or invest in puts or calls;
22
<PAGE>
(9) invest in any obligation not payable as to principal and interest
in United States currency; or
(10) Acquire for value the securities of any other investment company,
except in connection with a merger, consolidation, reorganization or
acquisition of assets and except for the investment in such securities of
funds representing compensation otherwise payable to its directors pursuant
to any deferred compensation plan existing at any time between the Fund and
its directors.
The following investment policies and restrictions are not fundamental
policies and may be changed by the Board of Directors of the Fund without
shareholder approval. The Portfolio does not intend to invest in companies for
the purpose of exercising control or management.
State Law Restrictions The Fund may, from time to time in order to qualify
shares of the Portfolio for sale in a particular state, agree to certain
investment restrictions in addition to or more stringent than those set forth
above. Such restrictions are not fundamental and may be changed without the
approval of shareholders. Pursuant to an undertaking made to the State
Securities Board of Texas, the Portfolio (i) will not invest in limited
partnership interests in real property, and (ii) will not issue any class of
senior security or borrow money unless immediately after such issuance or
borrowing there is asset coverage of at least 300%.
PORTFOLIO TRANSACTIONS
AIM is responsible for decisions to buy and sell securities for the
Portfolio, for selection of broker-dealers and for negotiation of commission
rates. Since purchases and sales of portfolio securities by the Portfolio are
usually principal transactions, the Portfolio incurs little or no brokerage
commissions. Portfolio securities are normally purchased directly from the
issuer or from a market maker for the securities. The purchase price paid to
dealers serving as market makers may include a spread between the bid and asked
prices. The Portfolio may also purchase securities from underwriters at prices
which include a commission paid by the issuer to the underwriter.
The Portfolio does not seek to profit from short-term trading, and will
generally (but not always) hold portfolio securities to maturity, but AIM may
seek to enhance the yield of the Portfolio by taking advantage of yield
disparities or other factors that occur in the money market. For example, market
conditions frequently result in similar securities trading at different prices.
AIM may dispose of any portfolio security prior to its maturity if such
disposition and reinvestment of proceeds are expected to enhance yield
consistent with AIM's judgment as to desirable portfolio maturity structure or
if such disposition is believed to be advisable due to other circumstances or
conditions. The amortized cost method of valuing portfolio securities requires
that the Portfolio maintain an average weighted portfolio maturity of ninety
days or less. Thus, there is likely to be relatively high portfolio turnover,
but since brokerage commissions are not normally paid on money market
instruments, the high rate of portfolio turnover is not expected to have a
material effect on the net income or expenses of the Portfolio.
AIM's primary consideration in effecting a security transaction is to
obtain the best net price and the most favorable execution of the order. To the
extent that the execution and prices offered by more than one dealer are
comparable, AIM may, in its discretion, effect transactions with dealers that
furnish statistical, research or other information or services which are deemed
by AIM to be beneficial to the Portfolio's investment program. Certain research
services furnished by dealers may be useful to AIM with clients other than the
Portfolio. Similarly, any research services received by AIM through placement
of portfolio transactions of other clients may be of value to AIM in fulfilling
its obligations to the Portfolio. AIM is of the opinion that the material
received is beneficial in supplementing AIM's research and analysis; and
therefore, it may benefit the Portfolio by improving the quality of AIM's
investment advice. The advisory fees paid by the Portfolio are not reduced
because AIM receives such services.
23
<PAGE>
From time to time, the Fund may sell a security to, or purchase a security
from, an AIM Fund or another investment account advised by AIM or AIM Capital
Management, Inc. ("AIM Capital"), when such transactions comply with applicable
rules and regulations and are deemed consistent with the investment objective(s)
and policies of the investment accounts advised by AIM or AIM Capital.
Procedures pursuant to Rule 17a-7 under the 1940 Act regarding transactions
between investment accounts advised by AIM or AIM Capital have been adopted by
the Boards of Directors/Trustees of the various AIM Funds, including the Fund.
Although such transactions may result in custodian, tax or other related
expenses, no brokerage commissions or other direct transaction costs are
generated by transactions among the investment accounts advised by AIM or AIM
Capital.
Provisions of the 1940 Act and rules and regulations thereunder have been
construed to prohibit the Fund from purchasing securities or instruments from,
or selling securities or instruments to, any holder of 5% or more of the voting
securities of any investment company managed or advised by AIM. The Fund has
obtained an order of exemption from the SEC which permits the Fund to engage in
certain transactions with such 5% holder, if the Fund complies with conditions
and procedures designed to ensure that such transactions are executed at fair
market value and present no conflicts of interest.
AIM and its affiliates manage several other investment accounts, some of
which may have objectives similar to the Portfolio's. It is possible that at
times identical securities will be acceptable for one or more of such investment
accounts. However, the position of each account in the securities of the same
issue may vary and the length of time that each account may choose to hold its
investment in the securities of the same issue may likewise vary. The timing
and amount of purchase by each account will also be determined by its cash
position. If the purchase or sale of securities is consistent with the
investment policies of the Portfolio and one or more of these accounts is
considered at or about the same time, transactions in such securities will be
allocated in good faith among such accounts, in accordance with applicable laws
and regulations, in order to obtain the best net price and most favorable
execution. The allocation and combination of simultaneous securities purchases
on behalf of the Portfolio will be made in the same way that such purchases are
allocated among or combined with those of other AIM accounts. Simultaneous
transactions could adversely affect the ability of the Portfolio to obtain or
dispose of the full amount of a security which it seeks to purchase or sell.
Under the 1940 Act, persons affiliated with the Fund are prohibited from
dealing with the Portfolio as a principal in any purchase or sale of securities
unless an exemptive order allowing such transactions is obtained from the SEC.
Furthermore, the 1940 Act prohibits the Fund from purchasing a security being
publicly underwritten by a syndicate of which persons affiliated with the Fund
are 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 Fund may,
from time to time, serve as placement agent or financial advisor to an issuer of
money market obligations and be paid a fee by such issuer. The Portfolio may
purchase such money market obligations directly from the issuer, provided that
the purchase is made in accordance with procedures adopted by the Fund's Board
of Directors and such purchase is reviewed at least quarterly by the Fund's
Board of Directors and a determination is made that all such purchases were
effected in compliance with such procedures, including a determination that the
placement fee or other remuneration paid by the issuer to the person affiliated
with the Fund was fair and reasonable in relation to the fees charged by others
performing similar services. During the fiscal year ended August 31, 1995, no
securities or instruments were purchased by the Portfolio from issuers who paid
placement fees or other compensation to a broker affiliated with the Portfolio.
TAX MATTERS
The following is only a summary of certain additional tax considerations
generally affecting the Portfolio and its shareholders that are not described in
the Prospectus. No attempt is made to present a detailed
24
<PAGE>
explanation of the tax treatment of the Portfolio or its shareholders, and the
discussion here and in the Prospectus is not intended as a substitute for
careful planning.
QUALIFICATION AS A REGULATED INVESTMENT COMPANY
The Portfolio has elected to be taxed as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). As a regulated investment company, the Portfolio is not subject to
federal income tax on the portion of its net investment income (i.e., taxable
interest, dividends and other taxable ordinary income, net of expenses) and
capital gain net income (i.e., the excess of capital gains over capital losses)
that it distributes to shareholders, provided that it distributes at least 90%
of its investment company taxable income (i.e., net investment income and the
excess of net short-term capital gain over net long-term capital loss) for the
taxable year (the "Distribution Requirement"), and satisfies certain other
requirements of the Code that are described below. Distributions by the
Portfolio made during the taxable year or, under specified circumstances, within
twelve months after the close of the taxable year, will be considered
distributions of income and gains for the taxable year and can therefore satisfy
the Distribution Requirement.
In addition to satisfying the Distribution Requirement, a regulated
investment company must (1) derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, gains
from the sale or other disposition of stock or securities or foreign currencies
(to the extent such currency gains are directly related to the regulated
investment company's principal business of investing in stock or securities) and
other income (including but not limited to gains from options, futures or
forward contracts) derived with respect to its business of investing in such
stock, securities or currencies (the "Income Requirement"); and (2) derive less
than 30% of its gross income (exclusive of certain gains on designated hedging
transactions that are offset by realized or unrealized losses on offsetting
positions) from the sale or other disposition of stock, securities or foreign
currencies (or of options, futures or forward contracts thereon) held for less
than three months (the "Short-Short Gain Test"). However, foreign currency
gains, including those derived from options, futures and forward contracts, will
not be characterized as Short-Short Gains if they are directly related to the
regulated investment company's principal business of investing in stock or
securities (or in options or futures thereon). Because of the Short-Short Gain
Test, a fund may have to limit the sale of appreciated securities that it has
held for less than three months. However, the Short-Short Gain Test will not
prevent a fund from disposing of investments at a loss, since the recognition of
a loss before the expiration of the three-month holding period is disregarded.
Interest (including original issue discount) received by a fund at maturity or
upon the disposition of a security held for less than three months will not be
treated as gross income derived from the sale or other disposition of a security
within the meaning of the Short-Short Gain Test. However, income that is
attributable to realized market appreciation will be treated as gross income
from the sale or other disposition of securities for this purpose.
In addition to satisfying the requirements described above, a regulated
investment company must satisfy an asset diversification test in order to
qualify for tax purposes as a regulated investment company. Under this test, at
the close of each quarter of a fund's taxable year, at least 50% of the value of
a fund's assets must consist of cash and cash items, U.S. Government securities,
securities of other regulated investment companies, and securities of other
issuers (as to which a fund has not invested more than 5% of the value of a
fund's total assets in securities of such issuer and as to which a fund does not
hold more than 10% of the outstanding voting securities of such issuer), and no
more than 25% of the value of its total assets may be invested in the securities
of any other issuer (other than U.S. Government securities and securities of
other regulated investment companies), or in two or more issuers which a fund
controls and which are engaged in the same or similar trades or businesses.
If, for any taxable year the Portfolio does not qualify as a regulated
investment company, all of its taxable income (including its net capital gain)
will be subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable as
ordinary dividends to the extent of the Portfolio's current and accumulated
earnings and profits. Such distributions generally will be eligible for the
dividends received deduction in the case of corporate shareholders.
25
<PAGE>
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). The balance of such income must be
distributed during the next calendar year. For the foregoing purposes, a
regulated investment company is treated as having distributed any amount on
which it is subject to income tax for any taxable year ending in such calendar
year.
The Portfolio intends to make sufficient distributions or deemed
distributions of its ordinary taxable income and capital gain net income prior
to the end of each calendar year to avoid liability for the excise tax. However,
investors should note that the Portfolio may in certain circumstances be
required to liquidate portfolio investments to make sufficient distributions to
avoid excise tax liability.
PORTFOLIO DISTRIBUTIONS
The Portfolio anticipates distributing substantially all of its investment
company taxable income for each taxable year. Such distributions will be
taxable to shareholders as ordinary income and treated as dividends for federal
income tax purposes, but they will not qualify for the 70% dividends received
deduction for corporations.
Distributions by the Portfolio will be treated in the manner described
above regardless of whether such distributions are paid in cash or reinvested in
additional shares of the Portfolio. Shareholders receiving a distribution in
the form of additional shares will be treated as receiving a distribution in an
amount equal to the fair market value of the shares received, determined as of
the reinvestment date.
Ordinarily, shareholders are required to take distributions by the
Portfolio into account in the year in which the distributions are made.
However, dividends declared in October, November or December of any year and
payable to shareholders of record on a specified date in such a month will be
deemed to have been received by the shareholders (and made by the Portfolio) on
December 31 of such calendar year if such dividends are actually paid in January
of the following year.
The Portfolio will be required in certain cases to withhold and remit to
the U.S. Treasury 31% of the ordinary income dividends and capital gain
dividends paid to any shareholder (1) who has provided either an incorrect tax
identification number or no number at all, (2) who is subject to backup
withholding by the Internal Revenue Service for failure to report the receipt of
interest or dividend income properly, or (3) who has failed to certify to the
Fund that it is not subject to backup withholding or that it is a corporation or
other "exempt recipient."
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 July 6,
1996. Future legislative or administrative changes or court decisions may
significantly change the conclusions expressed herein, and any such changes or
decisions may have a retroactive effect with respect to the transactions
contemplated herein.
Rules of state and local taxation of ordinary income dividends and capital
gain dividends from regulated investment companies often differ from the rules
for U.S. federal income taxation described above. Shareholders are urged to
consult their tax advisors as to the consequences of these and other state and
local tax rules affecting an investment in the Portfolio.
26
<PAGE>
FINANCIAL STATEMENTS
THE FOOTNOTES TO THE FINANCIAL STATEMENTS APPLY TO THE INSTITUTIONAL CLASS OF
LIQUID ASSETS PORTFOLIO WHICH HAS BEEN IN OPERATION SINCE NOVEMBER 4, 1993.
THE EXPENSES OF THE MSTC CASH RESERVES CLASS WILL DIFFER FROM THOSE OF THE
INSTITUTIONAL CLASS OF LIQUID ASSETS PORTFOLIO.
FS
<PAGE>
SCHEDULE OF INVESTMENTS
February 29, 1996
(Unaudited)
<TABLE>
<CAPTION>
MATURITY PAR(000) VALUE
<S> <C> <C> <C>
COMMERCIAL PAPER - 53.96%(a)
CONSUMER DURABLES - 13.38%
AUTOMOBILE - 8.29%
Ford Motor Credit Co.
5.28% 05/03/96 $ 50,000 $ 49,538,000
- ------------------------------------------------------------------------
4.98% 06/07/96 30,000 29,593,300
- ------------------------------------------------------------------------
5.01% 06/10/96 25,000 24,648,604
- ------------------------------------------------------------------------
Toyota Motor Credit Corp.
5.18% 04/04/96 24,000 23,882,587
- ------------------------------------------------------------------------
127,662,491
- ------------------------------------------------------------------------
COMPUTER & OFFICE EQUIPMENT - 5.09%
Hewlett-Packard Co.
4.88% 07/19/96 25,000 24,525,556
- ------------------------------------------------------------------------
4.93% 07/26/96 20,000 19,597,383
- ------------------------------------------------------------------------
4.93% 07/26/96 35,000 34,295,421
- ------------------------------------------------------------------------
78,418,360
- ------------------------------------------------------------------------
Total Consumer Durables 206,080,851
- ------------------------------------------------------------------------
CONSUMER NONDURABLES - 0.19%
MULTIPLE INDUSTRY - 0.19%
PepsiCo Inc.
5.05% 09/03/96 3,000 2,921,725
- ------------------------------------------------------------------------
Total Consumer Nondurables 2,921,725
- ------------------------------------------------------------------------
ENERGY - 2.17%
OIL & GAS - 2.17%
ARCO Coal Australia Inc.
5.62% 03/07/96 12,916 12,903,902
- ------------------------------------------------------------------------
5.07% 05/13/96 5,131 5,078,249
- ------------------------------------------------------------------------
5.05% 05/17/96 15,637 15,468,099
- ------------------------------------------------------------------------
Total Energy 33,450,250
- ------------------------------------------------------------------------
FINANCIAL - 31.69%
ASSET-BACKED SECURITIES - 11.53%
Asset Securitization Cooperative Corp.
5.17% 04/23/96 15,000 14,885,829
- ------------------------------------------------------------------------
5.17% 04/25/96 20,000 19,842,028
- ------------------------------------------------------------------------
5.23% 05/09/96 50,000 49,498,792
- ------------------------------------------------------------------------
Ciesco, L.P.
5.13% 05/03/96 18,000 17,838,405
- ------------------------------------------------------------------------
Clipper Receivables Corp.
5.25% 03/07/96 30,494 30,467,318
- ------------------------------------------------------------------------
5.45% 03/08/96 25,000 24,973,507
- ------------------------------------------------------------------------
Preferred Receivables Funding Corp.
5.45% 04/12/96 20,300 20,170,926
- ------------------------------------------------------------------------
177,676,805
- ------------------------------------------------------------------------
</TABLE>
FS-1
<PAGE>
<TABLE>
<CAPTION>
MATURITY PAR(000) VALUE
<S> <C> <C> <C>
FINANCIAL - (continued)
BROKERAGE/INVESTMENT - 7.34%
Merrill Lynch & Co., Inc.
5.38% 04/12/96 $ 50,000 $ 49,686,167
- -------------------------------------------------------------------
5.00% 06/04/96 25,000 24,670,139
- -------------------------------------------------------------------
4.90% 08/05/96 23,500 22,997,818
- -------------------------------------------------------------------
4.95% 08/30/96 16,000 15,599,600
- -------------------------------------------------------------------
112,953,724
- -------------------------------------------------------------------
INSURANCE - 3.12%
Marsh & McLennan Companies Inc.
5.51% 04/12/96 14,000 13,910,004
- -------------------------------------------------------------------
5.62% 04/25/96 15,000 14,871,209
- -------------------------------------------------------------------
4.81% 11/01/96 20,000 19,345,306
- -------------------------------------------------------------------
48,126,519
- -------------------------------------------------------------------
PERSONAL CREDIT - 3.03%
Associates Corp. of North America
5.62% 04/10/96 13,000 12,918,822
- -------------------------------------------------------------------
Transamerica Finance Corp.
5.10% 05/08/96 19,500 19,312,150
- -------------------------------------------------------------------
4.92% 08/09/96 14,700 14,376,551
- -------------------------------------------------------------------
46,607,523
- -------------------------------------------------------------------
MISCELLANEOUS - 3.49%
Hertz Corp. (The)
5.45% 04/05/96 25,000 24,867,535
- -------------------------------------------------------------------
International Lease Finance Corp.
5.38% 04/11/96 29,000 28,822,311
- -------------------------------------------------------------------
53,689,846
- -------------------------------------------------------------------
MULTIPLE INDUSTRY - 3.18%
General Electric Capital Corp.
4.92% 07/18/96 50,000 49,050,167
- -------------------------------------------------------------------
Total Financial 488,104,584
- -------------------------------------------------------------------
UTILITIES - 3.87%
TELEPHONE - 3.87%
AT&T Corp.
5.55% 04/11/96 60,000 59,620,750
- -------------------------------------------------------------------
Total Utilities 59,620,750
- -------------------------------------------------------------------
OTHER - 2.66%
MISCELLANEOUS - 2.66%
Cargill Financial Services Corp.
4.89% 07/31/96 20,000 19,587,067
- -------------------------------------------------------------------
5.00% 08/15/96 10,000 9,768,056
- -------------------------------------------------------------------
4.95% 10/29/96 12,000 11,600,700
- -------------------------------------------------------------------
Total Other 40,955,823
- -------------------------------------------------------------------
Total Commercial Paper 831,133,983
- -------------------------------------------------------------------
</TABLE>
FS-2
<PAGE>
<TABLE>
<CAPTION>
MATURITY PAR(000) VALUE
<S> <C> <C> <C>
BANK NOTES - 0.65%
PNC Bank Corp.
6.04%(b) 05/24/96 $ 10,000 $ 10,015,296
- -------------------------------------------------------------------------------
Total Bank Notes 10,015,296
- -------------------------------------------------------------------------------
CORPORATE NOTES - 0.35%
International Lease Finance Corp.
6.625% 06/01/96 5,440 5,447,938
- -------------------------------------------------------------------------------
Total Corporate Notes 5,447,938
- -------------------------------------------------------------------------------
MEDIUM TERM NOTES - 1.30%
General Electric Capital Corp.
5.084% 01/29/97 10,000 10,008,396
- -------------------------------------------------------------------------------
5.138% 01/30/97 10,000 10,013,250
- -------------------------------------------------------------------------------
Total Medium Term Notes 20,021,646
- -------------------------------------------------------------------------------
PROMISSORY AND MASTER NOTE AGREEMENTS -
25.64%
Goldman Sachs Group (The), L.P.
5.5475%(c) 10/25/96 173,000 173,000,000
- -------------------------------------------------------------------------------
Morgan (J.P.) Securities, Inc.
5.4766%(d) 04/12/96 100,000 100,000,000
- -------------------------------------------------------------------------------
Morgan Stanley Group, Inc.
5.5075%(e) 07/31/96 122,000 122,000,000
- -------------------------------------------------------------------------------
Total Promissory and Master Note
Agreements 395,000,000
- -------------------------------------------------------------------------------
U.S. TREASURY SECURITIES - 6.40%
U.S. Treasury Bills - 4.76%(f)
4.805% 06/27/96 25,000 24,606,256
- -------------------------------------------------------------------------------
4.79% 08/29/96 50,000 48,795,846
- -------------------------------------------------------------------------------
73,402,102
- -------------------------------------------------------------------------------
U.S. Treasury Notes - 1.64%
6.50% 09/30/96 25,000 25,213,185
- -------------------------------------------------------------------------------
Total U.S. Treasury Securities 98,615,287
- -------------------------------------------------------------------------------
Total Investments, excluding Repurchase
Agreements 1,360,234,150
- -------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 12.24%(g)
Goldman, Sachs & Co.
6.25%(h) 03/01/96 150,000 150,000,000
- -------------------------------------------------------------------------------
6.00%(i) 03/01/96 38,506 38,506,304
- -------------------------------------------------------------------------------
Total Repurchase Agreements 188,506,304
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.54% 1,548,740,454(j)
- -------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - (0.54%) (8,335,583)
- -------------------------------------------------------------------------------
NET ASSETS - 100.00% $1,540,404,871
===============================================================================
</TABLE>
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Some commercial paper is 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) Interest rates are redetermined weekly. Rate shown is the rate in effect on
February 29, 1996.
FS-3
<PAGE>
(c) The Portfolio may demand prepayment of note upon seven calendar days'
notice. Interest rates on promissory notes are redetermined periodically.
Rate shown is the rate in effect on February 29, 1996.
(d) The Portfolio may demand prepayment of notes purchased under the Master
Note Agreement upon seven calendar days' notice. Interest rates on master
notes are redetermined periodically. Rate shown is the rate in effect on
February 29, 1996.
(e) Master Note Purchase Agreement may be terminated by either party upon three
business days' notice, at which time all amounts outstanding under the
notes purchased under the Master Note Agreement will become payable.
Interest rates on master notes are redetermined periodically. Rate shown is
the rate in effect on February 29, 1996.
(f) 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.
(g) Collateral on repurchase agreements, including the Portfolio's pro-rata
interest in joint repurchase agreements, is taken into possession by the
Portfolio upon entering into the repurchase agreement. The collateral is
marked to market daily to ensure its market value as being 102% of the
sales price of the repurchase agreement. The investments in some repurchase
agreements are through participation in joint accounts with other mutual
funds managed by the investment advisor.
(h) Joint repurchase agreement entered into on 02/29/96 with a maturing value
of $150,026,042. Collateralized by $144,624,000 U.S. Treasury obligations,
0% to 7.25% due 03/01/96 to 09/29/08.
(i) Joint repurchase agreement entered into on 02/29/96 with a maturing value
of $195,032,500. Collateralized by $190,359,000 U.S. Treasury obligations,
5.25% to 8.75% due 08/31/97 to 11/15/08.
(j) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
FS-4
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
February 29, 1996
(Unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase agreements, at value
(amortized cost) $1,360,234,150
- ------------------------------------------------------------------------
Repurchase agreements 188,506,304
- ------------------------------------------------------------------------
Interest receivable 3,117,370
- ------------------------------------------------------------------------
Investment for deferred compensation plan 18,517
- ------------------------------------------------------------------------
Other assets 53,745
- ------------------------------------------------------------------------
Total assets 1,551,930,086
- ------------------------------------------------------------------------
LIABILITIES:
Payables for:
Dividends 11,333,574
- ------------------------------------------------------------------------
Deferred compensation 18,517
- ------------------------------------------------------------------------
Accrued advisory fees 49,045
- ------------------------------------------------------------------------
Accrued distribution fees 1,759
- ------------------------------------------------------------------------
Accrued directors' fees 2,414
- ------------------------------------------------------------------------
Accrued administrative services fees 4,590
- ------------------------------------------------------------------------
Accrued transfer agent fees 36,363
- ------------------------------------------------------------------------
Accrued operating expenses 78,953
- ------------------------------------------------------------------------
Total liabilities 11,525,215
- ------------------------------------------------------------------------
NET ASSETS $1,540,404,871
========================================================================
NET ASSETS:
Institutional Class $1,510,235,332
========================================================================
Cash Management Class $ 22,954,192
========================================================================
Private Investment Class $ 7,215,347
========================================================================
CAPITAL STOCK, $.001 PAR VALUE PER SHARE:
Institutional Class 1,512,072,509
========================================================================
Cash Management Class 22,982,202
========================================================================
Private Investment Class 7,225,773
========================================================================
NET ASSET VALUE PER SHARE:
Net asset value, offering and redemption price per share $1.00
========================================================================
</TABLE>
See Notes to Financial Statements.
FS-5
<PAGE>
STATEMENT OF OPERATIONS
For the six months ended February 29, 1996
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $52,532,273
- ----------------------------------------------------------------------------
EXPENSES:
Advisory
fees 1,369,372
- ----------------------------------------------------------------------------
Custodian fees 84,403
- ----------------------------------------------------------------------------
Administrative services fees 20,935
- ----------------------------------------------------------------------------
Distribution fees (Note 2) 1,892
- ----------------------------------------------------------------------------
Directors' fees and expenses 8,330
- ----------------------------------------------------------------------------
Filing fees 46,118
- ----------------------------------------------------------------------------
Transfer agent fees 72,412
- ----------------------------------------------------------------------------
Other 71,073
- ----------------------------------------------------------------------------
Total expenses 1,674,535
- ----------------------------------------------------------------------------
Less expenses assumed by advisor (1,316,370)
- ----------------------------------------------------------------------------
Net expenses 358,165
- ----------------------------------------------------------------------------
Net investment income 52,174,108
- ----------------------------------------------------------------------------
Net realized gain (loss) on sales of investments (1,738,483)
- ----------------------------------------------------------------------------
Net increase in net assets resulting from operations $50,435,625
============================================================================
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
For the six months ended February 29, 1996 and year ended August 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
FEBRUARY 29, AUGUST 31,
1996 1995
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 52,174,108 $ 92,913,637
- ----------------------------------------------------------------------------
Net realized gain (loss) on sales of
investments (1,738,483) (74,934)
- ----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 50,435,625 92,838,703
- ----------------------------------------------------------------------------
Distributions to shareholders from net
investment income (52,174,108) (92,913,637)
- ----------------------------------------------------------------------------
Share transactions -- net 254,680,696 259,187,785
- ----------------------------------------------------------------------------
Net increase in net assets 252,942,213 259,112,851
- ----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 1,287,462,658 1,028,349,807
- ----------------------------------------------------------------------------
End of period $1,540,404,871 $1,287,462,658
============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $1,542,280,484 $1,287,599,788
- ----------------------------------------------------------------------------
Undistributed net realized gain (loss) on
sales of investment securities (1,875,613) (137,130)
- ----------------------------------------------------------------------------
$1,540,404,871 $1,287,462,658
============================================================================
</TABLE>
See Notes to Financial Statements.
FS-6
<PAGE>
NOTES TO FINANCIAL STATEMENTS
February 29, 1996
(Unaudited)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Short-Term Investments Co. (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 Maryland corporation consisting
of two different portfolios, each of which offers separate series of shares:
the Liquid Assets Portfolio and the Prime Portfolio. The assets, liabilities
and operations of each portfolio are accounted for separately. Information
presented in these financial statements pertains only to the Liquid Assets
Portfolio (the "Portfolio"). The Portfolio consists of three different classes
of shares: the Institutional Class, the Private Investment Class and the Cash
Management Class. Matters affecting each class are voted on exclusively by the
shareholders of each class. The Portfolio's objective is to provide as high a
level of current income as is consistent with the preservation of capital and
liquidity.
The following is a summary of significant accounting policies followed by the
Portfolio in the preparation of its financial statements. The preparation of
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
A. Security Valuations - The Portfolio invests only in securities which have
maturities of 397 days or less. The securities are valued on the basis of
amortized cost which approximates market value. This method values a
security at its cost on the date of purchase and thereafter assumes a
constant amortization to maturity of any discount or premium.
B. Securities Transactions, Investment Income and Distributions - Securities
transactions are accounted for on a trade date basis. Realized gains or
losses are computed on the basis of specific identification of the
securities sold. Interest income, adjusted for amortization of premiums and
discounts on investments, is accrued daily. Dividends to shareholders are
declared daily and are paid on the first business day of the following
month.
C. Federal Income Taxes - The Portfolio intends to comply with the requirements
of the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements. The Portfolio has a capital
loss carryforward of $90,712 (which may be carried forward to offset future
taxable gains, if any) which expires, if not previously utilized, through
the year 2003. The Portfolio cannot distribute capital gains to shareholders
until the tax loss carryforwards have been utilized.
D. Expenses - Operating expenses directly attributable to a class of shares
are charged to that class' operations. Expenses which are applicable to
more than one class, e.g., advisory fees, are allocated among them.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master advisory agreement, AIM
receives a fee, paid monthly, with respect to the Portfolio at the annual rate
of 0.15% of the average daily net assets of the Portfolio.
AIM will, if necessary, reduce its fee for any fiscal year to the extent
required so that the amount of ordinary expenses of the Portfolio (excluding
interest, taxes, brokerage commissions and extraordinary expenses) paid or
incurred by the Portfolio for such fiscal year does not exceed the applicable
expense limitations imposed by the state securities regulations in any state in
which the Portfolio's shares are qualified for sale. During the six months
ended February 29, 1996, AIM voluntarily waived fees of $1,291,820 on the
Portfolio and voluntarily reimbursed expenses of $22,000 on the Institutional
Class, $750 on the Private Investment Class and $1,800 on the Cash Management
Class.
The Portfolio, pursuant to a master administrative services agreement with
AIM, has agreed to reimburse AIM for certain costs incurred in providing
accounting services to the Portfolio. During the six months ended February 29,
1996, the Portfolio reimbursed AIM $20,935 for such services.
FS-7
<PAGE>
The Portfolio, pursuant to a transfer agency and service agreement, has agreed
to pay A I M Institutional Fund Services, Inc. ("AIFS") a fee for providing
transfer agent and shareholder services to the Portfolio. During the six months
ended February 29, 1996, the Portfolio paid AIFS $72,412 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 and the Cash Management Class of the Portfolio. The Plan
provides that the Private Investment Class and Cash Management Class pay FMC up
to a maximum annual rate of 0.50% and 0.10%, respectively, 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 0.25% and
0.10% of the average daily net assets, respectively, of each of the Private
Investment Class and the Cash Management Class, to selected banks, broker-
dealers and other financial institutions who offer continuing personal
shareholder services to their customers who purchase and own shares of the
Private Investment Class or the Cash Management Class. Any amounts not paid as
a service fee under such Plan would constitute an asset-based sales charge.
During the six months ended February 29, 1996, the Private Investment Class and
the Cash Management Class accrued for compensation to FMC amounts of $1,260 and
$632, respectively, under the Plan. Certain officers and directors of the Fund
are officers of AIM, FMC, and AIFS.
During the six months ended February 29, 1996, the Portfolio paid legal fees
of $3,530 for services rendered by Kramer, Levin, Naftalis, Nessen, Kamin &
Frankel as counsel to the Fund's directors. A member of that firm is a director
of the Fund.
NOTE 3 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Fund invests directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 4 - CAPITAL STOCK
Changes in capital stock during the six months ended February 29, 1996 and the
year ended August 31, 1995 were as follows:
<TABLE>
<CAPTION>
FEBRUARY 29, AUGUST 31,
1996 1995
-------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Sold:
Institutional Class 23,008,238,967 $23,008,238,967 32,408,905,435 $32,408,905,435
- ---------------------------------------------------------------------------------------------
Cash Management Class* 33,034,108 33,034,108 -- --
- ---------------------------------------------------------------------------------------------
Private Investment
Class** 18,504,008 18,504,008 -- --
- ---------------------------------------------------------------------------------------------
Issued as reinvestment
of dividends:
Institutional Class 2,396,283 2,396,283 2,458,920 2,458,920
- ---------------------------------------------------------------------------------------------
Cash Management Class* 43,106 43,106 -- --
- ---------------------------------------------------------------------------------------------
Private Investment
Class** 21,765 21,765 -- --
- ---------------------------------------------------------------------------------------------
Reacquired:
Institutional Class (22,786,162,529) (22,786,162,529) (32,152,176,570) (32,152,176,570)
- ---------------------------------------------------------------------------------------------
Cash Management Class* (10,095,012) (10,095,012) -- --
- ---------------------------------------------------------------------------------------------
Private Investment
Class** (11,300,000) (11,300,000) -- --
- ---------------------------------------------------------------------------------------------
Net increase 254,680,696 $ 254,680,696 259,187,785 $ 259,187,785
=============================================================================================
</TABLE>
* The Cash Management Class commenced operations on January 17, 1996.
** The Private Investment Class commenced operations on February 16, 1996.
FS-8
<PAGE>
NOTE 5 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share of capital stock
outstanding of the Institutional Class during the six months ended February 29,
1996, the year ended August 31, 1995 and the period November 4, 1993 (date
operations commenced) through August 31, 1994.
<TABLE>
<CAPTION>
AUGUST 31,
FEBRUARY 29, -------------------------
1996 1995 1994
------------ ---------- ----------
<S> <C> <C> <C>
Net asset value, beginning of
period $ 1.00 $ 1.00 $ 1.00
- ------------------------------- ---------- ---------- ----------
Income from investment
operations:
Net investment income 0.03 0.06 0.03
- ------------------------------- ---------- ---------- ----------
Less distributions:
Dividends from net investment
income (0.03) (0.06) (0.03)
- ------------------------------- ---------- ---------- ----------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00
=============================== ========== ========== ==========
Total return 5.80%(a) 5.83% 3.83%(a)
=============================== ========== ========== ==========
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $1,510,235 $1,287,463 $1,028,350
=============================== ========== ========== ==========
Ratio of expenses to average
net assets 0.04%(b)(c) 0.11%(c) 0.05%(c)
=============================== ========== ========== ==========
Ratio of net investment income
to average net assets 5.68%(b)(d) 5.69%(d) 3.85%(d)
=============================== ========== ========== ==========
</TABLE>
(a) Annualized.
(b) Ratios are annualized and based on average net assets of $1,843,802,600.
(c) Ratios of expenses to average net assets prior to expense reimbursements
were 0.18% for the periods 1996-1994, respectively. Ratios are annualized
for periods less than one year.
(d) Ratios of net investment income to average net assets prior to expense
reimbursements were 5.54% (annualized), 5.62% and 3.72% (annualized) for
the periods 1996-1994, respectively.
FS-9
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
Short-Term Investments Co.:
We have audited the accompanying statement of assets and liabilities of the
Liquid Assets Portfolio (a series Portfolio of Short-Term Investments Co.),
including the schedule of investments, as of August 31, 1995, and the related
statement of operations for the year then ended, and the statement of changes
in net assets and financial highlights for the year then ended and the period
November 4, 1993 (date operations commenced) through August 31, 1994. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
August 31, 1995 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Liquid Assets Portfolio as of August 31, 1995, the results of its operations
for the year then ended, and the changes in its net assets and financial
highlights for the year then ended and the period November 4, 1993 (date
operations commenced) through August 31, 1994, in conformity with generally
accepted accounting principles.
/s/ KPMG Peat Marwick LLP
October 6, 1995
Houston, Texas
FS-10
<PAGE>
SCHEDULE OF INVESTMENTS
August 31, 1995
<TABLE>
<CAPTION>
MATURITY PAR(000) VALUE
<S> <C> <C> <C>
COMMERCIAL PAPER - 35.84%(a)
CONSUMER DURABLES - 9.17%
AUTOMOBILE - 7.94%
Daimler-Benz North America Corp.
5.90% 11/07/95 $ 33,200 $ 32,835,445
- ----------------------------------------------------------------------
5.90% 11/08/95 25,000 24,721,389
- ----------------------------------------------------------------------
Ford Motor Credit Co.
5.90% 09/20/95 25,000 24,922,153
- ----------------------------------------------------------------------
5.95% 11/01/95 20,000 19,798,362
- ----------------------------------------------------------------------
102,277,349
- ----------------------------------------------------------------------
RESIDENTIAL CONSTRUCTION - 1.23%
Weyerhaeuser Real Estate Co.
5.90% 11/13/95 16,000 15,808,578
- ----------------------------------------------------------------------
Total Consumer Durables 118,085,927
- ----------------------------------------------------------------------
CONSUMER NONDURABLES - 3.44%
PUBLISHING - 1.54%
McGraw-Hill Inc.
5.64% 02/28/96 20,500 19,921,900
- ----------------------------------------------------------------------
MULTIPLE INDUSTRY - 1.90%
PepsiCo Inc.
5.53% 01/29/96 25,000 24,423,958
- ----------------------------------------------------------------------
Total Consumer Nondurables 44,345,858
- ----------------------------------------------------------------------
ENERGY - 2.39%
OIL & GAS - 2.39%
ARCO Coal Australia Inc.
6.04% 10/23/95 15,540 15,404,422
- ----------------------------------------------------------------------
6.07% 10/30/95 15,493 15,338,875
- ----------------------------------------------------------------------
Total Energy 30,743,297
- ----------------------------------------------------------------------
FINANCIAL - 15.50%
ASSET-BACKED SECURITIES - 2.94%
Delaware Funding Corp.
5.85% 09/22/95 18,389 18,326,247
- ----------------------------------------------------------------------
Falcon Asset Securitization Corp.
5.64% 01/22/96 20,000 19,551,933
- ----------------------------------------------------------------------
37,878,180
- ----------------------------------------------------------------------
BUSINESS CREDIT - 4.24%
CIT Group Holdings, Inc.
5.90% 09/20/95 25,000 24,922,153
- ----------------------------------------------------------------------
National Rural Utilities Cooperative
Finance Corp.
5.90% 09/08/95 10,000 9,988,528
- ----------------------------------------------------------------------
5.72% 12/04/95 20,000 19,701,289
- ----------------------------------------------------------------------
54,611,970
- ----------------------------------------------------------------------
</TABLE>
FS-11
<PAGE>
<TABLE>
<CAPTION>
MATURITY PAR(000) VALUE
<S> <C> <C> <C>
INSURANCE - 4.87%
Marsh & McLennan Companies Inc.
5.42% 02/27/96 $ 10,000 $ 9,730,506
- ----------------------------------------------------------------------------
5.42% 03/14/96 9,380 9,104,619
- ----------------------------------------------------------------------------
5.42% 03/29/96 16,350 15,833,067
- ----------------------------------------------------------------------------
5.51% 04/12/96 14,000 13,520,018
- ----------------------------------------------------------------------------
5.62% 04/25/96 15,000 14,445,025
- ----------------------------------------------------------------------------
62,633,235
- ----------------------------------------------------------------------------
MISCELLANEOUS - 0.62%
International Lease Finance Corp.
5.85% 09/12/95 8,000 7,985,700
- ----------------------------------------------------------------------------
MULTIPLE INDUSTRY - 2.83%
General Electric Capital Corp.
5.84% 09/14/95 11,500 11,475,747
- ----------------------------------------------------------------------------
5.88% 09/22/95 25,000 24,914,250
- ----------------------------------------------------------------------------
36,389,997
- ----------------------------------------------------------------------------
Total Financial 199,499,082
- ----------------------------------------------------------------------------
RETAIL - 2.01%
FOOD STORES - 2.01%
Winn-Dixie Stores Inc.
5.87% 10/05/95 26,000 25,855,859
- ----------------------------------------------------------------------------
UTILITIES - 1.43%
ELECTRIC SERVICES - 1.43%
Citizens Utilities Co.
5.85% 09/07/95 18,500 18,481,963
- ----------------------------------------------------------------------------
OTHER - 1.90%
MISCELLANEOUS - 1.90%
Cargill Financial Services Corp.
5.60% 12/18/95 10,000 9,832,000
- ----------------------------------------------------------------------------
5.68% 02/12/96 15,000 14,611,867
- ----------------------------------------------------------------------------
Total Other 24,443,867
- ----------------------------------------------------------------------------
Total Commercial Paper 461,455,853
- ----------------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES - 15.54%
Federal National Mortgage Association -
10.18%
5.58%(b) 06/02/99 131,000 131,000,000
- ----------------------------------------------------------------------------
Student Loan Marketing Association - 5.36%
5.71%(b) 01/13/99 54,000 54,000,000
- ----------------------------------------------------------------------------
5.71%(b) 02/08/99 15,000 15,000,000
- ----------------------------------------------------------------------------
69,000,000
- ----------------------------------------------------------------------------
Total U.S. Government Agencies 200,000,000
- ----------------------------------------------------------------------------
</TABLE>
FS-12
<PAGE>
<TABLE>
<CAPTION>
MATURITY PAR(000) VALUE
<S> <C> <C> <C>
PROMISSORY AND MASTER NOTE AGREEMENTS -
25.52%
Citicorp Securities, Inc.
6.0625%(c) 09/13/95 $ 94,000 $ 94,000,000
- --------------------------------------------------------------------------------
Goldman Sachs Group L.P. (The)
5.9125%(d) 01/29/96 75,000 75,000,000
- --------------------------------------------------------------------------------
Morgan (J.P.) Securities Inc.
5.9875%(e) 10/16/95 86,510 86,510,000
- --------------------------------------------------------------------------------
Morgan Stanley Group, Inc.
5.8925%(f) 01/29/96 73,000 73,000,000
- --------------------------------------------------------------------------------
Total Promissory and Master Note
Agreements 328,510,000
- --------------------------------------------------------------------------------
Total Investments, excluding Repurchase
Agreements 989,965,853
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 23.33%(g)
Fuji Securities Inc.
5.87%(h) -- 75,000 75,000,000
- --------------------------------------------------------------------------------
Goldman, Sachs & Co., Inc.
6.00%(i) 09/01/95 75,410 75,409,615
- --------------------------------------------------------------------------------
6.14%(j) 10/10/95 50,000 50,000,000
- --------------------------------------------------------------------------------
Harris-Nesbitt Thomson Securities Inc.
6.05%(k) 09/01/95 100,000 100,000,000
- --------------------------------------------------------------------------------
Total Repurchase Agreements 300,409,615
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.23% 1,290,375,468(1)
- --------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - (0.23%) (2,912,810)
- --------------------------------------------------------------------------------
NET ASSETS - 100.00% $1,287,462,658
================================================================================
</TABLE>
(a) Some commercial paper is 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) Interest rates are redetermined weekly. Rates shown are the rates in effect
on August 31, 1995.
(c) The Portfolio may demand prepayment of notes purchased under the Master
Note Agreement upon notice to the issuer. Interest rates on master notes
are redetermined periodically. Rates shown are the rates in effect on
August 31, 1995.
(d) The Portfolio may demand prepayment of notes upon seven calendar days'
notice. Interest rates on promissory notes are redetermined periodically.
Rate shown is the rate in effect on August 31, 1995.
(e) The Portfolio may demand prepayment of notes purchased under the Master
Note Agreement upon seven calendar days' notice. Interest rates on master
notes are redetermined periodically. Rate shown is the rate in effect on
August 31, 1995.
(f) Master Note Purchase Agreement may be terminated by either party upon three
business days' notice, at which time all amounts outstanding under the
notes purchased under the Master Note Agreement will become payable.
Interest rates on master notes are redetermined periodically. Rate shown is
the rate in effect on August 31, 1995.
(g) Collateral on repurchase agreements, including the Portfolio's pro-rata
interest in joint repurchase agreements, is taken into possession by the
Fund upon entering into the repurchase agreement. The collateral is marked
to market daily to ensure its market value as being 102 percent of the
sales price of the repurchase agreement. The investments in some repurchase
agreements are through participation in joint accounts with other mutual
funds managed by the investment advisor.
(h) Open joint repurchase agreement entered into on 08/30/95; however, either
party may terminate the agreement upon demand. Collateralized by
$332,491,000 U.S. Treasury obligations, 0.00% to 9.25% due 05/15/97 to
02/15/16.
(i) Entered into on 08/31/95 with a maturing value of $75,422,183.
Collateralized by $80,567,000 U.S. Treasury obligations, 5.875% to 6.87%
due 07/31/96 to 08/28/00.
(j) Term repurchase agreement entered into 04/11/95 with a maturity date of
10/10/95; however, either party may terminate the agreement as of any
business day not less than seven days' after receipt of written notice from
the terminating party. Collateralized by $43,260,000 U.S. Treasury
obligations, 7.25% to 8.75% due 05/01/16 to 08/15/20.
(k) Entered into on 08/31/95 with a maturing value of $100,016,806.
Collateralized by $90,778,000 U.S. Treasury obligations, 0.00% to 9.25% due
11/15/95 to 05/15/21.
(l) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
FS-13
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments, excluding repurchase agreements, at value
(amortized cost) $ 989,965,853
- ------------------------------------------------------------------------
Repurchase agreements 300,409,615
- ------------------------------------------------------------------------
Interest receivable 5,290,124
- ------------------------------------------------------------------------
Investment for deferred compensation plan 11,407
- ------------------------------------------------------------------------
Other assets 20,348
- ------------------------------------------------------------------------
Total assets 1,295,697,347
- ------------------------------------------------------------------------
LIABILITIES:
Payables for:
Dividends 8,081,656
- ------------------------------------------------------------------------
Deferred compensation 11,407
- ------------------------------------------------------------------------
Accrued advisory fees 91,097
- ------------------------------------------------------------------------
Accrued directors' fees 2,034
- ------------------------------------------------------------------------
Accrued administrative services fees 5,219
- ------------------------------------------------------------------------
Accrued transfer agent fees 10,645
- ------------------------------------------------------------------------
Accrued operating expenses 32,631
- ------------------------------------------------------------------------
Total liabilities 8,234,689
- ------------------------------------------------------------------------
NET ASSETS $1,287,462,658
========================================================================
NET ASSET VALUE PER SHARE:
Capital stock, $.001 par value per share 1,287,599,788
========================================================================
Net asset value, offering and redemption price per share $1.00
========================================================================
</TABLE>
See Notes to Financial Statements.
FS-14
<PAGE>
STATEMENT OF OPERATIONS
For the year ended August 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $94,760,422
- ------------------------------------------------------------------
EXPENSES:
Advisory fees 2,451,146
- ------------------------------------------------------------------
Custodian fees 59,910
- ------------------------------------------------------------------
Administrative services fees 97,044
- ------------------------------------------------------------------
Directors' fees and expenses 14,116
- ------------------------------------------------------------------
Filing fees 255,172
- ------------------------------------------------------------------
Transfer agent fees 34,915
- ------------------------------------------------------------------
Other 61,991
- ------------------------------------------------------------------
Total expenses 2,974,294
- ------------------------------------------------------------------
Less advisory fees waived (1,127,509)
- ------------------------------------------------------------------
Net expenses 1,846,785
- ------------------------------------------------------------------
Net investment income 92,913,637
- ------------------------------------------------------------------
Net realized gain (loss) on sales of investments (74,934)
- ------------------------------------------------------------------
Net increase in net assets resulting from operations $92,838,703
==================================================================
</TABLE>
See Notes to Financial Statements.
FS-15
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
For the year ended August 31, 1995 and the period November 4, 1993 (date
operations commenced) through August 31, 1994
<TABLE>
<CAPTION>
1995 1994
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 92,913,637 $ 44,215,233
- ----------------------------------------------------------------------------
Net realized gain (loss) on sales of
investments (74,934) (62,196)
- ----------------------------------------------------------------------------
Net increase in net assets resulting from
operations 92,838,703 44,153,037
- ----------------------------------------------------------------------------
Distributions to shareholders from net
investment income (92,913,637) (44,215,233)
- ----------------------------------------------------------------------------
Share transactions -- net 259,187,785 1,028,412,003
- ----------------------------------------------------------------------------
Net increase in net assets 259,112,851 1,028,349,807
- ----------------------------------------------------------------------------
NET ASSETS:
Beginning of period 1,028,349,807 --
- ----------------------------------------------------------------------------
End of period $1,287,462,658 $1,028,349,807
============================================================================
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in) $1,287,599,788 $1,028,412,003
- ----------------------------------------------------------------------------
Undistributed net realized gain (loss) on
sales of investment securities (137,130) (62,196)
- ----------------------------------------------------------------------------
$1,287,462,658 $1,028,349,807
============================================================================
</TABLE>
See Notes to Financial Statements.
FS-16
<PAGE>
NOTES TO FINANCIAL STATEMENTS
August 31, 1995
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Short-Term Investments Co. (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 Maryland corporation consisting
of two different portfolios, each of which offers separate series of shares:
the Liquid Assets Portfolio and the Prime Portfolio. The assets, liabilities
and operations of each portfolio are accounted for separately. Information
presented in these financial statements pertains only to the Liquid Assets
Portfolio (the "Portfolio").
The following is a summary of the significant accounting policies followed by
the Portfolio in the preparation of its financial statements.
A. Security Valuations - The Portfolio invests only in securities which have
maturities of 397 days or less. The securities are valued on the basis of
amortized cost which approximates market value. This method values a
security at its cost on the date of purchase and thereafter assumes a
constant amortization to maturity of any discount or premium.
B. Securities Transactions, Investment Income and Distributions - Securities
transactions are accounted for on a trade date basis. Realized gains or
losses are computed on the basis of specific identification of the
securities sold. Interest income, adjusted for amortization of premiums and
discounts on investments, is accrued daily. Dividends to shareholders are
declared daily and are paid on the first business day of the following
month.
C. Federal Income Taxes - The Portfolio intends to comply with the requirements
of the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements. The Fund has a capital loss
carryforward of $90,712 (which may be carried forward to offset future
taxable gains, if any) which expires, if not previously utilized, through
the year 2003. The Fund cannot distribute capital gains to shareholders
until the tax loss carryforwards have been utilized.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master advisory agreement, AIM
receives a fee, paid monthly, with respect to the Portfolio at the annual rate
of 0.15% of the average daily net assets of the Portfolio.
AIM will, if necessary, reduce its fee for any fiscal year to the extent
required so that the amount of ordinary expenses of the Portfolio (excluding
interest, taxes, brokerage commissions and extraordinary expenses) paid or
incurred by the Portfolio for such fiscal year does not exceed the applicable
expense limitations imposed by the state securities regulations in any state in
which the Portfolio's shares are qualified for sale. During the year ended
August 31, 1995, AIM voluntarily waived fees of $1,127,509.
The Portfolio, pursuant to a master administrative services agreement with
AIM, has agreed to reimburse AIM for certain costs incurred in providing
accounting services to the Portfolio. During the year ended August 31, 1995,
the Portfolio reimbursed AIM $58,174 for such services.
During the year ended August 31, 1995, the Fund paid A I M Institutional Fund
Services, Inc. ("AIFS") $47,915 for shareholder and transfer agency services.
Effective July 1, 1995, AIFS became the exclusive transfer agent of the
Portfolio. Certain officers and directors of the Fund are officers and
directors of AIM, AIFS and Fund Management Company, the Portfolio's
distributor.
During the year ended August 31, 1995, the Portfolio paid legal fees of $4,721
for services rendered by Kramer, Levin, Naftalis, Nessen, Kamin & Frankel as
counsel to the Fund's directors. A member of that firm is a director of the
Fund.
FS-17
<PAGE>
NOTE 3 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Fund invests directors' fees, if so
elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 4 - CAPITAL STOCK
Changes in capital stock during the year ended August 31, 1995 and the period
November 4, 1993 (date operations commenced) through August 31, 1994 were as
follows:
<TABLE>
<CAPTION>
1995 1994
--------------------------------- --------------------------------
SHARES AMOUNT SHARES VALUE
--------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
Sold 32,408,905,435 $ 32,408,905,435 20,765,848,248 $20,765,848,248
- --------------------------------------------------------------------------------------------
Issued as reinvestment
of dividends 2,458,920 2,458,920 587,397 587,397
- --------------------------------------------------------------------------------------------
Reacquired (32,152,176,570) (32,152,176,570) (19,738,023,642) (19,738,023,642)
============================================================================================
Net increase 259,187,785 $ 259,187,785 1,028,412,003 $ 1,028,412,003
============================================================================================
</TABLE>
NOTE 5 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share of capital stock
of the Portfolio outstanding during the year ended August 31, 1995 and the
period November 4, 1993 (date operations commenced) through August 31, 1994.
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00
- --------------------------------------------- ---------- ----------
Income from investment operations:
Net investment income 0.06 0.03
- --------------------------------------------- ---------- ----------
Less distributions:
Dividends from net investment income (0.06) (0.03)
- --------------------------------------------- ---------- ----------
Net asset value, end of period $ 1.00 $ 1.00
============================================= ========== ==========
Total return 5.83% 3.83%(a)
============================================= ========== ==========
Ratios/supplemental data:
Net assets, end of period (000s omitted) $1,287,463 $1,028,350
============================================= ========== ==========
Ratio of expenses to average net assets 0.11%(b) 0.05%(c)
============================================= ========== ==========
Ratio of net investment income to average net
assets 5.69%(b) 3.85%(c)
============================================= ========== ==========
</TABLE>
(a) Annualized.
(b) After waiver of advisory fees. Ratios are based on average net assets of
$1,634,097,113. Ratios of expenses and net investment income to average net
assets prior to waiver of advisory fees are 0.18% and 5.62%, respectively.
(c) After waiver of advisory fees. Annualized ratios of expenses and net
investment income to average net assets prior to waiver of advisory fees
are 0.18% and 3.72%, respectively.
FS-18
<PAGE>
PART C
OTHER INFORMATION
Item 24. (a) Financial Statements:
(1) Prime Portfolio - Institutional Class
In Part A: None
In Part B: None
In Part C: None
(2) Prime Portfolio - Personal Investment Class
In Part A: None
In Part B: None
In Part C: None
(3) Prime Portfolio - Private Investment Class
In Part A: None
In Part B: None
In Part C: None
(4) Prime Portfolio - Cash Management Class
In Part A: None
In Part B: None
In Part C: None
(5) Prime Portfolio - Resource Class
In Part A: None
In Part B: None
In Part C: None
(6) Liquid Assets Portfolio - Institutional Class
In Part A: None
In Part B: None
In Part C: None
C-1
<PAGE>
(7) Liquid Assets Portfolio - Private Investment Class
In Part A: None
In Part B: None
In Part C: None
(8) Liquid Assets Portfolio - Cash Management Class
In Part A: None
In Part B: None
In Part C: None
(9) Liquid Assets Portfolio - MSTC Cash Reserves Class
In Part A: None
In Part B: (1) Schedule of Investments as of February 29, 1996
(2) Statement of Assets and Liabilities as of
February 29, 1996
(3) Statement of Operations for the six month
period ended February 29, 1996
(4) Statement of Changes in Net Assets for the six
month period ended February 29, 1996 and the
year ended August 31, 1995
(5) Independent Auditors' Report
(6) Schedule of Investments as of August 31, 1995
(7) Statement of Assets and Liabilities as of
August 31, 1995
(8) Statement of Operations for the year ended
August 31, 1995
(9) Statement of Changes in Net Assets for the year
ended August 31, 1995 and for the period
November 4, 1993 (date operations commenced)
through August 31, 1994
In Part C: None
Exhibit
Number Description
- ------ ----------------------------------------------------------------------
(1) - (a) Articles of Incorporation of Registrant, as filed with the State
of Maryland on May 3, 1993, were filed as an Exhibit to
Registrant's initial Registration Statement on July 19, 1993,
and were filed electronically as an Exhibit to Post-Effective
Amendment No. 4 on November 8, 1995, and are hereby in
incorporated by reference.
(b) Certificate of Correction of Registrant, as filed with the State
of Maryland on June 10, 1993, was filed as an Exhibit to
Registrant's initial Registration Statement on July 19, 1993,
and was filed electronically as an Exhibit to Post- Effective
Amendment No. 4 on November 8, 1995, and is hereby incorporated
by reference.
(c) Articles of Amendment of Registrant, as filed with the State of
Maryland on October 15, 1993, were filed as an Exhibit to
Registrant's Post-Effective Amendment No. 2 on August 22, 1994,
and were filed electronically as an Exhibit Post-Effective
Amendment No. 4 on November 8, 1995, and are hereby incorporated
by reference.
(d) Articles Supplementary of Registrant, as filed with the State of
Maryland on October 10, 1995, were filed electronically as an
Exhibit to Post-Effective Amendment No. 4 on November 8, 1995,
and are hereby incorporated by reference.
(e) Articles Supplementary of Registrant, as filed with the State of
Maryland on November 6, 1995, were filed electronically as an
Exhibit to Post-Effective Amendment No. 4 on November 8, 1995,
and are hereby incorporated by reference.
(f) Articles of Amendment of Registrant, as filed with the State of
Maryland on November 6, 1995, were filed electronically as an
Exhibit to Post-Effective
C-2
<PAGE>
Amendment No. 4 on November 8, 1995, and are hereby incorporated
by reference.
(g) Certificate of Correction of Registrant, as filed with the State
of Maryland on November 8, 1995, was filed electronically as an
Exhibit to Post-Effective Amendment No. 4 on November 8, 1995,
and is hereby incorporated by reference.
(h) Form of Certificate of Correction of Registrant was filed
electronically as an Exhibit to Post-Effective Amendment No. 5
on July 9, 1996 and is hereby incorporated by reference.
(i) Form of Articles Supplementary of Registrant was filed
electronically as an Exhibit to Post-Effective Amendment No. 5
on July 9, 1996 and is hereby incorporated by reference.
(2) - (a) By-Laws of Registrant were filed as an exhibit to Registrant's
initial Registration Statement on July 19, 1993, and were filed
electronically as an Exhibit to Post-Effective Amendment No. 4
on November 8, 1995, and are hereby incorporated by reference.
(b) First Amendment, dated March 14, 1995, to By-Laws of Registrant
was filed electronically as an Exhibit to Post-Effective
Amendment No. 4 on November 8, 1995, and is hereby incorporated
by reference.
(3) - Voting Trust Agreements - None.
(4) - (a) Form of Specimen Certificate for Liquid Assets Portfolio was
filed as an exhibit to Registrant's Pre-Effective Amendment No.
1 on October 1, 1993, and is hereby incorporated by reference.
(b) Form of Specimen Certificate for Prime Portfolio - Personal
Investment Class was filed as an exhibit to Registrant's Post-
Effective Amendment No. 1 on October 15, 1993, and is hereby
incorporated by reference.
(c) Form of Specimen Certificate for Prime Portfolio - Private
Investment Class was filed as an exhibit to Registrant's Post-
Effective Amendment No. 1 on October 15, 1993, and is hereby
incorporated by reference.
(d) Form of Specimen Certificate for Prime Portfolio - Institutional
Class was filed as an exhibit to Registrant's Post-Effective
Amendment No. 1 on October 15, 1993, and is hereby incorporated
by reference.
(e) Form of Specimen Certificate for Prime Portfolio - Cash
Management Class was filed as an exhibit to Registrant's Post-
Effective Amendment No. 1 on October 15, 1993, and is hereby
incorporated by reference.
(f) Form of Specimen Certificate for Prime Portfolio - Resource
Class was filed electronically as an Exhibit to Post-Effective
Amendment No. 4 on November 8, 1995, and is hereby incorporated
by reference.
(g) Form of Specimen Certificate for Liquid Assets Portfolio -
Private Investment Class was filed electronically as an Exhibit
to Post-Effective Amendment No. 4 on November 8, 1995, is hereby
incorporated by reference.
(h) Form of Specimen Certificate for Liquid Assets Portfolio - Cash
Management Class was filed electronically as an Exhibit to Post-
Effective Amendment No. 4 on November 8, 1995, and is hereby
incorporated by reference.
C-3
<PAGE>
(i) Form of Specimen Certificate for Liquid Assets Portfolio - MSTC
Cash Reserves Class was filed electronically as an Exhibit to
Post-Effective Amendment No. 5 on July 9, 1996, and is hereby
incorporated by reference.
(5) - (a) Master Investment Advisory Agreement between Registrant and A I M
Advisors, Inc. dated August 6, 1993 was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 1 on October 15, 1993.
(b) Master Investment Advisory Agreement, dated October 18, 1993,
between Registrant and A I M Advisors, Inc. was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 2 on August
22, 1994, and was filed electronically as an Exhibit to Post-
Effective Amendment No. 4 on November 8, 1995, and is hereby
incorporated by reference.
(6) - (a) Master Distribution Agreement between Registrant and Fund
Management Company dated August 6, 1993 was filed as an Exhibit
to Registrant's Post-Effective Amendment No. 1 on October 15,
1993.
(b) Master Distribution Agreement between Registrant and Fund
Management Company, dated October 18, 1993, was filed as an
exhibit to Registrant's Post-Effective Amendment No. 2 on August
22, 1994, and was filed electronically as an Exhibit to Post-
Effective Amendment No. 4 on November 8, 1995, and is hereby
incorporated by reference.
(c) Amendment No. 1, dated September 19, 1995, to Master
Distribution Agreement between Registrant and Fund Management
Company, dated October 18, 1993, was filed electronically as an
Exhibit to Post-Effective Amendment No. 4 on November 8, 1995,
and is hereby incorporated by reference.
(d) Amendment No. 2, dated as of December 4, 1995, to Master
Distribution Agreement between Registrant and Fund Management
Company, dated October 18, 1993, was filed electronically as an
Exhibit to Post-Effective Amendment No. 5 on July 9, 1996, and is
hereby incorporated by reference.
(e) Form of Amendment No. 3 to Master Distribution Agreement between
Registrant and Fund Management Company, dated October 18, 1993,
was filed electronically as an Exhibit to Post-Effective
Amendment No. 5 on July 9, 1996, and is hereby incorporated by
reference.
(7) - (a) Retirement Plan for Eligible Directors/Trustees was filed as an
exhibit to Registrant's Post-Effective Amendment No. 2 on August
22, 1994, and is hereby incorporated by reference.
(b) Form of Deferred Compensation Agreement was filed as an exhibit
to Registrant's Post-Effective Amendment No. 2 on August 22,
1994, and is hereby incorporated by reference.
(8) - Custodian Agreement between the Registrant and The Bank of New
York, dated October 19, 1993 was filed as an exhibit to
Registrant's Post-Effective Amendment No. 2 on August 22, 1994,
and is hereby incorporated by reference.
(9) - (a) Transfer Agency Agreement between the Registrant and State
Street Bank and Trust Company, dated October 15, 1993 was filed
as an exhibit to Registrant's Post-Effective Amendment No. 2 on
August 22, 1994, and is hereby incorporated by reference.
(b) Transfer Agency and Service Agreement between A I M
Institutional Fund Services, Inc. and Registrant, dated
September 16, 1994, was filed electronically as an Exhibit
to
C-4
<PAGE>
Post-Effective Amendment No. 4 on November 8, 1995, and is
hereby incorporated by reference.
(c) Amendment No.1, dated July 1, 1995, to Transfer Agency and
Service Agreement between A I M Institutional Fund Services,
Inc. and Registrant, dated September 16, 1994, was filed
electronically as an Exhibit to Post-Effective Amendment No. 4
on November 8, 1995, and is hereby incorporated by reference.
(d) Master Administrative Services Agreement between the Registrant
and A I M Advisors, Inc. dated August 6, 1993 was filed as an
exhibit to Registrant's Post-Effective Amendment No. 1 on
October 15, 1993.
(e) Master Administrative Services Agreement between the Registrant
and A I M Advisors, Inc., dated October 18, 1993, was filed as
an Exhibit to Registrant's Post-Effective Amendment No. 2 on
August 22, 1994, and was filed electronically as an Exhibit to
Post-Effective Amendment No. 4 on November 8, 1995, and is
hereby incorporated by reference.
(f) Amendment No. 1, dated November 2, 1995, to Master Administrative
Services Agreement between the Registrant and A I M Advisors,
Inc., dated October 18, 1993, was filed electronically as an
Exhibit to Post-Effective Amendment No. 4 on November 8, 1995,
and is hereby incorporated by reference.
(g) Amendment No. 2, dated as of December 4, 1995, to Master
Administrative Services Agreement between the Registrant and
A I M Advisors, Inc., dated October 18, 1993, was filed
electronically as an Exhibit to Post-Effective Amendment No. 5 on
July 9, 1996, and is hereby incorporated by reference.
(h) Form of Amendment No. 3 to Master Administrative Services
Agreement between the Registrant and A I M Advisors, Inc. dated
October 18, 1993, was filed electronically as an Exhibit to
Post-Effective Amendment No. 5 on July 9, 1996, and is hereby
incorporated by reference.
(i) Administrative Service Agreement between A I M Advisors, Inc.
and A I M Fund Services, Inc., dated October 18, 1993, as
amended on May 11, 1994, was filed as an exhibit to Registrant's
Post-Effective Amendment No. 2 on August 22, 1994.
(j) Amendment No. 2 to Administrative Services Agreement between
A I M Advisors, Inc. and A I M Fund Services, Inc., dated October
18, 1993, as amended on May 11, 1994, was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 3 on December 21, 1994.
(k) Amendment No. 3 to Administrative Services Agreement between
A I M Advisors, Inc. and A I M Fund Services, Inc., dated October
18, 1993, as amended on May 11, 1994, was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 3 on December 21,
1994.
(l) Form of Administrative Services Agreement between A I M
Advisors, Inc. and A I M Institutional Fund Services, Inc., on
behalf of the Portfolios and Classes of the Registrant was filed
as an Exhibit to Registrant's Post-Effective Amendment No. 3 on
December 21, 1994.
(10) - Opinion of Ballard Spahr Andrews & Ingersoll was filed as an
exhibit to Registrant's Pre-Effective Amendment No. 1 on October
1, 1993.
(11) - (a) Consent of Ballard Spahr Andrews & Ingersoll was filed
electronically as an Exhibit to Post-Effective Amendment No. 5 on
July 9, 1996, and is hereby incorporated by reference.
C-5
<PAGE>
(b) Consent of KPMG Peat Marwick LLP is filed herewith
electronically.
(12) - Financial Statements - None.
(13) - Agreements Concerning Initial Capitalization - None.
(14) - Registrant's Retirement Plan Documents - None.
(15) - (a) Master Distribution Plan Pursuant to Rule 12b-1 under the 1940
Act for Registrant's Prime Portfolio - Personal Investment
Class, Private Investment Class and Cash Management Class, and
related forms of agreements were filed as an Exhibit to
Registrant's Post-Effective Amendment No. 3 on December 21, 1994
and were filed electronically as an Exhibit to Post-Effective
Amendment No. 4 on November 8, 1995.
(b) Master Distribution Plan Pursuant to Rule 12b-1 under the 1940
Act, dated August 6, 1993, amended as of September 19, 1995 and
December 4, 1995, and amended and restated as of December 4,
1995, for Registrant's Prime Portfolio - Personal Investment
Class, Private Investment Class, Resource Class and Cash
Management Class and Registrant's Liquid Assets Portfolio -
Private Investment Class and Cash Management Class, and related
forms of agreements were filed electronically as an Exhibit to
Post-Effective Amendment No. 5 on July 9, 1996, and are hereby
incorporated by reference.
(c) Form of Amendment No. 1 to Master Distribution Plan Pursuant to
Rule 12b-1 under the 1940 Act for Registrant's Liquid Assets
Portfolio - MSTC Cash Reserves Class was filed electronically as
an Exhibit to Post-Effective Amendment No. 5 on July 9, 1996,
and is hereby incorporated by reference.
(16) - Schedule of Performance Quotations was filed as an exhibit to
Registrant's Registration Statement on July 19, 1993.
(18) - Rule 18f-3 Plan - None.
(27) - Financial Data Schedule - None
Item 25. Persons Controlled by or under Common Control With Registrant
-------------------------------------------------------------
Furnish a list or diagram of all persons directly or indirectly controlled by
or under common control with the Registrant and as to each such person indicate
(1) if a company, the state or other sovereign power under the laws of which it
is organized, and (2) the percentage of voting securities owned or other basis
of control by the person, if any, immediately controlling it.
None.
Item 26. Number of Holders of Securities
-------------------------------
State in substantially the tabular form indicated, as of a specified date
within 90 days prior to the date of filing, the number of record holders of
each class of securities of the Registrant.
<TABLE>
<CAPTION>
Title of Class As of June 20, 1996
-------------- -------------------
<S> <C>
Prime Portfolio - Institutional Class 46
Prime Portfolio - Personal Investment Class 5
Prime Portfolio - Private Investment Class 12
Prime Portfolio - Cash Management Class 16
Prime Portfolio - Resource Class 3
Liquid Assets Portfolio - Institutional Class 23
Liquid Assets Portfolio - Private Investment Class 1
Liquid Assets Portfolio - Cash Management Class 3
Liquid Assets Portfolio - MSTC Cash Reserves Class 0
</TABLE>
C-6
<PAGE>
Item 27. Indemnification
---------------
State the general effect of any contract, arrangement or statute under which
any director, officer, underwriter or affiliated person of the Registrant is
insured or indemnified in any manner against any liability which may be incurred
in such capacity, other than insurance provided by any director, officer,
affiliated person or underwriter for their own protection.
Under the terms of the Maryland General Corporation Law and the Registrant's
Charter and By-Laws, the Registrant may indemnify any person who was or is a
director, officer, employee or agent of the Registrant to the maximum extent
permitted by the Maryland General Corporation Law. The specific terms of such
indemnification are reflected in the Registrant's Charter and By-Laws, which
are incorporated herein as part of this Registration Statement. No
indemnification will be provided by the Registrant to any director or officer
of the Registrant for any liability to the Registrant or shareholders to
which such director or officer 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 directors, 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 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 director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered hereby, 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 such Act and will be governed
by the final adjudication of such issue. Insurance coverage is provided under
a joint Mutual Fund & Investment Advisory Professional Directors & Officers
Liability Policy, issued by ICI Mutual Insurance Company, with a $15,000,000
limit of liability.
Item 28. Business and Other Connections of Investment Advisor
----------------------------------------------------
Describe any other business, profession, vocation or employment of a
substantial nature in which each investment advisor of the Registrant, and each
director, officer or partner of any such investment advisor, is or has been, at
any time during the past two fiscal years, engaged for his own account or in the
capacity of director, officer, employee, partner, or trustee.
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 discussion under the captions "Management of the Fund" of the
Prospectus which comprises Part A of this Registration Statement, and to the
discussion under the caption "General Information about the Fund --Investment
Advisor" of the Statement of Additional Information which comprises Part B of
this Registration Statement, and to Item 29(b) of this Part C of the
Registration Statement.
Item 29. Principal Underwriters
----------------------
(a) Fund Management Company, the Registrant's principal underwriter, also
acts as a principal underwriter to the following investment companies:
C-7
<PAGE>
AIM Equity Funds, Inc. (Institutional Classes)
AIM Investment Securities Fund (Limited Maturity Treasury Portfolio-
Institutional Shares)
Short-Term Investments Trust
Tax-Free Investments Co.
(b)
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ------------------ -------------------------- --------------------
<S> <C> <C>
Charles T. Bauer Chairman of the Board of Directors Chairman and Director
J. Abbott Sprague President and Director Vice President
Robert H. Graham Senior Vice President and Director Director and President
Mark D. Santero Senior Vice President None
Mark E. McMeans Senior Vice President None
Carol F. Relihan Vice President Senior Vice President & Secretary
& General Counsel
John J. Arthur Treasurer & Vice President Senior Vice President & Treasurer
William H. Kleh Director None
Jesse H. Cole Vice President None
Stephen I. Winer Vice President, Assistant Assistant Secretary
General Counsel & Assistant Secretary
Melville B. Cox Vice President & Vice President
Chief Compliance Office
Kathleen J. Pflueger Secretary Assistant Secretary
David E. Hessel Assistant Vice President, None
Assistant Treasurer & Controller
Jeffrey L. Horne Assistant Vice President None
Margaret A. Reilly Assistant Vice President None
Dana R. Sutton Assistant Vice President Vice President & Assistant
& Assistant Treasurer Treasurer
Nicholas D. White Assistant Vice President None
Nancy A. Beck Assistant Vice President None
David L. Kite Assistant General Counsel & Assistant Secretary
Assistant Secretary
</TABLE>
- ------------------------------
*11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173
C-8
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Position and Offices Position and Offices
Business Address* with Principal Underwriter with Registrant
- ------------------ -------------------------- --------------------
<S> <C> <C>
Nancy L. Martin Assistant General Counsel & Assistant Secretary
Assistant Secretary
Ofelia M. Mayo Assistant General Counsel & Assistant Secretary
Assistant Secretary
Samuel D. Sirko Assistant General Counsel & Assistant Secretary
Assistant Secretary
</TABLE>
(c) Not Applicable
Item 30. Location of Accounts and Records
--------------------------------
With respect to each account, book or other document required to be
maintained by Section 31(a) of the 1940 Act and the Rules (17 CFR 270.31a-1 to
31a-3) promulgated thereunder, furnish the name and address of each person
maintaining physical possession of each such account, book or other document.
A I M Advisors, Inc., 11 Greenway Plaza, Suite 1919, Houston, Texas 77046-
1173, will maintain physical possession of each such account, book or other
document of the Registrant at its principal executive offices, except for
those maintained by the Registrant's Custodian, The Bank of New York, 90
Washington Street, 11th Floor, New York, New York 10286, and Transfer Agent,
A I M Institutional Fund Services, Inc., 11 Greenway Plaza, Suite 1919,
Houston, Texas 77046-1173.
Item 31. Management Services
-------------------
Furnish a summary of the substantive provisions of any management-related
service contract not discussed in Part A or Part B of this Form (because the
contract was not believed to be of interest to a purchaser of securities of the
Registrant) under which services are provided to the Registrant, indicating the
parties to the contract, the total dollars paid and by whom, for the last three
fiscal years.
None.
Item 32. Undertakings
------------
(a) None.
(b) None.
(c) The Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of the applicable Portfolio's latest annual report
to shareholders, upon request and without charge.
- -----------------------
*11 Greenway Plaza, Suite 1919, Houston, Texas 77046-1173
C-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment to
its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the city of Houston, Texas on the 4th day of
September, 1996.
Registrant: SHORT-TERM INVESTMENTS CO.
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 & Director September 4, 1996
- ----------------------
(Charles T. Bauer)
/s/ ROBERT H. GRAHAM Director & President September 4, 1996
- ---------------------- (Principal Executive Officer)
(Robert H. Graham)
/s/ BRUCE L. CROCKETT Director September 4, 1996
______________________
(Bruce L. Crockett)
/s/ OWEN DALY II Director September 4, 1996
- ----------------------
(Owen Daly II)
/s/ CARL FRISCHLING Director September 4, 1996
- ----------------------
(Carl Frischling)
/s/ JOHN F. KROEGER Director September 4, 1996
- ----------------------
(John F. Kroeger)
/s/ LEWIS F. PENNOCK Director September 4, 1996
- ----------------------
(Lewis F. Pennock)
/s/ IAN W. ROBINSON Director September 4, 1996
- ----------------------
(Ian W. Robinson)
/s/ LOUIS S. SKLAR Director September 4, 1996
- ----------------------
(Louis S. Sklar)
/s/ JOHN J. ARTHUR Senior Vice President & September 4, 1996
- ---------------------- Treasurer (Principal Financial
(John J. Arthur) and Accounting Officer)
</TABLE>
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
No.
- --------
<C> <S>
11(b) Consent of KPMG Peat Marwick LLP
</TABLE>
<PAGE>
EXHIBIT 11(b)
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Short-Term Investments Co.
We consent to the use of our report dated October 6, 1995 for the Liquid Assets
Portfolio for the year ended August 31, 1995 and to the reference to our firm
under the heading "Reports" in the Statement of Additional Information.
/s/ KPMG Peat Marwick LLP
Houston, Texas
August 30, 1996
